The Descent of Air India (12 page)

Lack of corporate experience was also reflected in the way some IAS chairmen conducted board meetings. V. Subramanian, who had questioned the decisions taken on fleet acquisition, when asked as to what distinguished the board meetings of the Indian Airlines from those of Air India, said that while Sunil Arora, also an IAS officer but not cast in the typical bureaucratic mould, conducted the meetings of the Indian Airlines board professionally, V. Thulasidas of Air India acted as ‘His Master’s Voice’. He chose to invoke the ministry’s and the minister’s name often instead of explaining the proposals in the meetings. In October 2004, when Mr Subramanian had asked about the business plan that detailed the type of aircraft, route deployment and route-wise profitability during discussions on the revised fleet plan in the board, Mr Thulasidas is said to have responded by stating, ‘The minister wants it.’ Mr Subramanian countered by asking why the board should not question this since its allegiance was to Air India and not to the minister. He had taken the stand that acquisition proposals should be backed by a proper business plan and could not be considered to be based on an agenda note only. He was supported by Sunil Arora, who was on the board as the CMD of Indian Airlines. The other ministry representative, Raghu Menon, had absented himself. Other members, including Mr Vaghul, who should have raised the red flag from the financial point of view, were silent. As soon as the meeting ended and Mr Subramanian left for the airport to take the flight back to Delhi, Mr Thulasidas, as a matter of routine, briefed Praful Patel about the deliberations. And the government system, better known for its lethargic pace, moved at lightning speed to remove Mr Subramanian. The media was abuzz with talk of his transfer from the civil aviation ministry even before he boarded the flight. He received his order transferring him to the Ministry of Rural Development the following day.

As far as the minutes of the meeting were concerned, Mr Thulasidas chose only to record that the matter of fleet acquisition should be referred to the ministry. The views expressed by Mr Subramanian found no mention in the recording of the proceedings. Mr Subramanian, on his part, saw no point in sending a rejoinder or amendment since he had, by then, been removed from the directorship of Air India as well as transferred out of the ministry. The abruptness with which he was transferred—and for doing what seemed to be the right thing to do—was naturally a huge blow to the man. Many say that he ought to have protested, but in the environment that prevailed at the time, where the government was keen to keep its allies together and, thus, not willing to anger any partner, Mr Subramanian perhaps felt that it would have been difficult to obtain justice. I could appreciate his plight because every time I was unceremoniously transferred, I had given up the intent to complain since the bureaucrats in charge of the ministry at the time did not show the will or the gumption to act on behalf of the airline and its victimised officials. This was symptomatic of the times when the decay in the Indian bureaucracy was becoming more and more visible to all of us.

Logically, the officials who have functioned as secretaries in the Ministry of Civil Aviation should be the ones held accountable for the mess created in Air India through wrongful selection of candidates. However, instead of being taken to task for dereliction of duty and performing their functions to the detriment of Air India, the ministry, with Mr Praful Patel at the helm, introduced a new post-retirement perquisite in February 2010 entitling all past secretaries at the Ministry of Civil Aviation to get lifetime upgrades for themselves and family members. It defies logic to justify the benefit of free upgrades with no ceiling for all bureaucrats who have been Secretary, Civil Aviation, and their family members.

Compounding the problem of leadership has been the centralised functioning of the airline, which has allowed the incumbent chairman/managing director to take decisions that they deemed to be in the best interests of the airline without seeking the sanction of colleagues. After seeing Rajan Jetley take the decision on corporate identity change in 1989, Captain D. S. Mathur’s agreement with the pilots’ union in 1994 and Brijesh Kumar’s decision on time-bound promotion policy in 1996, all of which have had disastrous consequences on the airline, I wrote to M. P. Mascarhenhas on 14 October 1997. I was keen to bring about greater transparency in decision-making and suggested to Mr Mascarenhas, as he was a managing director from within Air India, that we needed to refine our system so that no CMD could play havoc with the airline. I wrote that there was a need to encourage ‘free and frank participation in meetings’ and ‘a policy should be laid down clearly stipulating that all major decisions which have long term repercussions, impose substantial financial liabilities and are irreversible in character should be first discussed threadbare in the Departmental Heads meetings and only then be presented to the Board for approval’. I further stated that criticism of any such decision should be appended with ‘papers presented to the Board members so that they are aware of various apprehensions and points expressed by the Departmental Heads’ (see
Appendix 5
).

