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Why the Air India Maharaja is in a mess

Last updated on: March 4, 2011 16:17 IST

Why the Air India Maharaja is in a mess

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Shyamal Majumdar

Gustav Baldauf's resignation as Air India's chief operating officer was on expected lines.

But the frivolity of the national carrier's latest crisis was surprising even after discounting the sheer incompetence of successive managements and the way the civil aviation ministry has been handling Air India's affairs.   

Anyway, Baldauf's days were numbered since two of his high-profile appointees had already been shown the door.

The Austrian national only hastened the process by publicly criticising the Indian government for playing 'too prominent a role in the airline'.

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Image: Air India aircraft.

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Forget Air India; no chief executive officer can survive if he criticises the 'promoter' in his public or private conversation.

What seemed a joke, however, was the way the appointments were made in the first place.

Even basic management books will tell you that no company should appoint four outsiders with fancy salaries when you are being forced to defer employees' salaries.

Air India did just that.

Baldauf & co were appointed at salaries of over Rs 3 crore (Rs 30 million) each at a time when Air India was losing Rs 20 crore (Rs 200 million) a day and the employees of the debt-laden airline got delayed salaries for the seventh month in a row.

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Image: Air India mascot Maharaja.

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That's a sure recipe for an HR disaster -- the 'outsiders' were isolated from day one, with employees resenting their appointments and the owner (the government) expecting a turnaround magic from them 'with cooperation of all concerned'.

A management consultant says it reminded him of a large company that once announced a shift of operations to a much smaller place in the suburbs owing to financial difficulties. That's alright.

But the announcement came on the day the managing director arrived at the office in a new luxury sedan he was given as retention bonus!

The role of the board, which empowered Baldauf to make at least two hugely controversial senior appointments, is even more curious and raises questions about the entire recruitment process.

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Image: An Air India flight takes off.

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Here are the facts.

Baldauf had recommended the hiring of Capt Pawan Arora as chief operating officer of Air India Express and Stephen Sukumar as chief training officer.

Arora was a former executive of IndiGo, while Sukumar had come from Deutsche Lufthansa.

Eyebrows were raised at their hiring, especially among the unions that demanded their ouster from day one in view of the company's financial condition.

Although Air India says chairman and managing director Arvind Jadhav went by Baldauf's recommendation, the fact is that he and the board should have done some basic due diligence before giving such appointments the go-ahead.

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Image: Air India aircraft.

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What makes the entire situation even more untenable is the subsequent revelation that the appointments were cleared despite objections raised by some board members.

In a decision that speaks volumes about its hazy role, the board sacked Arora only after it "learnt" that he had been removed from the Directorate General of Civil Aviation in which he had been seconded as flight operations inspector from IndiGo.

The DGCA's decision was prompted by the findings that Arora was not qualified for the post.

In fact, the DGCA had asked its chief flight operations inspector to explain the circumstances under which Arora was appointed a flight operations inspector.

Even if one accepts the argument that Baldauf had a vested interest in recommending Arora, it's strange how the airline's CMD and the board, which comprises civil ministry officials, didn't have the basic information about DGCA's reservations.

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Image: An aircraft makes its final approach at an airport.
Photographs: Andrew Winning/Reuters
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Even in Sukumar's (he has also resigned) case, the post of chief training officer was not advertised by Air India.

Baldauf's detractors say he deserved to be sacked since he was not able to do anything to turn the airline around even after almost a year in his job.

To support this argument, they cite the DGCA data for domestic air traffic in January.

Air India's domestic wing had slipped to the fourth place.

Jet, Kingfisher and IndiGo each flew more passengers than Air India, that too by a large margin.

The DGCA's figures also showed that Air India reported low occupancy and the lowest on-time figures.

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Image: Members of the ground staff watch the inaugural flight of an Air India Boeing 777.
Photographs: Vijay Mathur/Reuters
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But that's a juvenile argument since it's unrealistic to expect an external person to work his magic in just 10 months in an organisation that has been on its deathbed for long with a Rs 40,000-crore (Rs 400-billion) debt.

Its promoters never allowed it to function as a commercial airline and as a public sector undertaking; it had to follow the regulations and writ of watchdog bodies that have failed to serve any fruitful purpose.

If Air India's experiment with outside talent has proved to be short-lived (even some independent directors appointed recently want to quit), it's clearly the fault of the aviation ministry and the board.

It was a circus all the way -- right from the selection process to the way things were handled subsequently.


Image: Air India's newly acquired Boeing 777-200 LR is on display at the tarmac of Mumbai airport.
Photographs: Punit Paranjpe/Reuters
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