The Descent of Air India (14 page)

The IPG was forced to seek help from other quarters. It approached Sahib Singh Verma, the then labour minister, who, without consulting the management or Shahnawaz Hussain, the then civil aviation minister, appealed to the pilots to withdraw the agitation. This was used by the IPG as a way out of the deadlock without having to lose face with its constituency. They withdrew the strike, citing the minister’s request as their reason for doing so.

In Air India’s history of employee relations, the strike and the way it was handled stands out as a rare example of managerial strength and resolve. Mr Gogoi was firm with the unions, and he was backed by the chairman Mr Paul and a committed leadership team, all of whom worked together towards a common objective.

Credit was due to K. Roy Paul as he had, in fact, brought about a huge change in the airline’s dealings with the ministry. He understood the need of the hour and was able to convey it effectively to the minister. In fact, as a pre-emptive measure, Mr Paul and Mr Hussain had taken the requisite precaution of meeting L. K. Advani, who was then deputy prime minister, before taking the tough stand against the agitating pilots. This was done to ensure that no pressure was mounted on the management to renege on its stated position. He knew how to hold his people together and consulted them at every stage. In fact, when a parliamentary committee visited the airline soon afterwards, Mr Gogoi deputed the then head of the HR department, A. N. K. Kaimal, and me to brief its prominent members at the hotel prior to the meeting. The result—the parliamentary committee members formally complimented the management for its tough stance in the meeting that followed. The management’s firm stand thus not only paid off but also had a salutary effect; for some time after the SARS agitation, neither the pilots nor any union dared to go on strike. With industrial peace, an environment in which to move forward was created.

INNOVATION, INITIATIVE AND A STEP FORWARD

Sunil Arora took over from Mr Gogoi. He followed through with some of the decisions taken during the Gogoi–Paul years and took several steps to help Air India deal with the changing marketplace. Consider, for example, the setting up of the Air India Airport Transport Services Limited (AIATSL), a subsidiary of Air India, in 2003. It was meant to provide ground handling services to foreign airlines at various Indian airports, which form an integral and lucrative part of the business of most airline operators. It was the same for Air India, especially because in the early years, there had been no other airline or company authorised to provide the ground handling services in India. However, when the sector was opened up, the government decided to allow at least three service providers at each airport. The new players were more aggressive with rates and the service offered, and faced with competition Air India had to change.

The first step was to offer competitive rates; the private ground handling companies were offering the same service at a lower rate to the foreign airlines. It was difficult for Air India to do the same because its operational expenses were higher. The private companies also had an edge in terms of the service being offered and employed younger and more efficient ground handling staff. In contrast, Air India was saddled with a huge workforce and inefficient work practices. The ground staff were unionised, belonged to an older age group, and drew a hefty salary as a result of wage agreements that were heavily in their favour. The members of Air India’s ground handling staff were also extremely rigid when it came to the number of hours that they worked for in a week and were unwilling to consider improving the productivity parameters.

On paper, there was nothing to stop us from hiring fresh recruits exclusively for the ground handling business, but the government had imposed a recruitment freeze at Air India. The airline was not even filling up positions that had fallen vacant due to retirement. As a result, whenever there was a need to augment manpower at the airport, surplus staff from non-operational departments, like medical, finance and commercial, were redeployed and assigned airport duties. It did not matter whether they had the requisite aptitude. Naturally, this impacted the quality of service offered. Soon, Air India began losing out to the private ground handling companies and faced the threat of a lucrative business opportunity drying up.

Air India tried to appease the foreign airlines by diverting staff from its own flights. This meant compromising on the service offered to its own passengers. And the airline ended up with disgruntled fliers on the one hand and irate foreign airlines on the other. It was a lose–lose situation all around, and Air India was struggling to find a way out.

