Air India management caused mess, not unions: CPM

ET Bureau May 28, 2010 NEW DELHI: CPM has alleged that the Air India management had arbitrarily withdrawn recognition to the Air Corporation Employees Union and chairman Arvind Jadhav had refused to hold a dialogue with employees. The party demanded immediate revocation of termination and suspension orders against union activists and restoring recognition of the Air Corporation Employees Union. "The management should immediately start negotiations with unions to improve the services of Air India and address the legitimate grievances of employees," CPM polit bureau said in a statement here. "The great inconvenience caused to thousands of passengers was due to policies adopted by the management. The Air India management is solely responsible for the inconvenience of passengers. The role of civil aviation minister Praful Patel is also responsible for the present state of affairs in Air India," it said. Describing as "vindictive" the attitude of the Air India management, CPM said it had "arbitrarily withdrawn recognition of Air Corporation Employees Union without assigning any reason." The two-day Air India strike was called off on Wednesday after the Delhi high court said it was illegal and the airline dismissed 17 officials, including union leaders, and suspended 15 engineers. Over 20,000 employees, including engineers, had gone on strike protesting against an order against union members from talking to the media. The management claimed that there is only one general circular and no 'gag order'. CPM leader and chairman of the parliamentary committee on transport and tourism Sitaram Yechury had spoken to the Air India chairman on the first day of the strike and asked him to talk to unions and resolve the matter. BJP had on Wednesday alleged that Air India was in a "mess" and asked Prime Minister Manmohan Singh to spell out who was responsible for it. It also wanted the government to specify what steps were taken to save the national carrier.

Government battered as the Comptroller and Auditor General report blames it for Air India mess
ET Bureau Sep 9, 2011, NEW DELHI: Poor strategic planning, bad financial moves combined with desultory decisionmaking on the part of the government are responsible for Air India's current impoverished status, the country's top auditor said on Thursday. In a report on the decisions that have caused the national carrier's calamitous downward spiral, the Comptroller and Auditor General ( CAG) has severely criticised the Air India management and civil aviation ministry for sloppy implementation and unsound decisions, some of which seem to have been 'supply driven', that is driven by the seller rather than a genuine analysis of the buyer's requirements. The government, along with the management, forced through a hasty merger of Indian Airlines with Air India after ordering a fleet of aircraft from Boeing and Airbus when it should have been the other way round. After the orders were finalised, they agreed to purchase planes worth $9 billion with only Rs 325 crore of equity, a decision that should have sent alarm bells ringing in the ministry of civil aviation and Planning Commission, the report adds. Air India and the ministry, the report goes on to say, also took some decisions logic or were backed by data that subsequently proved wildly optimistic. For instance, the airline suddenly decided to increase its orders for new aircraft to 68 in 2004 from 28. The proposal was discussed, vetted, approved by various arms of the government and signed with Boeing in a record eight months, no mean feat considering the original decision on whether to buy 28 aircraft or not lay in the cold storage from 1996. "This increase in numbers does not withstand audit scrutiny, considering the market requirements obtained then or forecast for future as also commercial viability projected to justify the acquisition. The acquisition appears to be supply driven," the report said. A merger with Indian Airlines was pushed through in 2007 after the purchase orders were signed. Little thought was given to the fact that the combined entity would have very different requirements and could have had a bigger bargaining power with the seller, thereby ensuring better terms. The merger itself was not properly thought through, the report adds.

Restoring Air India's health

After ten long and agonising days, the strike by the Air India pilots was called off, thanks mainly to the government turning sensible by opting for conciliation over a witch-hunt. With 800 pilots, mostly those who were originally with Indian Airlines, striking work demanding pay parity with their counterparts who had been with Air India prior to the merger, the rate of flight cancellation rose close to 90 per cent towards the end of the strike period. It was left to the Union Civil Aviation Ministry to intervene, negotiate with the pilots union, and bring about a settlement albeit a temporary one. Considering that the strike, which came at the height of the summer vacation season, resulted in a loss of Rs.150 crore to Rs.200 crore, it is difficult to understand why the government did not intervene earlier. The strategy and methods of the Air India management clearly worsened the situation. The basic demand of the pilots was neither new nor unreasonable: they have been seeking pay parity ever since the merger process began in 2007. It is hard to explain why the process should drag on endlessly and why most of the demands of the staff have not been seriously addressed for such a long time. Under the interim settlement, the Ministry has given some concrete assurances. All the dismissed and suspended pilots will be reinstated; the de-recognition of the Indian Commercial Pilots' Association will be revoked; and all the other demands of the pilots will be addressed in a timebound manner. The key issue of pay parity will be dealt with by the Dharmadhikari committee, which has just begun to look into the staff-related issues arising from the merger of the two airlines, and it has been required to give the report by November 2011. All categories of employees have been asked to approach it with their demands. At least this time, the Air India management must keep its word and resolve the issues by adopting a businesslike consultative process in all seriousness and sincerity. For their part, the employees and their unions must respond positively to the challenges that lie ahead. Though the national carrier has been claiming operational profits, the accumulated losses and its undue dependence on funding by government tell a different story. Air India needs to be run on sound commercial lines, which means it must not be discriminated against vis--vis the private airlines. For that to happen, it must set its own house in order, go ahead and complete its programme for aircraft acquisition, do everything necessary to restore the prestige of the Maharajah' brand in a competitive environment, and win back customer loyalty.

