Air India and It’s Disinvestment – Analysing The Issue From A Historic Perspective

Air india (AI) is in the limelight once again as the efforts of the government of India to privatize it are beginning to show results. As per media reports,Tata sons and a startup based in USA have shown interest in acquiring it.So what is the best available solution to this mega problem confronting the airline?

Let us analyze the issue from a historical perspective.

AI was founded by the great JRD Tata as Tata airlines in 1932.After World war two, it became a public limited company and was renamed Air India.In 1947,,after independence the GOI acquired 49% of is share in 1948.Finally in 1953 the Goi passed the Air corporation Act and purchased a majority stake in the airline from Tata sons but allowed JRD Tata to continue as Chairman till 1977.

Very high standards were maintained during his tenure as he was personally involved in selection of in flight crew,menus and interior decoration of the aircraft.It was because of his untiring efforts, AI always featured as one of the best airlines in the world.
It was after his unceremonious exit that the standards began to decline primarily because it was being run by babus and ‘yes men’ of the government in power.However,there were a few good CMDs under whom the airline flourished but only for a limited period.The worst period was from 2005 onwards and the terminal decline started from 2007 when it was merged with Indian airlines.

The present status is pathetic as the liabilities and provisions including short term loans and trade payables are a whopping Rs 70686 crores and net debit of Rs 58255 crores at the end of March, 2019.The GOI has however come to the rescue and has transferred Rs 29464 crores of this debit from AI to a government owned Special Purpose Vehicle, Air India Assets holding company limited.

It is in this context we would like to analyze the suitable candidate for taking over the airline. Tata sons are in a fairly good financial position and have a very good administrative setup.They have sufficient experience in airline industry with joint ventures with Air Asia and Singapore airlines in India. But the biggest plus is the fact that the airline was originally owned by them and they understand the work culture.

As and when a decision is taken and hopefully, it would be Tata Sons who would acquire it then we could see all round improvements in the functioning of the airline.

Tata sons need o be careful of a few pitfalls after acquiring AI and the same are listed as under:

1. There are a lots of peripheral departments in the airline and they should be done away forthwith and manpower be reduced.If need be,the work can be outsourced.

2. The new owners should be careful not of babus and politicians but of senior yes men/women directors and GMs who were promoted not due to merit but because of seniority and influence.Post merger of the two airlines, the HR department’s gross ineptitude and nexus of unions should be thoroughly scrutinized and adequate measures should be taken to weed out the undesirable officials.

3. There will be jockeying for employment with the new owners as it is hallmark of the presently employed officials.This should be strictly based on merit.

This is a sincere hope that the new owners would strictly avoid pitfalls mentioned above and only then a truly functioning airline would emerge.

Views expressed here are those of Bharat Chaturvedi, Former Executive Director of Air India