Everyone seems happy?the government has promised a few thousand crores, salary cuts will be ?discussed? and the Air India executive pilots? strike is off. But everyone knows that there?s a problem.
Consider, first, that it was executive pilots who went on mass leave. The difference between regular pilots and executive pilots is that the latter are not members of any union. Unionised pilots have been declared as ?workmen? by a court order under Workmen?s compensation Act. But it was non-workmen executive pilots who behaved like trade unionists. This is a serious problem for any organisation.
Second, while the civil aviation minister is being seen as an ultimate source of a solution, that?s not really the case. It?s not that the minister declared, rightly, that he is not the minister for Air India. The substantive issue is that AI is managed at one end by management that is ?independent? and at the other end by the Cabinet and the GoM (Group of Ministers Committee). The latter have taken all decisions on major issues like purchase of aircraft or merger of Air India and Indian Airlines. If AI is to revive, it?s these entities that have to deliver. Getting them to do so is tough. For example, much press was devoted to the promise of revamping AI?s board of directors. Celebrities were mentioned. But deadlines have passed and the board remains unrevamped.
Management changes in AI are typically abrupt and seem to bear little relation to achieving results. When AI chiefs are removed, the action is associated with questions that have little to do with operational efficiency. The un-ceremonious removal of a CMD recently set the rumour mills rolling, mostly because there seems to have been no official rationale. Recall the suspension of the MD in early 2000 and his subsequent reinstatement. The current CMD has everybody?s goodwill. But he is basically working in a place, not quite geared to top management basics.
This leads us to the third issue: is public sector ownership the problem? Singapore Airlines and Emirates are public sector but are among the top airlines in the world. Also, remember all full service airlines (as opposed to low cost ones) around the world are doing badly, whatever their ownership structure. AI?s problem is that it is run like a government department. It is said of Singapore Airlines that it will never delay a flight even for its own minister. Can we think of that in India and for Air India?
For demonstration, look at the executive pilots? issue again. If it appears that the government has given in, can AI economise on salary and wage costs? Cuts are not supposed to apply to just pilots but to all executives. If the AI management is seen to be making compromises for pilots, how will it negotiate with the rest of the staff? True, wage costs as a proportion of total costs in AI, at 18%, are lower than in foreign airlines. But AI is in deep trouble and it needs economising everywhere. Also, why doesn?t AI management think of utilising its pilots more and, if contracts permit, lower the usage of foreign pilots?
The economising issue is especially vital because of the government offer of providing help.
The government needs assurance that AI will manage its affairs better because it is already committed heavily in AI?s finances?it has given sovereign guarantees for about
Rs 50,000 crore for the 111 aircraft ordered. While Boeing has deferred delivery of B787s, AI has not sought deferment of the balance deliveries. This is about half of the order. If AI becomes insolvent, the liability will fall on the government. Surely, this is something that should concentrate minds in the government?
What AI management needs to tell its employees is that AI has been a public sector undertaking for the last 60 years and its employees have been the advantage of job security as well as good salaries. In fact, salaries of AI employees have generally been better than those of private airlines. When the organisation is in a crisis, employees must now do their bit to help the management. But can the management communicate this message convincingly?
And does it have the courage to act tough if required? The last major public sector civil aviation strike took place in 2000 when air traffic controllers, employed by the Airports Authority of India, went on strike. That strike was successfully broken by use of Essential Services Maintenance Act. If employee agitation becomes a serious problem in restructuring, AI management must remember the usefulness of blunt weapons.
The writer is chairman, International Foundation for Aviation & Development, and was formerly with the civil aviation ministry. He has also served on the board of Air India