The Descent of Air India (18 page)

The upcoming agreements presented an opportunity to bring the airline in line with the new requirements in terms of service, cost, revenue enhancement schemes and employee productivity. It could have been used to build a pay structure that helped reflect Air India’s ability to bear increased expenditure—one that allowed for greater flexibility in terms of the hours of work, etc. All in all, the wage agreement that was due to be signed in 2004–05 could have become a platform for the airline to rebrand itself as a customer-friendly organisation. It offered Air India a chance to set its house in order—its last chance, perhaps, to do so given that an agreement was signed only once every ten years.

Air India’s experience with agreements was not a pleasant one. The process had been hijacked by the union leaders who used it as an opportunity to flex their muscles. They would bargain for the enhancement of existing perks, introduction of new allowances, concessions in work assignments, higher pay scales and other such benefits without making any commensurate commitment regarding work ethics and productivity. There was no consideration of the airline’s ability to pay. The management was weak, and none was keen to take on the might of the unions. All agreements, however, did have a few clauses where unions conceded a few of the management’s demands so as to give the document a semblance of respectability.

Signing an agreement was not only a tortuous affair but also did not guarantee that the productivity-linked clauses in the agreement would be honoured. If the management tried to implement these conditions, it would be met with a barrage of protests from the union leaders, who paid no attention to the fact that these were part of the agreement. For instance, even though the terms of the agreement with the ground unions that had been signed in the early 1990s and again in 2005 clearly stated that all attendance-related allowances would be paid on the basis of computerised attendance systems, the unions blocked its implementation. An automated attendance system would have helped the airline crack down on those who were manipulating the system to claim undue benefits, but the unions refused to let that happen even after agreeing to make the switch during the wage negotiations. The same was true with regard to weight checks and security checks for the cabin crew, and there are endless such examples that one can cite. The point is that the airline had suffered in the past on account of agreements being one-sided and poorly implemented. It had led to a situation where employees were being paid more for less work, while productivity and efficiency at the workplace was sacrificed.

In all of this, the HR department had played a rather diffident role. It had allowed departmental loyalties to dominate the process and caved in to vested interests. The departments, in turn, were not able to withstand the pressure of the unionised workforce and failed to hold up the management’s point of view in the negotiations. Thus, we had a situation where the engineers’ union had the tacit approval of the engineering department and the pilots’ union had the support of the operations department and so on. The unions would enforce their end of the bargain through a battery of strong-arm tactics, but there was no one to ensure that the management’s terms were met. This had taken a toll on the airline and one of the consequences of the skewed wage negotiation process was that the salary bill had ballooned by 30 per cent over a ten-year period without a corresponding increase in productivity or any improvement in work practices.

It had been clear to me way back in 1997, after being in the company for about eight years and getting increasingly frustrated at the way wage agreements were being signed and executed, that there was an urgent need for reform. I had written to the then managing director M.P. Mascarenhas a letter titled ‘Implementation of wage agreements’. Apart from the flaws in the process, I was particularly agitated about the productivity-linked incentive (PLI) that had been introduced by his predecessor Brijesh Kumar, which had cast a huge financial liability on the airline without any corresponding benefits coming its way. Air India had ended the previous fiscal year with its highest ever loss of
297 crore in its history and that too after accounting for
94 crore of forex reserves. I said in my letter to Mr Mascarenhas dated 13 October 1997 that given its poor record in implementing wage agreements, the management should consider putting together a team that would be in charge of enforcing the clauses beneficial to the management in all the previous agreements. I also said that productivity-linked agreements had imposed quite a burden on the airline in the past two years. These agreements were supposed to have been self-financed with the payouts to employees being balanced out by gains through increased productivity, cost savings, etc. However while the unions had ensured the immediate implementation of clauses that were beneficial to them, the management had been unable to push through the requisite changes, either because the departments lacked the will to enforce the agreement or because unions were reluctant to honour their end of the contract. I suggested that we set up a committee of directors for overseeing the implementation of all agreements as it would not only ensure that departmental heads who were unable to withstand the unions’ pressure tactics were protected but would also make them accountable. I pointed out, for good measure, that many of the departmental heads had, in the past, preferred taking a soft line on account of their own departmental loyalties or personal agendas.

Unfortunately, Air India’s management took no action. If today the airline is reeling under heavy losses and is unable to offer a competitive product, it is due to the cavalier attitude of successive managements and their inability to enforce agreements once signed. As the time for discussions for the next wage agreement drew close I wrote to the general manager in charge of industrial relations (V. A. Ferreira) as well as the chairman and managing director. In my letter dated 16 July 2004, I urged Mr Ferreira to ensure that the restrictive practices in the agreements were eliminated to improve productivity; unwarranted payments were withdrawn and earnings were made commensurate with the skills and matched the payments for similar jobs in companies of corresponding size in India and, if compared with international airlines for some categories of employees, were related to the Purchasing Index; differences in earnings of various categories of employees were made more realistic; and so on. In addition, I wrote that the management should be allowed to regain its absolute right to introduce new practices as followed by other international airlines, be free to outsource non-core jobs, and so on.

