It’s plane and simple
Private investment may not be the perfect solution to the problems our national airline faces. But, the public cannot be made to pay the high cost of public sector intervention, Abhijit Banerjee writes.columns Updated: Mar 31, 2013 22:39 IST
Just about a year and a half ago a friend and I took Air India from New York to Goa. The flight reached Mumbai in the middle of the night.
Our connection was in the morning. Getting from the international terminal in Mumbai to the domestic took forever and when we got there, the lady at the Air India counter apologised and told us that the flight to Goa had recently been reassigned to the international terminal, contrary to what it said on our ticket. She assured us that we would be more comfortable in the international lounge.
By the time we finally made it to the lounge it was the early morning. The lounge was empty except for a young man fast asleep at the counter.
He checked us in silence, waved to the cavernous room behind him and went back to sleep, dashing our hope that Air India’s munificence would extend to a cup of tea.
We made ourselves comfortable. The lounge was enormous — several times the size of the usually congested Jet Airways lounge, and completely empty.
We each settled into a huge high-backed cloth-upholstered sofa of the kind that was quite the fashion in the 1980s (which may also have been when they were last cleaned) and tried to reclaim a bit of the lost night.
The rats woke us up. Suddenly there were dozens of them prancing all over the lounge, peering at us, making that indescribable rat sound.
I tried to attract the attention of our host, and eventually succeeded by going up to him and rapping on the counter (not before I noticed that his feet were carefully tucked away under him, a couple of feet off the ground).
Mice I said in my imperfect Hindi. Rats, he corrected me. Do something? He called security — I had visions of commandoes with assault weapons chasing the rats across the lounge — but no one showed up. We sat with our legs up and gave up all plans of sleeping.
A couple of hours later the lounge got another guest — a European who looked like he had come on business. He got the same warm greeting that we had got, and discouraged, sat down right next to the entrance. This set off some nationalist instinct in me that I did not know I possessed.
I was apprehensive that despite the dim light in the lounge he would soon notice our animal companions. That’s when he spoke up and asked us whether there was internet. No I said, not in the lounge, but almost anywhere else in the airport, free.
He picked up his bag and walked out, while I thanked the wisdom of those who had kept this bit of the airport communication free.
I was reminded of this story because I just passed through Kolkata’s new airport, built by the Airports Authority of India (AAI). Let me start by saying that I quite liked the design — certainly more than the much-praised Delhi and Hyderabad airports.
But the first impression of the airport — which explains the generally negative reaction in the Press — is one of remarkable dinginess. How did they build a new old airport, my companion asked.
Some of that will go away when more of the lights start working and the shops move in, but a lot of it was poor craftsmanship and materials — tiles of no obvious charm unevenly laid out with the cement showing where the gaps between them have been filled in, a chipped glass door at the international exit, and just old-fashioned dirt everywhere.
I remember when it was decided that the AAI will build the Kolkata airport rather than some private company, one of the arguments was one of even-handedness. We have public sector organisations that can build airports — they should be given a chance as well, shouldn’t they?
The stated reason for allowing Air India to survive is similar — we don’t want all of our aviation in private hands, do we? But whose priorities are these?
Last fiscal year Air India lost over Rs.7,000 crore. This year, after much belt tightening, it is projected to lose Rs. 4,270 crore (it is true this was a tough year for the airline industry, but of the two largest private airlines Indigo made some money and Jet Airways lost Rs.75 crore in the first two quarters, which is roughly what Air India loses in a week).
Air India’s loss of Rs.4,270 crore is more than what all the poor people in Bihar got from the NREGA, which is often cited as an example of a wasteful government programme.
Bihar has more than 10 crore people, nearly half of them below the poverty line. Air India has 28,000 employees (so they lost an amazing Rs.15 lakh per worker in one year — we could easily pay off the workers for a lot less than that.)
Don’t get me wrong. I am certainly not saying that private investment or public-private partnerships are always the way to go in the infrastructure sector.
Our data suggests for example that the private contractors who maintain toilets in Delhi slums routinely over-charge their (poor) clients and provide a level of quality nowhere near what they have promised to deliver.
But the justification of public sector intervention cannot be that certain organisations exist and therefore need to be supported.
Employees of these organisations are among the most privileged workers in the country — furthering that privilege at public expense, especially at a time when we are cutting on vital infrastructural and other investments because of fiscal pressures, is unconscionable.
Abhijit Banerjee is Ford Foundation International Professor of Economics and Director, Abdul Latif Jameel Poverty Action Lab, MIT
Views expressed by the author are personal