Air India: Delayed Decisions and Wrong Calls
CAG's performance audit of Air India ignores the effect of delayed decisions and wrong calls
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Image: Sameer Pawar
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The Comptroller and Auditor General of India’s performance audit of Air India says the hasty order for Boeing 787s and the decision to allow foreign carriers more flights are responsible for the airline’s losses. It ignores the dozens of wrong calls and missed opportunities that have brought the airline down.
Strengths Never Leveraged
- AI Engineering: Excellent maintenance facilities with airplane, engine and avionics shops. Only such certified outfit in the entire sub-continent. The hangars and 5,000-strong team of trained manpower was never used optimally.
- AI Cargo: Half a century of cargo operations around the world. With domestic linkages, it could have cashed in on India’s growth. Lost to Emirates, Cathay and Lufthansa.
- AI Ground Handling: Handled dozens of foreign airlines. Marginal investment, training and customer orientation could have made it impossible to beat.
Poor Leadership
- Since 2003, Air India has been run by IAS officers with no experience of running a complex, global business. The last incumbent, Arvind Jadhav, was secretary of industries in Karnataka and his predecessor V. Thulasidas was the chief secretary of Tripura. Rivals like Jet Airways hired expat management. The AI chiefs looked to their super boss, the secretary of civil aviation, for direction.
- Ministers Ananth Kumar, Sharad Yadav, Shahnawaz Hussain and Praful Patel, who were at the helm when the decline was the steepest, have never been able to put the airline on the course to recovery.
People Trouble
- Union Grip: 19 unions with political links have wrested control from the management over the years.
- Bad Agreements: Lopsided agreements make it impossible to push for higher productivity.
- Poor Work Ethics: Over the years, little pride in working for the airline and a sense that the politicians (and management) are responsible for all problems. Pilots struck work in May 2011 for more pay, even as accumulated losses were touching Rs. 20,000 crore.
- No New Hires: No fresh hiring (except pilots and crew) has taken place for about 18 years.
Wrong Commercial Calls
- New Planes: Brand new, well-fitted B777s and A320s could never be leveraged for higher fares. The non-stop flights connecting India and the US had the best timings but flights were losing money until recently.
- Low Fares: Lost its image for business and first class passengers. Began morphing into an airline focused on labour traffic between India and the Middle East.
- Wrong Routes: Wrong calls on routes with many of them being operated because of political reasons.
- Merger Mishap: Integration between AI and IA is still a distant dream.
This article appeared in Forbes India Magazine of 07 October, 2011
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Comment
Jasmine Chandran October 1, 2011
Joseph has rightly brought out how the airline has been plundered from within and outside, and continues to be.
Guess it's no mean task for the Government to turn around Air India. The rot is deep within.
Privatisation is probably the only way with Government support from outside like Singapore, Emirates, British Airways and Lufthansa.... Is the Government listening?
Guess it's no mean task for the Government to turn around Air India. The rot is deep within.
Privatisation is probably the only way with Government support from outside like Singapore, Emirates, British Airways and Lufthansa.... Is the Government listening?
Cuckoo October 1, 2011
Ratan, you've highlighted what's arguably the biggest problem for Air India, one that we've covered this in the story too. The airline has had very ineffective leadership. After Michael Mascarenhas and Mr Gogoi, there have been no airline professionals at the helm either. Over the next few years a crisis in mid and senior level management may emerge, as there has been barely any fresh recruitment.
VRS and freezing promotions have been tried several times, but the problem is now much bigger and needs more drastic action.
VRS and freezing promotions have been tried several times, but the problem is now much bigger and needs more drastic action.
Joseph October 1, 2011
The CAG's comment on the decision to allow foreign carriers more flights are responsible for the airline's losses stems from the fact that if the Government of the state is in the business of running an airline (and not end up subsidising it with tax-payers money) it is important to sign bilaterals in conjunction with the business strategy of it's airlines and I include Air India, Jet, Kingfisher, et al.
When we wish to promote our two national gateways in Mumbai and New Delhi, what justifies increasing seat capacity to/fro only Dubai from 12000 seats to over 55000 seats per week in the past six years from all international airports in India !!
No the whole of India does not only travel to Dubai for work or holidays but it was evident to the mandarins in the Ministry that the 6th freedom traffic is what Emirates was fishing for to carry beyond Dubai... and they gladly signed on the dotted line. The signatories include senior executives of Air India too: Ms S.Lalwani, Executive Director-Planning, Mr Prem Sagar-Asst Manager-AI, Mr Shyam Sunder-DGM-Indian Airlines and Mr Rajan Malhotra-Indian Airlines.
And today we hear them complaining about how they were robbed !! Kindly refer to the Bilaterals with UAE-Dubai dated: 10-May-2007 in the DGCA, India website.
WILFULL NEGLIGENCE who compromised National Assets.
Needless to say more, the same people are today submitting turnaround plans for governments equity infusion to hopefully erase the pains inflicted upon thirty-two thousand employees and their families!
It's job well done by the CAG.
When we wish to promote our two national gateways in Mumbai and New Delhi, what justifies increasing seat capacity to/fro only Dubai from 12000 seats to over 55000 seats per week in the past six years from all international airports in India !!
No the whole of India does not only travel to Dubai for work or holidays but it was evident to the mandarins in the Ministry that the 6th freedom traffic is what Emirates was fishing for to carry beyond Dubai... and they gladly signed on the dotted line. The signatories include senior executives of Air India too: Ms S.Lalwani, Executive Director-Planning, Mr Prem Sagar-Asst Manager-AI, Mr Shyam Sunder-DGM-Indian Airlines and Mr Rajan Malhotra-Indian Airlines.
And today we hear them complaining about how they were robbed !! Kindly refer to the Bilaterals with UAE-Dubai dated: 10-May-2007 in the DGCA, India website.
WILFULL NEGLIGENCE who compromised National Assets.
Needless to say more, the same people are today submitting turnaround plans for governments equity infusion to hopefully erase the pains inflicted upon thirty-two thousand employees and their families!
It's job well done by the CAG.
