The Descent of Air India (48 page)

Unfortunately, there is no one who can take up cudgels on behalf of the airline today—politicians are busy looking at their gains; the chairmen are keener on serving out their terms; and ex-Air Indians are focused on their post-retirement benefits concerning free tickets and medical care. The unions, who could have compelled the government to act, have lost all moral authority over the airline, and as for those who are currently employed with Air India, they are focused on receiving their salaries on time instead of the airline’s future. Air India’s future is thus at risk by default and it is fast running out of all other options.

Can Air India or the joint entity of Air India–Indian Airlines change track and turn over a new leaf? My outlook is not optimistic. There has been no sign of change from the management, the ministry, the politicians or the employee unions to indicate that they may be willing to mend their ways. It may well be the case that all those who are adamant about getting their way with the airline may not have an airline to hold on to at all. Jim Collins, an author of best-sellers, such as
Built to Last
,
Good to Great
and
How The Mighty Fall
, lists five crucial tell-tale signs of how even successful companies take the route to failure. In the successful phase, managements are driven by hubris and tend to over-reach and expand beyond their core areas of competence; this leads to crisis. The next three phases to failure are: first, denial of risks; next, seeking snake-oil remedies; and finally sinking into irrelevance.

Has Air India become irrelevant to Indian aviation? The answer, if we take a look at the airline’s diminishing market share with less than one in five Indian passengers patronizing it and receding esteem among travellers, is a resounding yes. It appears that the airline’s decline from a state of meaningful existence to meaningless survival is being fast tracked by its primary stakeholders, which is not only unfortunate but calamitous for India’s aviation sector!

the appendix

APPENDIX
1

(A letter from J. R. D. Tata to Raghu Raj, Chairman of Air India, dated 6 May 1981)

Mr Raghu Raj,

Now that I am once again a member of the Board, I propose to resume my practice of writing notes of impressions gathered on my flights on Air India and other airlines, which I feel might be of interest to the management.

In the last few months I have made four long-range flights on Swissair, Lufthansa and BA, and three on Air India. The point that struck me and worries me most is the continuing fact that, whereas we hardly carry any first class passengers, their first class cabins are full, or nearly full, most of the time, despite the fact that their first class cabins have more seats than ours. I have consistently pointed out the importance of changing the policy we had wrongly followed in recent years of concentrating all our sales efforts on excursion and other promotional fare traffic, the yield from which is less than one-fifth of that of first class traffic. If we take also into account the fact that in addition to carrying five times the number of passengers, we also have to carry five times the baggage and cabin service loads, and proportionate additional cabin crew members and their baggage, the real yield ratio must be nearer to, or over, 6:1.

I am satisfied that our first class service has always been, and is today, as good as, if not better than, that of other airlines. In fact, a flight in first class on Air India, with its outstandingly comfortable slumberette seats, is far superior to one on Swissair, and yet Swissair’s 22-seater first class cabin is always full. I could not get a seat on Swissair recently, even as a paying passenger.

I must once again urge that top management give firm instructions down the line that first priority must be given to securing first class traffic, and that the performance of our various sales offices will be judged not by the total number of bodies put on board but by the proportion of the total which consists of first class and executive class revenue passengers.

I am glad to say that our standards of food and service in first class continue to be fully comparable with those of our competitors.

APPENDIX
2

(A letter from Jitender Bhargava to K. Roy Paul, Chairman, dated 22 October 2002)

Subject: Marketing of First/Executive Class... After the Revamp

In the meeting of some departmental heads convened by you on July 25 at Hansalaya Building (where Air India office was housed), you had sought comments on the new flight being introduced to New Jersey. I had, when asked to comment, stated that we will fail to derive advantage of the investment in installation of flat-bed seats in First Class and Slumberettes in Executive Class unless a proper marketing approach is adopted. I had also given specific instances of our consistent failure to take advantage in the past even when our product had been superior to competing airlines viz deployment of 747-400s on the India/London/New York route when other airlines were still flying the classic 747s.

I do not know the seriousness that was attached to these comments for corrective action though a committee of five Directors was constituted as a follow up of this meeting. This committee hasn’t been able to address the various issues related with the introduction of the new flight as a result of which the conventional system associated with the launching of a new flight—hosting parties—is being followed, without a serious thought being given to the need for aggressive marketing, personal contact, etc.

I would like to propose as under:

1.  A dedicated core team within the Sales personnel in Mumbai, Delhi, Kolkata and Chennai be identified, and trained, for approaching passengers who travel on west bound destinations in First and Executive class to inform them about our revamped product.

2.  A survey be undertaken at airports in metro cities to build a data bank of personnel who are presently patronising First and Executive class of British Airways, Lufthansa, North West, Delta, etc for their travel to Western destinations so that each one of them can be contacted and provided details of the revamped product. (This is considered essential as it takes years to erase memories of a failed product).

3.  Senior Directors/GMs of the company, who are articulate, be drafted for individually meeting people of senior level viz Mr Ratan Tata, Ambanis, Birlas, Mahindras, Godrejs, etc.

4.  The existing set up—wherein the Commercial Department looks after sales, inflight services department looks after the menus, champagne and wines served to First class passengers, General Manager-Airport decides the system of check-in and the Ground Services Department sets parameters for baggage delivery—should be replaced by a single unit so that the First Class product is looked at in its totality and benchmarked by this unit. Integration of various Department functions is imperative to evolve a top grade product and ensure implementation so that no department blames the other for any deficiency in the product. This core team should also be involved with advertising, direct mailers, marketing initiatives, etc. and should be fully accountable for enhanced revenues.

