Air India’s Pragmatism before Sale

Perhaps the most exploited airline in the world, Air India today faces hard choices
By Harjap Singh Aujla

Perhaps the most exploited airline in the world is our Air India. The powerful politicians and influential bureaucrats of our country have been overburdening this commercial venture with unqualified people of their choice far over and above the needs of the airline. Their emoluments were also on the higher end. This resulted in overstaffing of the venture. In addition, all the bigwigs in politics and bureaucracy were getting free rides in premium class at the expense of this national flag carrier. The cumulative losses kept mounting and at one point the government started toying with the idea of its privatization. But the lobby of the exploiters was so powerful, that every time, the government floated this idea, it was shot down by those very folks, who floated the idea. Such developments gave birth to indiscipline. The pilots frequently went on strike and so did the air crew and the ground staff. Accountability was a casualty. No one ever cared for the elusive profitability. Every exploiter posed as a God father. The previous prime minister was an economist, he thought the emancipation was in its disinvestment. But most within the corridors of power thought otherwise. This has been happening for half a century. Some of the redundant staff has retired long ago. Some are still on the payrolls and adding to the losses.

The routes of operation were not as a result of legitimate research and analysis. The government made politically correct, but most of the time financially ruinous decisions and Air India was made to tamely implement and face the music. Due to the political decisions, some of the most profitable routes were discontinued in favor of populous loss-making routes. The justification invariably was that all routes were losing money. Even the routes with 90% passenger load were dubbed unprofitable. No one went into the reasons of such losses. The primary reason was terrible overstaffing and an army of free travelers. Some minor decisions with cumulative effect included expensive food from well-known places rather than cheaper, but more delicious food from lesser known places. It takes two hours between New Delhi and Mumbai, many times a full meal was served on this route too. Food from expensive cities was served even to passengers from cities known for their food. Most airlines run special cargo flights to business-friendly cities, which are profitable. Air India never explored such innovative ventures. On some of the important flights the routes were longer than required. As an example, the Bombay-Frankfurt-Los Angeles flight completed one way in 22 hours. Due to customary late flying by Air India the 24-hour cycle was always exceeded, this resulted in cancellation of a good profitable flight.  Air India was on the route of self destruction. In the most expensive cities like New York, there was excessive staff. The government too has finally realized the writing on the wall.

When reality dawned on Air India that its sale price may not be enough to stay afloat. A long overdue course correction has started. But the all-powerful government was still in populous mode. Finally, it appears that Air India is putting its foot down and making decisions conducive to profitability. Some routes are being altered to touch load centers. Some routes on which profitable business was witnessed for six days a week, but there was scope for more flights, those routes are seeing augmentation of frequency. The hub and spoke system is not suitable for countries like India, there is scope for a change. Several flights have more passengers from specific spoke stations than hubs, they may get justice now. Such stations were so far ignored, and the hub system was brutally enforced. Now there is a scope for change. There is a possibility of Air India turning the corner during the period leading up to the fall of hammer. Such a scenario can potentially fetch a good price. There is plenty of real estate owned by Air India in the most expensive areas of India. That will help too. Let us keep our fingers crossed. Best of luck to Air India.

(The author is a regular contributor to The Indian Panorama. He writes on diverse issues with equal felicity. He can be reached at harjapaujla@gmail.com)

2 Comments

  1. Excellent analysis by the author. Will give full marks for bringing out the truth and facts
    Although covered generally but lots more can be added when more digging is done.

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