I was keen that we initiate the strategy-planning exercise and therefore emphasised on the same. Mr Thulasidas, who was the chairman at the time, endorsed the criticality of the agreement in a letter to me where he said that despite the misgivings of the Ministry of Civil Aviation, he had prevailed upon them to understand the need to get the agreement ready and signed. The ministry had been reluctant to accord its approval for the initiation of talks on a fresh agreement because Air India did not have the financial capability to bear the additional burden. When the airline’s leadership had approached the ministry for permission to initiate the negotiation process, the ministry had cited the rulebook, which stated that a public sector unit should have been in the black for three years in a row before it could enter into a new agreement—this was clearly not the case with Air India.

Mr Thulasidas wrote: ‘Such productivity improvements have to be negotiated and agreed with the employees unions for which discussions on their Charter of Demands is essential.’ Further, he added: ‘This package is to be worked out and presented to the ministry by 29 July 2004, when both the minister and secretary will be in Mumbai to attend the JRD Tata Centenary celebrations. It will be useful to associate a HR consultant while drawing up this productivity package on a realistic basis taking into account the productivity norms prevailing in the company and those prevailing in the industry as a whole, both in India and abroad. I had issued an order constituting a group of officers to examine the need for such a consultant after a presentation was given by M/s Nihilent Technologies. This process may have to be expedited.’

Mr Thulasidas did, at least on paper, express his understanding of the situation. The Ministry of Civil Aviation was also on board because they had clearly opined that Air India had been making operating losses.

LOST IN CONFRONTATION

The situation was grim, and the way I read it, my options were limited. Air India had to get back on its feet and there were only two ways to do that—one way was to enhance its revenues through improved productivity and cost efficiency and the second was to curb expenditures. I decided to act without delay.

One of the changes that we implemented was with respect to the deployment of cabin crew. At Air India, an understanding had been reached with the cabin crew union that if a flight took off without the minimum crew complement, the members on-board would be paid an extra compensation. As a result, the company was paying out an additional amount of close to USD700–1,000 per crew member on an India–US–India flight because flights were operating with 4–5 crew short of the requisite number. I decided to fly the full crew complement by augmenting the strength with new crew members who were trained in in-flight service but awaiting training for flight safety procedures. The condition was that flight safety would be the responsibility of those with the requisite training and that their number on a flight would exceed the number of doors in the aircraft. I sought the approval of the Director General of Civil Aviation (DGCA) for this, and upon obtaining the go-ahead, implemented it. This angered many of the old timers in the Air India Cabin Crew Association (AICCA) because they lost out on the additional compensation. The AICCA was further riled by the company’s decision to reject its demand for an additional payment of USD362 per crew member for operating the Frankfurt–Los Angeles– Frankfurt sector because it exceeded 10 hours of flight time. We decided to operate the flights with the executive crew from the management cadre who were not members of the union, which the AICCA believed was unfair even though it saved the organisation a substantial sum of money and helped add a new destination to the network.

It was critical for us to induct people into the two subsidiaries, Air India Transport Services Ltd (AIATSL) and Air India Charters Ltd (AICL), as it could help us retain business worth crores of rupees in the form of ground handling contracts that Air India had signed with foreign airlines. Besides, bringing in people specifically for these functions could free up existing staff for the airline’s regular flight-handling duties. It was meant to improve services and reduce the excessive and avoidable payment of overtime to existing staff members. The unions, however, saw it as an attempt to deny them their dues. They were perhaps intimidated by my refusal to bow to their militant tactics and worried about the role that I would play in the forthcoming wage agreement negotiations, given that some of the general managers of the department had shared my letters requesting a strategy meeting for the same with them. They wrote to Mr Thulasidas in February 2004 and Praful Patel in July 2004, seeking my removal from the HR department. Their letter stated, ‘In the recent past, there has been a total breakdown of industrial relations in Air India due to anti-labour, anti-union attitude and conduct of director-HRD, Mr Jitendra Bhargava. There appears to be a systematic and a sustained campaign to decimate all the unions. The DHRD has also publicly declared his intentions to finish all the Unions/Associations/Guilds of Air India. Sadly, this situation has only worsened by the inaction of the chairman and managing director who has preferred to let the DHRD resort to back seat driving of our company. This despite our drawing his attention to the disastrous consequences of DHRD’s actions from time to time.’They threatened to stop work if I was not removed from my post. The letter was signed by all the six unions, including the then derecognised Indian Pilots’ Guild.

I sent a strong riposte with my comments on various issues that the unions had raised. In my letter to Mr Thulasidas, dated 9 July 2004 I refuted each of their allegations. I wrote that: ‘The letter begins by describing my conduct as anti-labour and anti-union. No instances of anti-labour and anti-union policies, alleged to have been followed by me, have been spelt out. They are perhaps referring to the following actions of mine.