Air India unions want govt to pay for mistakes Mumbai: Having tasted success, Air India (AI) unions now want the government to review and undo all the decisions that they claim caused the current mess at the airline. They also want the government to pay for its mistakes, asserting that the employees of the organisation did not contribute towards the mess. The government on Friday issued marching orders to former AI chairman and managing director (CMD) Arvind Jadhav, who was branded "anti employee" following a sustained campaign by the unions, which were bolstered by the Opposition parties raising the issue. It brought in senior IAS officer Rohit Nandan to nurse the airline back to health. PM promises salaries for Air India staff "Once the government has started providing money, it means that it accepts its mistakes. Now it has to pay for it and take over all the liabilities of Air India. Employees are not responsible for buying so many excess aircraft or handing over profitable routes to foreign and domestic airlines," said a union leader asking not to be identified. The unions assert that the airline's debt of over Rs 44,000 crore is the government's responsibility as the airline's present precarious financial position is a direct result of several decisions taken by the civil aviation ministry. They pointed out that two parliamentary committees have already dwelled upon this fact, clearly stating that the employees were not responsible.

It is no exaggeration to suggest that Air India is much more than an airline. In fact as an airline it is hardly world class any more. But as a representation of what can go badly wrong in an India where there is so much potential and room for economic and social expansion, there is no better case study than the flag carrier. It has taken a pilots strike to bring matters to a head and, today, the airline is at a crossroad. Finally there is a glimmer of hope that progress will be made. But it will not be without some pain. Major surgery is required. To receive monthly in depth reports on India, subscribe to CAPA's Monthly Essential India.

In the words of a TV panel debate on 01-May-2011: How did the airline go from a Maharajah to a royal mess? CAPAs CEO South Asia, Kapil Kaul participated in that discussion. In reality, the Maharajah has been slipping for decades. It was one of the worlds leading airline brands 50 years ago, but its decline steepened drastically over the past two decades. Unfortunately, Indias entire aviation system declined in step over this period, while the rest of the world was surging ahead. Successive governments stalled on liberalising the industry, pending restructuring of Air India, which meanwhile remained under the umbrella of protection. This effectively froze the process of change in the nations industry. It was only in the middle of the past decade that the reality of the world had to be faced. New domestic entry was permitted and a flurry of low cost airlines began operating. Air India was merged nominally at least with Indian Airlines. Even then, to protect Indias national airlines, Indias new carriers were not allowed to operate internationally, a rule which also helped foreign carriers, as the Indian private airlines increased services, but an underfunded Air India went backwards. This was eventually modified to allow the new entrants to expand in this way, but they had a five-year freeze imposed on them before they could (which is now coming to an end). Aprils pilots strike was provoked by the continuing failure of management and of government to create pay parity between the two airlines pilots. Four years on, Indian Airlines pilots remain on a lower pay scale or alternatively, Air Indias on a higher one but they are not demanding to have their salaries reduced to match. Despite many promises, change has not been achieved, nor did it look like being happening. And the airline is still bleeding heavily, while discounting fares. As the issue comes to a boil, only one consistent thread emerges: no politician or management is responsible. Therein lies the problem. The government owned airline is consistently subject to intervention and management change. Every time a difficult issue has emerged and tough decisions were needed, those responsible took the easy way out. The legacy, after years of indecision and avoiding key decisions, is a national airline drastically weakened and unable to compete effectively with international companies. It is yet to undergo any serious reconstruction, it has taken four years to get close to having a common IT platform and, despite a management now committed to improvement, it is not at all obvious that the political will exists to support the inevitably painful innovations that need to be made. Worse, in the wider environment created by that inaction, India also now hosts two of the most heavily indebted albeit high quality - private airlines, in Jet Airways and the newer Kingfisher Airlines. The long delay in confronting the issue has only contributed to digging a deeper hole for Air India, to the stage where recovery without drastic action is unlikely.

The status a possible path for the future

As with any industrial dispute of this kind, the details change quickly. However, the importance and timing of this confrontation give it a unique flavour. Air India had been losing around USD5 million a day before the strike. While the strike continues and AI has to endorse tickets across to their competitors, the losses increase. The Delhi High Court has chided both management and pilots, the unions have raised accusations about corruption and mismanagement and demanded an enquiry, various court actions are under way - and so the issues escalate. But the issue has caught fire among the public this time, thanks partly to the inconvenience caused during a holiday season offering some hope that there will be the political will to promise change. This may be a long shot, as management appears already to have been pressured by government into backing down on a refusal to reinstate a handful of sacked pilots, merely so they could get back to the negotiating table. But even if the will is still not there, at least the awareness is now there that the usual series of backdowns and compromises is a sure way of digging Air India further into its predicament. From here on, politicians and management (and unions) will be accountable. That at least is a start on the right road - though Indian roads can be very long and winding. If this iconic company can be turned around something that will only occur by taking very unpopular measures its influence on attitudes generally in India towards improving efficiency and commercialism will be fundamental. A weak Air India spells a lack of resolve to address difficult issues; a strong one will shine a light on Indias way forward.