AIATSL presented itself as a solution. The idea was conceived during the Paul–Gogoi regime and executed when Sunil Arora was at the helm. The big difference from the way things had been conducted in the past was that Mr Arora did not turn down the suggestion simply because it had come from his predecessor. He saw merit in the idea and took it forward. And he moved with great speed, which was a welcome change from the way things were run at Air India, where decisions took interminably long to move from the stage of ideation to that of proposal and finally to that of execution. Unfortunately, after Mr Arora was moved out of Air India, a AIATSL was not allowed to function in Mumbai by the Air India Employees’ Guild. The new hires were not allowed into the airport premises. And as a consequence, the airline lost several contracts, which caused immense damage in terms of revenues and reputation.

Mr Arora also took a series of decisions that helped the airline cut costs and improve its efficiency. But what proved to be his biggest contribution was the change he brought about in the airline’s work ethic. He discouraged the sycophantic culture that had been the hallmark of the regimens of a few former chairmen and managing directors, encouraged participation in the decision-making process and motivated his team to work towards a speedy abolition of Air India’s problems.

Aware of the airline’s rapidly dwindling resources, Mr Arora focused keenly on revenue generation. He tapped into new and unexplored avenues and exploited those that the airline had hitherto neglected to shore up its earnings. The following example illustrates the hawk eye he kept on the issue: In 2002, Air India introduced new flights to New Jersey. Even though route profitability, assessed to justify the flight introduction, had taken into consideration revenue from the carriage of cargo, the airline had earned nothing from it for nearly a year after the service was launched. None had looked into the problem. Sunil Arora sought an explanation. The question was: ‘Why was zero revenue being generated from a route that held out the promise of significant earnings?’This led to a chain of enquiries; the commercial director asked the regional director, who, in turn, asked the regional manager, but there was no answer. Finally, Gure Benegal, the cargo manager, pointed to the real reason. A team of security officers from Mumbai had visited New Jersey’s Newark Liberty International Airport and, after surveying the area, said that Air India required a separate cargo-handling facility at the warehouse under the airline’s security rules. Instead of bringing this to the notice of the agent (Signature Flight Support Corporation), the cargo manager and the security manager decided to put the cargo carriage on hold. Even though the regional director, regional manager and cargo manager visited the New Jersey airport several times thereafter, and even though the system provided for a monthly analysis of performance, with an appalling lack of concern for the resultant loss of business, they ignored the problem. Mr Arora was livid; to resolve the issue, he set up a team, which met the handling agents and apprised them of the security requirements. The representatives of Signature were amused. They asked what had kept the airline silent for a year after the problem had been identified. It did not take them long to provide a separate enclosure for Air India’s cargo and in no time at all, the cargo business began generating revenue. The tragedy was that without Mr Arora’s intervention, the problem would have festered and the airline would have continued to lose out on potential revenue.

In the five months that he spent with Air India, Mr Arora brought costs under control, appointed people to positions that had lain vacant for months, and set in place—for the first time in the airline’s history— parameters to assess employees’ performance. For instance, when the Commercial Department approached him for the appointment of a dedicated person in charge of the sale of first class seats in Frankfurt, he obliged without any delay, but laid down stringent sale targets to ensure that the incumbent generated enough revenue to at least cover the compensation paid to him. In the end, the appointment did not take place because while the commercial director in Mumbai wanted to appoint a person of his choice, the manager at Frankfurt had shortlisted someone else!

Mr Arora was also resistant to political pressure. This was evident from the way he handled the demand for the reinstatement of Captain Vikrant Sansare, the dismissed general secretary of the IPG. Captain Sansare had been dismissed for his role in the SARS agitation, but he had approached the Shiv Sena to help him get back his job. Sanjay Nirupam, then a Shiv Sena leader but now an MP from the Indian National Congress, called Mr Arora to plead Captain Sansare’s case. I happened to be with him at the time and, as the director of the HR department, volunteered to meet Mr Nirupam on behalf of the airline. Mr Arora agreed, and I met him for about an hour, taking him through the facts of the case in detail. Mr Nirupam asked me to come back and restate the position in Captain Sansare’s presence. When I landed up the next day at Mr Nirupam’s office, Captain Sansare was asked to give his side of the story. I pointed out several discrepancies and Mr Nirupam was convinced with my version. He asked me what it would take to give Captain Sansare his job back. I said that all he had to do was offer an unqualified apology to the airline. But he refused. To Mr Nirupam’s and the Shiv Sena’s credit, we never heard from them after that.