While not wishing to sound as a pessimist, I would like to once again state that if we deal with the new product in a traditional manner, we are likely to achieve a not-so-very-different result from the past, which we all know cannot be described as good when judged by international standards. The challenge before us warrants a change in our existing systems, procedures and practices. The above suggestion is being given so that we put our act together in time rather than six months later when we (hope not) fail to record higher load factors in high yield classes without the companion-free offer as a prop. The fact that many of the existing patrons who are using Air India today solely because of the companion-free scheme, and may not do so when the scheme is withdrawn and fares increased, should also be reckoned while devising our strategies for marketing the revamped First and Executive classes.

APPENDIX
3

(A letter from Jitender Bhargava to M. P. Mascarenhas, Managing Director, dated 20 September 1999)

Subject: Our First Class Product

‘Dom Perignon Champagne was discontinued some time ago as part of economy drive. Caviar has not been available in our First Class segment for quite some time. What’s our First Class product for the full fare paying passenger?

While one can advance an argument that we don’t have very many full fare paying passengers on board as it is, as bulk of the seats are sold through our companion offer, we need to be conscious of the fact that we will lose even the ones who are today patronising Air-India, if we can’t maintain our product. The Commercial Department can perhaps be asked to analyse the First Class load; percentage of those travelling on full fare and those travelling under the companion scheme. The analysis will hopefully give us the answer whether we can afford to ignore the interests of full fare paying passengers by cutting down costs on first class service viz. Dom Perignon, gifts, etc, particularly when we already suffer from two major disadvantages vis-a-vis our competitors—lack of personal TVs and 180 degree reclining seats.

My personal opinion is that we should enhance our standard; resume serving Dom Perignon; presentation of gift; and buy caviar from flight kitchens abroad even at a higher cost, if Stores and Purchase Department fails to make adequate stocks available. The ultimate solution of course lies in our getting genuine First Class passengers through innovative and more aggressive marketing, and not through companion scheme only.’

Submitted to MD for direction.

APPENDIX
4

(A note from JRD Tata to senior management dated 9 May 1972)

Subject: Labour relations

We must face the fact that our efforts at establishing good relations with our employees in Air India have not met with full success up to now, at least in India. So far as employees abroad are concerned, including those under local unions, the situation is, I believe, excellent. In fact, I have been surprised at the extent of loyalty and devotion to the Airline that prevails amongst some of our foreign employees, particularly the senior ones.

Basically Indians are sentimental and loyalty-inclined people, and we must therefore look for the causes of unrest and lack of loyalty and trust. The trouble in India lies partly in the fact that we have to deal with seven craft unions, each of which is led by office bearers who are employees of the Company, have no basic training and experience in trade unionism, and feel it is their duty to their membership to show hostility towards the management as proof of their devotion to the members’ interests. As a result, even in the intervals of wage negotiations every three years, the pot is kept boiling with endless correspondence and circulars, usually couched in acrimonious terms and spiked with charges of deceitfulness. The result is that Management–Union relations never seem to settle down to a state of mutual understanding and cooperation, and tempers remain frayed.

To the extent, however, that poor relations are due to mistrust and the existence of genuine grievances, it is up to the management to do more than it has done in the past to remove the sources of such mistrust and sense of grievance. I have no doubt in my mind that while basically our Management means to be fair and honest, there is still far too much of a rigid, bureaucratic or legalistic approach and far too little of a human approach to our handling of staff matters. I have at many times pointed out the lack of the human touch in our administrative offices in dealing with individual cases.

Dealing with thousands of employees obviously requires the establishment of rules and regulations, but they have to be interpreted in practice. In Air India, when there is some doubt as to the correct interpretation of a rule, it is invariably interpreted against the employee, whereas the benefit of the doubt should be given to the employee and not to the Corporation.

It is a matter of great concern to me that year after year I have made no headway in instilling in our officialdom, a realisation of the tremendous importance of morale. If management would only take the trouble to find out what the rank and file of the employees feel about it, they would understand why it seems so easy for the unions to create and sustain anti-management agitation whenever they want to. If, instead, we had created amongst the mass of individual employees and workers the belief that, apart from wage negotiations, management deals with individuals cases with sympathy and understanding, and shows genuine interest in their individual problems, I have no doubt whatsoever that the unions would have found it far less easy to arouse and maintain anti-management feelings amongst the rank and file.

We seem far too inclined to fear that any sympathy in dealing with labour will be interpreted as a sign of weakness which will be exploited against us. This can be true only if weakness is shown in dealing with clear cases of misconduct, deliberate non-cooperation, laziness, insubordination, etc., or meeting unreasonable demands on the part of the Unions. There is no such risk when dealing with individual cases of requests, applications or complaints in which there is no question of any such offence on the part of an employee.

There are two simple and yet significant requirements which, I have noticed more than once, we regularly fail to meet: one is to reply quickly to a letter or application from an employee and the other is to couch a refusal to agree in sympathetic terms, and giving a reason for rejection. While we must pursue our scheme for joint consultation, we must not forget that however well-conceived such machinery may be and however well-intentioned the Management, only a very small number of staff members will be directly involved in it. Unfortunately, they will inevitably consist largely of union office bearers who, as I said earlier, have a vested interest in keeping up an atmosphere of agitation and dispute.