Alas, nothing changed and I feel only the deepest regret at the recent turn of events because if only the management had paid heed and changed their ways, Air India would have been a different organisation. Major decisions on aircraft purchase and the merger would have been better if debated and planned, and instances of unwarranted expenditures which have pushed Air India to the brink of bankruptcy could have been brought under control if moderated or stymied by the senior management. Interestingly, while the whistle-blower policy has today become a buzzword, I had, through this letter, advocated quite the same to embolden officers to speak on policy matters and be assured of protection. I had stated: ‘The draft policy should also provide for a redressal system so that no departmental head has any fear of being penalized for airing views, which, though not to the liking of the incumbent managing director, may be in the Company’s interests’ (see
Appendix 5
).

The way in which the airline was being dragged into a morass by the people who ran it made me question the propriety of governmental control of Air India’s affairs. While the government, as owner, had every right to have a say in the airline’s management, was it prudent to do so? Internationally, governments have moved away from the day-to-day control of their national airlines. Most national carriers start out with a fair share of or complete governmental involvement, which diminishes as the airline expands its network. Also, the airline’s management is entrusted to a professional team of aviation and management experts. In China, the government does assume a large role in management, but it ensures a separation of duties by appointing one chairman for political and governmental affairs and another with commercial responsibility. Air India, on the other hand, has never made such a distinction. Also, many national carriers started out as government enterprises but switched to a private–public partnership model or completely privatised their operations in the 1980s and thereafter. Air India, in contrast, journeyed in reverse from the private to the public sector. Among the early national carriers of Air India’s vintage to go private were: British Airways in 1987, Qantas Airways in 1993 and Air France in 1999. Successful airlines like Emirates, Qatar Airways and Etihad Airways are still government-owned airlines, while a majority stake in Singapore Airlines is held by a government investment vehicle. Governments also hold majority stakes in carriers such as Garuda Indonesia, Malaysia Airlines, Air New Zealand, Thai Airways and Vietnam Airlines and a minority holding (49 per cent) in Turkish Airlines. In all these airlines, the management has, however, been left to professionals.

With Air India repeatedly denied competent leadership by the government at the board and CEO level and the senior management being unequal to its tasks, it became the standard operating procedure for flawed decision-making processes and persistent problems that directly impacted performance to remain unattended. It should come as no surprise therefore to anyone that Air India has been spinning out of control for years now. But the question that we need to ask is whether an airline that started out with promise and achieved the heights of excellence that it did in its initial years should not be considered a national treasure. If so, the people who have driven Air India to the ground should be answerable for the roles they have played in its destruction.

CHAPTER FIVE

a flicker of hope

THROUGH THE DECADE of the 1980s and the 1990s, Air India was grappling with a multitude of problems. It faced a shortage of quality leaders, frequent changes in leadership, declining standards of service and aircraft ambience and restive and unreasonable unions. Passengers were beginning to get disillusioned with the airline, and at a time when the contours of the aviation business were changing, the airline was stuck with weak, ineffective and apathetic leadership. Over time, the state of the airline’s leadership and the quality of its service has worsened and the airline has fallen to newer depths every year. In the midst of all this gloom, 2003 stands out as a refreshingly different year in the airline’s history. It ignited a flicker of hope among all of us who had begun to despair at the state of affairs. The year marked a shift in the airline’s managerial stance as the team that had taken over was assertive, firm and ensured greater cooperation between the departments. It recognised the need for Air India to develop an armoury of responses to the challenges it faced on account of increasing competition and changing consumer behaviour. The management’s ‘
chalta hai
’ attitude appeared to be on its way out.

To be fair, the period 1997–2000 had seen some positive developments too. But the measures initiated by the team during those years were primarily meant to arrest the airline’s downward slide. M. P. Mascarenhas succeeded Brijesh Kumar as managing director on 27 July 1997 and found the airline had run up a loss of almost
400 crore (before adjusting foreign exchange reserves of
94 crore) in the previous fiscal, the highest till then in Air India’s annals. To stem the losses, Mr Mascarenhas took a slew of bold steps such as withdrawal of flights from Frankfurt and Rome, which were heavy loss making sectors; redeployment of the freed aircraft capacity on high revenue and profit generating routes using the airline’s existing bilateral rights, introduction of cost saving measures, reduction in retirement age of employees from 60 to 58 years and so on. By 1999, Air India was back on track making operational profit. He led from the front and was lucky to have had the backing of the board.

This was also the time when the government appeared to be earnest in its attempts to help the airline survive. The Disinvestment Commission to which Air India was one of the first public sector companies to be referred to in 1987 submitted its report in August 1998. The commission after an exhaustive study considered four options for the revival of Air India which were as follows:

1.  The government should immediately provide
1,000 crore as equity for the financial restructuring of the airline, which would raise its paid-up share capital to
1,154 crore.