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August 11 , 1997


Politicians, bureaucrats treat Air-India as their property

In this column last week I had argued that India's highly promising economic liberalisation and deregulation initiative of 1991 seems to be running out of steam because of a half-hearted commitment to deregulation evidenced by a conspicuous reluctance to privatise public sector enterprises which dominate 'the commanding heights' of the Indian economy.

There is a vast conspiracy of silence spanning the entire political spectrum and the bureaucratic establishment over the privatisation issue because the public sector is the very private sector of politicians and bureaucrats. As the numerous scams and scandals being unearthed on a daily indicate, the public sector enterprises (and the public sector in general) offer too many opportunities for patronage and graft for the politician-bureaucrat nexus to give it up without a fight.

And perhaps no other illustrates more tellingly the metaphor that the public sector is the private of politicians and bureaucrats than the government-owned international airline Air-India. A furious and unseemly succession battle was fought within the top echelons of Air-India for the prized position of managing director of the nationalised airline.

The chief antagonists were the former managing director Brijesh Kumar and his deputy, now acting managing director, Michael Mascarenhas. On the eve of the expiry of his term as MD (which according to Air-India insiders he made every effort to extend) at the end of the month of July, in an official letter to the civil aviation ministry, Kumar accused Mascarenhas of having committed "serious irregularities" in signing a wetlease (lease of aircraft with crew) agreement with a foreign company named Caribjet way back in 1994.

According to Kumar, Mascarenhas signed the agreement for the lease of (two) aircraft with "undue haste" without the approval of the AI board and that he had suppressed information that the agreement had already been signed when board approval was sought ex post facto.

Not surprisingly, the Cambridge-educated Mascarenhas -- a rare career professional who has been with AI for almost three decades and has painstakingly climbed the executive ladder -- expressed surprise that this matter has suddenly been raised at this juncture. According to him, this very contract was renewed by Brijesh Kumar in his capacity as a member of the AI board and as joint secretary in the civil aviation ministry.

Mascarenhas, with some justification believes that the matter had been raked up by the powerful IAS lobby which wanted another bureaucrat to succeed Kumar as chief executive of this beleaguered airline which chalked up a net loss of US$ 75.5 million on a sales turnover of $ 989.72 million in fiscal 1995-96. This loss is estimated to have risen to over $ 250 million in fiscal 1996-97.

This type of wrangling for office and the omnipresent possibility of outsiders with little experience in civil aviation being inducted into apex-level positions is symptomatic of the rot that has corroded this once high potential airline. Politicians and bureaucrats of all shapes and hues regard the airline as a huge trough to feed in. Bureaucrats are enamored of the high-flying perks which the airline offers employees. And politicians like to have pliant nominees as chief executives so that they can use Air-India as their private airline.

The late Rajiv Gandhi for instance frequently commandeered Air-India jetliners to take him on his jaunts around the world. On one particular occasion, not one but two Boeing 747s were pulled out of service to fly him abroad. A second plane was put on standby notwithstanding the complete disruption of Air India's services and the inconvenience caused to thousands of fare-paying passengers.

In my long career as a business journalist I wrote the first and several other in-depth stores on Air-India. But on every occasion when I stepped into the corporation's headquarters in Nariman Point, Bombay I couldn't help bring struck by the thick atmosphere of anguish and intrigue which pervaded the environment. All the managers seemed to be working under great stress; nobody seemed to be enjoying his job but was hanging on because of the highly prized perks of free foreign travels and postings the airline offers.

This gloom-doom scenario which pervades the airline is hardly surprising given that after 1978 when the late J R D Tata was peremptorily sacked from the office of chairman of the airline which he founded, there have been eight CEOs with an average tenure of only two years. As the airline's chief executives struggled to remain in the pilot's seat with little time for planning for orderly growth and expansion, the airline's fleet of 28 aircraft is considerably overaged because politicians lobbying for rival airplane manufacturers cause interminable delays for acquisition of new aircraft.

And last but by no means least, managers have to cope with the business illiterate demands of the powerful trade and craft unions -- including the pilots' association -- of the world's most over-manned (relative to its fleet strength) airline. None of these unions have any compunctions about grounding the airline to press their demands. Little wonder Air-India has the worst reliability record of any major international airline.

Though the indications are that Mascarenhas will be appointed managing director of Air-India despite the machinations of the IAS lobby, the rot has set in too deep for him to set right even though he is an experienced insider. The only real option for this ruined airline is privatisation, a thorough spring cleaning and a new beginning. Any halfway solution is likely to prolong the misery of Air-India's managers and unfortunate customers.

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