The Descent of Air India (10 page)

Even though the objective of the PLI scheme was noble, it lent itself to misuse because it was weakly structured and poorly administered. Employees managed to generate a favourable reading of their performance without actually improving it. For instance, aircraft were forced out of the base station with ‘go snags’, so that the despatch availability was high, resulting in no loss of PLI for the officers in the Engineering Department. As a result, Air India aircraft had to be often grounded in foreign stations due to technical difficulties. This resulted in huge losses incurred in transferring passengers to other airlines and providing them with overnight accommodation in hotels, apart from the loss in reputation and flier loyalty that such incidents inevitably led to. Similarly, since on-time performance was a consideration for PLI for the Ground Services Division, they would compromise on the loading and tagging of baggage on connecting flights. The airline ended up paying huge amounts as ex gratia payments to passengers for misplaced baggage. There are instances when the all passengers on a flight have had to be compensated for erroneous baggage tagging procedures.

The Cargo Department was no different. In order to fulfil the on-time performance criteria, officials would leave cargo behind so that the flight could keep to its schedule. On occasion, the cargo meant for a particular station would not be offloaded so that the on-time criterion was met—it did not concern the employees or the senior management that such actions resulted in enhanced consumption of fuel and loss of revenue.

Besides, the PLI concept was poorly implemented. The original agreement with unions had a provision for review of performance parameters. No such review was conducted by the HR Department. In fact, there was a stage during which even as losses were mounting and Air India’s performance continued to be way below the mark on key indicators, the quantum of PLI being doled out was going up.

It wasn’t just the Commercial and HR departments that had let down the company during this critical period. The engineers failed to provide the level of aircraft utilisation that other rookie airlines were able to manage; the Operations Department failed to look beyond the usual and its officials resigned themselves to a scarcity of pilots that hampered the airline’s expansion. Other Indian carriers were inducting expatriate pilots for steady growth, but Air India had failed to consider the option. The Finance Department did not deem it necessary to exercise its authority, allowing expenditure to rise even when revenues were under threat. The In-flight Services Department kept basking in past glory even as new service standards were set by the South-East Asian and Gulf carriers and the Information Technology Department stuck to antiquated technologies and failed to innovate to make systems customer-friendly.

As I spent more time understanding the airline and the people who ran it, I realised that every department of Air India was being put in the dock by its own employees. Air India’s weak spot lay in the people who were in charge of running it. And thus, as the environment got tougher and the competition more aggressive, the airline was brought down by those who were entrusted with its care.

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http://www.orientaviation.com/storage/PDF/OA_May10/OAMag_V17N04_p10_Cover Story.pdf

CHAPTER FOUR

all the government’s men

IN JULY 1932, more than a decade before India won its independence from the British, J. R. D. Tata floated the country’s first aviation company and called it Tata Airlines. The same year, on 15 October 1932, Mr Tata, a passionate flier himself, flew a single-engine de Havilland Puss Moth carrying airmail from Karachi’s Drigh Road Aerodrome to Bombay’s Juhu Airstrip via Ahmedabad. The division grew under Mr Tata’s care and Tata Airlines became a public limited company in July 1946; it was renamed ‘Air-India’. Two years later in 1948 (a year after India became a free nation), the Government of India acquired a 49 per cent equity stake—with an option to purchase an additional two per cent—in Air-India, rebranded it as ‘Air India International’ and gave it the status of India’s designated national carrier for international travel. In 1953, it was nationalised and the government acquired a 100 per cent equity stake in the airline.

J. R. D. Tata was apprehensive about the change in ownership. He feared that Air India would lose its independence and end up as a department under the Ministry of Communications (there was no ministry for civil aviation at that time). However, Pandit Jawaharlal Nehru, India’s first prime minister, allayed Mr Tata’s fears and assured him that Air India would function as it always had. He also asked Mr Tata to continue to steer the airline as its chairman. Pandit Nehru kept his promise and J. R. D. Tata stayed on. On 8 June 1962 the airline changed its name from Air India International to Air India and that is how we know it even today.

Air India went on to earn an enviable reputation among fliers and the rest of the industry. As an institution that straddled two periods—pre-and post-independence and pre- and post-J. R. D. Tata—Air India carried forward a legacy that few other airline companies across the world could boast of. Led by a professional team of executives who were handpicked by Mr Tata and schooled under his guidance, the airline created a perfect mix of private enterprise and social commitment to develop a management style that was both inspirational and committed to customer delight. For instance, Air India, in order to ensure that its first class passengers were treated in the true traditions of Indian hospitality, created a lounge in the upper deck of its 747-200 aircraft when they were inducted in early 1970s—something that no airline had ever done. It cared for the passengers and that was reflected in the quality of its service.

The airline’s subsequent years, however, have been rather a series of unfortunate events. After J. R. D. Tata was unceremoniously removed from chairmanship in 1978, the government steadily increased its involvement in the airline’s management. Air India, just as J. R. D. Tata had feared, became an extension of the Ministry of Civil Aviation, with bureaucrats and ministers interfering in the airline’s day-to-day operations and in the appointment of its chairmen and managing directors, constitution of the board and other such affairs.

In pursuit of political goals, the government failed to recognise all that had gone into making Air India a great airline. It discarded many of the management practices and traditions that had given it an edge in the past. As a result, its reputation among fliers suffered, as did its financial health.

At the organisational level, the biggest casualty was the quality of the airline’s leadership. In the initial years, visionary leadership played a huge role in defining the character of the airline and benchmarking it against the best in the business. But with the government dictating who would be the chairman or the managing director or both and for how long, the airline was left at the mercy of people who cared little for the airline and more for their political connections.

