On a runway to nowhere
Air India’s need for surgery is obvious to its owner, the government, its management, and, to an extent, its employees.india Updated: Sep 29, 2009 21:32 IST
Air India’s need for surgery is obvious to its owner, the government, its management, and, to an extent, its employees. The strike over pay cuts by the airline’s non-unionised pilots is the opening gambit in a game that will play out over the next couple of years as the bleeding flag carrier tries to make itself fit to fly again. The government is willing to pump Rs 4,000-odd crore into Air India, provided it comes up with a workable turnaround plan. Central to any revival strategy is shedding flab in a carrier that has half as many employees again per aircraft than the global average. The world over, an aircraft makes money in the air and loses it when on the tarmac; Air India’s bloated wage bill, in contradistinction, makes it cheaper to keep the fleet grounded.
This grim reality is not lost on either side of the negotiating table. An extended strike must set the stage for a generous golden handshake. Previous attempts failed because of the Maharaja’s parsimony, but other state-owned corporations provide documented instances of well-crafted voluntary retirement schemes, in combination with natural attrition, thinning the muster rolls rapidly, and without pain. The hapless customer shouldn’t be made to pay for what is essentially a forgone conclusion at Air India. Had its owners chosen to put professional managers on the airline’s board, much of this week’s turbulence would have been avoided.
It is in everybody’s interest that a clear revival plan emerges from among the farrago of resentments. The Prime Minister’s Office is well within its rights to demand a turnaround strategy from Air India. It would also be a prudential financier if it were to benchmark cash infusion to quantifiable metrices. The airline’s board needs to come up with a workable plan, which cannot involve lockouts or suspension of operations that ferry 17 per cent of Indian fliers. And Air India’s myriad unions must be held to whatever terms they eventually settle on. The government is displaying rare shareholder activism by seeking an account of its investment. It should take the next logical step and seek an account of the quality of management at Air India. More than as regulator of aviation, the government must act decisively as owner of Air India to ensure that efforts to arrest the decline are not waylaid by industrial dispute. The Maharaja is too precious to sink under its own weight.