Conscious of the fact that the aviation market was expanding and Air India had to expand its fleet to protect its market share, Mr Arora fast-tracked Air India’s fleet expansion. He asked the Techno-Economic-cum-Negotiating Committee to go ahead with the selection of new aircraft. The board, with Mr Paul still as chairman, approved the proposal for the purchase of 28 aircraft—10 long-haul A340 aircraft and 18 short-haul B 737-800 aircraft. In retrospect, I am convinced that if the order had been maintained at this level instead of being increased manifold as was subsequently done, Air India would have steered clear of the financial mess it is in today.

DASHED HOPES AND EXPECTATIONS

I was appointed as the head of the HR department, effective 1 October 2003, by Mr Arora. Even though I had acquired a reputation for not yielding ground to the unions and had earlier been transferred at least once at the behest of the cabin crew union, Mr Arora did not let these issues come in the way of his trust in my abilities. I was thus able to view him from extremely close quarters and was impressed with the speed and clarity with which he took decisions. For instance, we were faced with an acute shortage of ground handling staff at Delhi’s Indira Gandhi International Airport and when Mr Arora was told about the problem, he summoned the Delhi airport general manager D. S. Kohli to Mumbai. We heard him out and at the end of the day, after quick back-of-the-envelope calculations on the costs and revenue implications of our decision, sent him back with a sanction for 400 new recruits for ground handling services.

Soon after I took over the portfolio, I discussed the possibility of setting up a new wage-and-emolument package for new crew members. This was approved even though the department was halfway through the induction process. The new package had clauses that benchmarked employee productivity against that of other airlines and set down a set of basic eligibility standards for cabin crew. In addition, employees’ performances were to be reviewed every five years. The terms of appointment had been made as rigid as those of private airlines. I was convinced that this was the way forward and if only this had also been done for the new pilots being recruited at the time, the story of Air India would have been a different one altogether.

Air India was also short of talent and was struggling to find the right people to head its senior and mid-level positions, a problem made even more acute by the burgeoning competition. Having spent more than three years at Indian Airlines, Mr Arora understood how this could hurt the company’s future. He approved setting up a corporate cadre scheme. This effectively created a special channel for recruitment and career progression, to be governed by a separate pay structure. The new scheme yielded results and quite a few MBAs from the Indian Institutes of Management and other premier management institutions did join Air India. But many candidates left within a few months of joining the airline, unable to deal with the stifling work environment and the frequently changing leadership. A few years after it was introduced, the corporate cadre scheme was abandoned.

It was around this time that I broached the possibility of bringing expatriate pilots into Air India. We had been in the business of flying for over six decades and had traditionally recruited co-pilots who were put through an extremely effective in-house training facility and gradually trained to become commanders. The airline was well served by the system when it was expanding its fleet at an average pace of no more than one or two aircraft a year. But when it began to grow more rapidly and induct leased aircraft, the need for trained pilots became acute. We were facing a situation where the Commercial Department wanted to introduce new flights and routes but the Operations Department regretted its inability to service the flights for want of adequate pilots.

Accepting the plea of the Operations Department that it could not service the flights due to a lack of adequate pilots would have been suicidal because the Ministry of Civil Aviation was, at that time, liberally granting bilateral rights to foreign carriers. The rulebook says that a co-pilot can be inducted and deployed on an aircraft six months after the training programme. However, a commander must have a minimum of 2,500 flying hours on that particular aircraft. Since we were inducting B777s for the first time and no Indian carrier had this aircraft, this was another reason for our need to look at expatriate commanders. We initiated the process while simultaneously launching a recruitment drive for co-pilots within the country. Fortunately, the union had no objection as long as their members’ emoluments were protected.