How not to “keep a company going”
Civil Aviation Minister Praful Patel deserves marks for his honest confession that he wanted the government to sell Air India in 2004, but was asked to keep it going. It is obvious that this was a decision taken when the Left parties were an integral part of the UPA coalition, with no thought to whether a state-owned airline with India’s public sector culture could match the service levels of private carriers. The problem is what happened after he was asked to keep it going, because the airline has slipped from being sick to being on life-support. Unless key issues are addressed, Air India could run through the bail-out it is getting, in less than two years, given that it loses around Rs 200 crore a month.
The unfortunate truth is that every major decision that Mr Patel and his government have taken has hurt Air India — and no fingers can be pointed because all of these decisions were either taken collectively, according to Mr Patel, or at the instance of ministries other than his own. What is expected of a government if it is keen to keep state-owned enterprises going, for whatever reason, is that it follows a rational policy regime. The first decision, to liberally grant bilateral flying rights to foreign airlines at a pace never witnessed before, ensured that Air India’s share of the ex-India market fell dramatically. Mr Patel justifies this by saying that the bilaterals were approved by an inter-ministerial group and that various other factors governed the decisions — “We were told to give more bilaterals to Qatar because we had signed a gas agreement with them.”
Mr Patel has also been saying in every forum he can get that, in any case, he was the minister for all of India, and not just Air India — hence, he needed to add capacity to bring down air fares. That is the right position, of course, but then why did he make Air India order more than twice the number of aircraft it wanted to? And which shareholder asks a company to make massive capital expenditure commitments, without a financing plan in place? Mr Patel blames these shortcomings on an inefficient governmental way of functioning that “does not look at every aspect in one go”. He may well be right, but he has no convincing answer to why he pushed through the merger of Air India and Indian Airlines, without then making sure that the expected gains materialised. Mr Patel cites consultants who advised it, blames staff in the airlines, and generally looks in all directions possible to cast the blame.
The Air India case stands out because the government’s decisions have so obviously crippled the airline, but talk to any PSU chief and the stories come tumbling out of ministerial micro-management, without any responsibility for the outcome.