In Air India, increasing governmental control has meant that chairmen have been appointed by and have been accountable to the Ministry of Civil Aviation, which also decides on the structure of the leadership team, their tenures and the composition of the board. The government has also shown a remarkable propensity to experiment with the positions and tenures of the people appointed to various senior positions. The posts of chairman and managing director have, for instance, been combined and split as and when convenient. Time spent in the chairman’s chair has been cut and lengthened at will, and many a time the government has imposed policy decisions on the airline without taking its stakeholders into confidence. All of this has had a profound impact on the way the airline has been run and managed.

AN INSECURE PERCH

Over the years Air India has had numerous chairmen and managing directors. It has been led by as many as 13 people in a span of just over two decades, with each chairman or managing director getting an average of less than two years in the position since 1989, the year I joined. Among those who have helmed the airline in this period are: Rajan Jetley and Y. C. Deveshwar from the corporate sector; Brijesh Kumar, Sunil Arora, V. Thulasidas, Raghu Menon, E. K. Bharat Bhushan, Arvind Jadhav and the current incumbent Rohit Nandan from the bureaucracy; and people such as Subhash Gupte, Captain D. S. Mathur, M. P. Mascarenhas and J. N. Gogoi from within Air India.

Some of the appointees to the post were either stop-gap arrangements (some were allowed to stay for barely a week) or appointed by default when there was no one else to fill the post. Interestingly, even though all the CEOs were appointed by the government, few were allowed to last their full term. It was as if every chairman had fallen short or fallen afoul of the ministry’s expectations. One can understand that the government erred in some of its appointments, but how could they have gone wrong each time?

In any company, private or public, repeated failure to select the right leader would have led to a change in the way chairmen were appointed, or the people entrusted with the task would have been asked for an explanation. In the case of Air India, nothing happened. No action was taken against the people responsible for the appointment of chairmen since they were—and still are—chosen by a faceless ministry. Nor did the airline go for an alternative recruitment process. It could have, for instance, entrusted the task to a selection committee of professionals, but that never quite happened. As a result, a pall of uncertainty was cast over the post of chairman in Air India as few wanted to take on the responsibility. This has led to a situation where there are no takers for what once used to be a coveted management position. Who would want to join an airline that could deflagrate any day? It is alleged by those in the airline that even the current incumbent, Rohit Nandan, was reluctant to take on the assignment.

This insecurity of tenure has also led to indecisive and weak chairmen. People feared retribution and most chairmen, even if they had the requisite competence, preferred to be subservient to the government’s demands. None was willing to stand up to the politicians and bureaucrats. Thus, Air India’s interests were, more often than not, ignored and individual priorities took precedence over the organisation’s requirements.

The game of musical chairs that the government has played with the chairman’s post has had another fallout. The balance of power in Air India has shifted away from Mumbai, where it was once headquartered, to New Delhi. This has been more than a geographical shift—the airline’s operation centre is Mumbai and yet, its chairmen began spending more and more time in the capital city, away from the organisation but close to the political power centres. This, in turn, slowed down the airline, impacted efficiency and allowed the ministry to wield a greater and more direct control over the airline.

In the beginning, the chairmen were based in Mumbai and would travel to the capital for occasional meetings. Gradually, the trend changed, and the first to make the shift was V. Thulasidas. Other chairmen followed suit, and finally, in February 2013 it seemed that the airline gave up the charade of maintaining Mumbai as its headquarters and announced a formal shift to New Delhi. How this will impact the airline will be clear to us in the years to come.

The government could also never make up its mind on whether the posts of chairman and managing director should be rolled into one or should be assigned to two separate individuals. As a result, in addition to the those named earlier, Air India also had corporate stalwarts, such as Ratan Tata and Russi Modi, and senior bureaucrats like K. Padmanabiah, P. C. Sen, P. V. Jayakrishnan, Ravindra Gupta, A. H. Jung and K. Roy Paul functioning as chairmen. Barring P. C. Sen, who held the position of chairman because he was the chairman and managing director of Indian Airlines, the other bureaucrats assigned to the position were secretaries in the Ministry of Civil Aviation and held concurrent charge of the airline. In fact, the appointment of A. H. Jung as Secretary of the Ministry of Civil Aviation and his consequent appointment as the chairman of Air India were unusual because he did not belong to the IAS cadre but was an officer in the Indian Accounts and Audit Service. One could ignore these anomalies in the appointment process if the ministry had extended a rationale for its behaviour, but there was none forthcoming. Also, while some chairmen worked well with their managing directors, others were in perpetual conflict, adding another layer to the beleaguered airline’s troubled leadership history.

FLAWED CHOICES

The government was also inconsistent in the way it appointed its bureaucrats to the position of chairman. The position of chairman of Air India was on par with that of an additional secretary in the Ministry of Civil Aviation. But this was only on paper. The selectors made no distinction between an additional secretary and a joint secretary as part of the candidate’s eligibility criteria. The choice depended more on who the minister was comfortable with or wanted to keep away. This impacted the relationship that the airline had with its owner because it was found that seniority levels of the bureaucrats chosen for the post determined the authority they wielded and the influence they had on policy decisions that affected the airline.

While most bureaucrats who have occupied the chair have been joint secretaries, in the case of Mr Thulasidas, the eligibility criterion for the position was changed to that of additional secretary. It was a one-off instance because since then, joint secretaries have been routinely appointed to the position. A similar flip-flop on eligibility criteria was visible with respect to the Air India board. The government was, in its initial years, represented by the Secretary in the Ministry of Civil Aviation, who was expected to have a wider understanding of the aviation sector, but in the later years, the representatives have been from various levels within the bureaucracy, with not everyone being familiar with the business or with Air India.