Spotlight
New
Delhi, 30 June 2017
Air India Privatisation
OVERTHROWING THE ‘MAHARAJA’
By Proloy Bagchi
Happy tidings have
arrived from Delhi indicating the decision of the Union Cabinet to privatise
Air India. A very bold decision for a vital economic reform that, perhaps, only
this government could take blocking the drain that it had become of government
finances.
Though crowned a
Maharaja, recent reports indicated as if the national carrier Air India had
gone bankrupt. An order of a State level consumer forum and later confirmed by
the Central Forum for payment of Rs 15,000 as compensation to a petitioner for
deficiency in services exposed the Airline’s financial ill-health. A cheque
issued by it in compliance of the order bounced for the reason that the account
had no balance. Like the feudals of yore the so-called ‘Maharaja’ has been hit
by inclemency.
It is indeed in bad
shape. A news item recently said that the staff is going to cut down on their
allowances and perks in order to improve the Airline’s financial health. One
supposes this kind of realisation among the staff has come rather late in the
day. It was the excesses of the pilots, the cabin crew and other serving or retired
employees during its heydays that contributed in no mean manner to usher in the
current difficult times of the Airline.
A report in the Telegraph of United Kingdom said that
some of the “staggering” losses of Air India were due to exceptionally generous
staff benefits. Pilots used to stay in five-star hotels in the US and would
commute only in limousines, serving and retired pilot and crew would take
business class seats ahead of paying passengers. There was a time when paying
business class passengers would be shunted off to rival airlines at Air India’s
cost to accommodate the airline’s own staff. Thus, the largesse distributed
after negotiations with the unions practically did the Airline in. On top of
that there were the demands of the politicians, bureaucrats and other VIPs for
special considerations regardless of the costs. One cannot also forget Air
India’s “free companion service” which the supposed VIPs made generous use of.
There are various
views that are being aired regarding the Airline’s future. An overwhelming
section wants its privatisation as otherwise its revival, if attempted, will
set the government back by as much as Rs 52000 crores. But the thinking in the
government is for reviving it, whatever, it takes. The government seemed to
have been of the opinion that it should have an airline which could be used in
times of emergency.
There have been
several instances when the planes of Air India have been used to rescue Indian
citizens from hostile and dangerous conditions in foreign lands. If privatised
the government would have no hold on the airline resulting in situations that
could turn out to be uncomfortable for it. More importantly, politicians
perhaps do not wish to let go of a milch cow that remains at their beck and
call and offers unabashed preferential treatment.
Surviving on the
bailout package of Rs 30000 crore provided by the last UPA government in 2013,
its continuance as a public sector airline seems to be uncertain. Niti Ayog has
suggested outright divestment and privatisation of the airline. Nonetheless,
the government is trying to monetise the Airline’s vast assets in India and
abroad. Only recently, The Pioneer
reported the Airline’s assets sale plan had badly floundered. No bidders came
forward to participate in the auction of the national carrier’s properties at
prime locations in Mumbai, Bengaluru and Thiruvanantapuram. The Airline had
planned to raise around Rs 80 crores from its fixed assets monetisation plan
but this has, for the time being, failed to materialise – a rude setback to the
airline.
The larger question,
however, is how a thriving and reputed airline as Air India slid down to such a
level that it has had to contemplate hiving off of its solid assets to raise a
few crores. Pritish Nandy, a poet, movie maker, painter, an admirer of Air
India as it used to be and a past MP to boot, has put it succinctly in one of
his recent blogs that things started going drastically wrong for the Airline as
competition arrived. While, according to general belief, competition improves
standards and the existing companies prepare themselves to take on the new
arrivals.
Unfortunately, this
did not happen with Air India, not because it was incapable of facing
competition but because it was “strongarmed” by its political masters to cede
ground to its competitors in which they had developed stakes. Nandy, therefore,
comes to that unmistakable conclusion that Air India did not “lie down” and
allowed itself to die; it was “murdered in broad daylight” so that its rivals could
gain. While the air traffic was burgeoning, instead of readying itself to meet
the new traffic surge, it allowed the “Ministry” to give away the traffic to
others. The untenable excuse was “globalisation and an open skies policy”.
This contention finds
an echo in the Neera Radia tapes which the Income Tax department recorded while
snooping on Radia’s Vaishnavi Consultants. The department happened to stumble
upon the murky dealings of the Civil Aviation Ministry. Radia had become privy
to goings on in the Ministry when Praful Patel and his cronies were trying to
get into Air India Rattan Tata to hold and take the blame for the mess they had
made. As Tata used to be Radia’s client, she had researched Air India and had
come to conclusions that painted Praful as the villain.
According to her, the
politicians who were involved in the deals would have sold the airline to its
competitors. She points her fingers at Jet Airways and Kingfisher airline. The
idea was to “strip” its assets and then hand over the Airline to Naresh Goyal
and Vijay Mallya. The bilateral agreements on profitable routes had already
been handed over to a Middle-Eastern airline for which the protagonists raked
in, according to Radia’s estimates (and one has no reason to suspect her judgment),
around $3-4 hundred million.
This is not all. Even
when the Airline was performing at a loss it was made to place orders with
various manufacturers for as many as 111 planes. Radia asks where would they
have flown the planes to, (including Boeing 787 Dreamliners with a capacity to
fly more than 300 passengers) when all the profitable routes had been sold off.
The talk at that time was how could an airline with turnover of just Rs 7000
crore go on an aircraft buying spree costing Rs 70000 crore. Some of these
aircraft have later been sold and taken back on lease in order to pay back the
loans. That does not help much; while the Airline’s finances (as also its
reputation) were ruined those in authority, the villains, walked away with the
kickbacks.
The CBI has now
commenced Preliminary Enquiries against unknown people to investigate purchase
of 111 aircraft for Air India at a cost of Rs 70000 crore; leasing large number
of aircraft without proper justifications; and handing over of profit-making
routes to foreign private airlines.
All these
investigations might take a few months or even years. But the most crucial man
who has never been investigated is Praful Patel, during whose tenure
irreparable damage was done to the Airline. All that may eventually take place
in God’s own time but in the meantime one must celebrate the government’s
decision. ---INFA
(Copyright, India
News & Feature Alliance)
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