Seat belt signs are flashing
While there is no real incentive for Air India to conduct serious restructuring, considering that it is government property and claimant to a perpetual cushion, a bail-out will mean that it will be taxpayers — us — who will be footing the bill.india Updated: Jun 23, 2009 21:34 IST
In an earlier era, it was factories and their workers; today, it’s airlines and their staff. But the rules of the game have changed substantially since white elephants were allowed to roam the Earth and nationalised corporations were bloated companies swaggering under the protection of the government. With the National Aviation Company of India Ltd, the State-owned entity that runs Air India’s domestic and international avatars, facing mounting losses — Rs 2,226 crore in 2007-08, doubling to Rs 4,000 crore in 2008-09 — the obvious thing to do is to cut the flab without further ado. Which is exactly where Air India runs into an age-old problem: rampant unions resisting any downsizing or pay-cuts as if free market economics had never ever taken off the tarmac. Airlines worldwide are tightening belts; India is not immune to the same forces of downturn. But Air India’s anomalous figures stare at you with unerring clarity: 31,000 employees with an average of 215 members of staff per flight, as against 150-155 in other airlines. The annual salary bill is Rs 3,000 crore, a figure that in medical terms is a painful amassment of varicose veins.
But when even private companies like Jet Airways had to reinstate the 1,000 workers that they had planned to let go to firm up the balance sheets in October 2008, what chance of the national carrier, with no incentive to become fitter and trimmer, to conduct emergency self-surgery? (Jet has, subsequently, gone on a more nuanced dieting regime.) The word ‘bail-out’ is doing the rounds even before July 15 when a four-member committee, which will suggest ways to reduce Air India’s salary bill by up to 16 per cent or Rs 500 crore every year, will submit its report. A ‘blind’ bail-out must be avoided at all costs. The demand will come in the form of workers’ rights, union protests and even all-too-loud-and-visible media coverage that will oppose cost-cutting. The government should be ready to stand up against any emotional blackmail.
While there is no real incentive for Air India to conduct serious restructuring, considering that it is government property and claimant to a perpetual cushion, a bail-out will mean that it will be taxpayers — us — who will be footing the bill. If there is intervention, one thing must be made mandatory and very clear: that a bail-out package is tied firmly to strict time-bound conditions that will see Air India biting the leather and forcing itself to become a modern enterprise run according to modern business practices. In the end, a few thousand people cannot be allowed to hold the rest of us hostage.