Let Air India fade away like HMT and IDPL

Air India lost Rs 5,000 crore last year, and is surviving on huge government handouts. Opposition politicians are critical, but reject any cut in its bloated staff. Across the world, airlines are reducing staff in the recession. But Air India staff—labour aristocrats paid several times the average Indian wage–are unsackable. Instead Civil Aviation Minister Praful Patel proposes to hive off surplus staff to some new corporations. Problem: the new corporations, with the same faulty staff and culture, may suffer the same fate as Air India.

Patel says, rightly, that airlines across the world have been hammered by the recession. Jet and Kingfisher have big reputations, but are also in the red.

When the recession struck last year, Jet proposed cutting its staff by 1,900, and Kingfisher too. But politicians, trade unions and the media created a ruckus. Jet and Kingfisher were not allowed to slim down like airlines across the world: instead they were allowed to pile up unpaid fuel bills.

The recession is estimated to have cost 1.5 million jobs—the left says 15 million—in labour-intensive industries like textiles. Our labour laws protect unionised workers from retrenchment, but low-paid casual workers have been laid off. Politicians murmur sympathy for the millions of casual workers laid off, but their outrage is reserved for any sacking of the labour aristocracy, such as the staff of Air India or Jet.

Patel is being criticized for various reasons, some legitimate and others not. Air India has never been viewed by politicians as a commercial venture. Rather, it has been a vehicle for serving VIPs and satisfying political pressures to fly to certain destinations, whether commercial or not. Plane purchases have been dogged by allegations of kickbacks. Naturally, Air India managers are not focused on efficiency or profitability. This is one reason why the merger of Indian Airlines and Air India has failed.

In 2004, Air India increased orders for new planes from 24 to 68. It had sales of Rs 7,000 crore but placed orders for aircraft worth Rs 35,000 crore, at a time of increasing competition. Instead of selling surplus planes and canceling orders, Patel insists that new planes are needed to replace old ones. Phooey, say critics, who smell something rotten in the purchase deals.

Patel has been lambasted for signing bilateral deals with several countries to expand international flights. This, say critics, has enabled foreign airlines to greatly improve their market share at the expense of Air India.

On this count, we should actually congratulate Patel for bringing real competition after decades into air traffic. International competition has been buttressed by competition from private sector airlines like Jet and Kingfisher. This new competition has greatly increased passenger choice and convenience, reduced fares, and improved quality. Passengers have never had it so good. If millions of passengers have benefited while Air India has wilted, we should cheer, not complain.

A good Civil Aviation Minister must maximize the interest of air passengers, not public sector behemoths. Praful Patel has done so, and needs full support in this respect. He must hold steadfast to his excellent policy of liberalizing the skies. If this means a sliding market share for Air India, so be it.

Some people will berate me for trying to bury what is widely called the national carrier. But the very concept of a national carrier dates from the bad old days of government monopoly when only a handful of airlines were allowed to fly internationally. Now that we have competition, we have no reason to call a public sector carrier the national carrier. Competition may indeed throw up one or more national champions, but this will arise from top performance in serving passengers, not in catering to VIPs or political pressures. Passengers might one day prove with their wallets that Jet is the national airline—it has an international reputation for quality, and could build on this. But passengers view Air India as a national disgrace, not a national champion. The proof lies in Air India’s empty seats.

One way forward is to privatise Air India, as was done earlier to British Airways, Lufthansa and other “national carriers.” If this proves politically impossible, then Air India should be allowed to lose market share and slide gently into insignificance. That after all has been the fate of inefficient public sector corporation like Hindustan Machine Tools, Indian Drugs and Pharmaceuticals Ltd, and Heavy Engineering Corporation. Once called national champions, they have faded away, and India is the better for it. Let Air India go the same way.

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