Digging Air India’s grave with compromise

Last night as we watched the TV news my much better half commented “these Air India pilots are digging their own grave!!”

It got me thinking of Julius Caesar’s famous quote, Veni Vidi Vici, but with a twist.

Chairman Arvind Jadhav came, the pilots struck, the government compromised, and the continuing down slide at Air India won.

Since it’s government take over in 1953, Air India has a chequered 56 year history of highs and lows, and strikes at Air India are nothing new. Other than the inconvenienced passengers very few Indians were surprised that the 250 or so executive pilots of the erstwhile Indian Airlines went on strike and refused to work from 26th September. At least today there are other airlines in the Indian sky and we have an alternative.

What did surprise the average Indian, is the new resolve and the tough approach by the Air India management led by its Chairman and Managing Director Arvind Jadhav, whom I consider the “iron man” that Air India so desperately needs.

Since his appointment earlier this year, Jadhav has been giving the entire staff at Air India a strong dose of bitter reality as his interview with Business World shows. Remember life long employment is the holiest of cows in India’s government.

Even if Jadhav suddenly decides to lose all the pragmatism and decisiveness he is known for, he has very few choices. Air India has accumulated losses of Rs 7,000 crore ($1.45 billion) and borrowings Rs 15,241 crore ($3.175 billion). Cost cutting is the critical need and there is little else other than cutting employee costs that can be done in the immediate hour.

To prevent a fatal tailspin, Air India and more importantly, its political bosses, are going to have to take on the unions like those of the pilots; unions which have become excessively powerful, thanks to years of molly-coddling by successive generations of politicians for their personal gain.

The pilots’ representative V.K. Bhalla made loud announcements that pay cuts will not be accepted by the pilots. Air India is over-bloated in terms of staff, and if pay cuts are not acceptable, then harsher job cuts will have to be resorted to.

However, just a week ago, one of India’s leading private airlines, Jet Airways, faced significant industrial action, when it terminated just two pilots. One can only imagine the levels of disruption the pilots of Air India will resort to, when job cuts are announced, and that too for a government job which is considered “an appointment for life”.

Yet, even while Air India is on life support, its owner, the government of India, is continuing its molly coddling approach and not supporting the management. On Monday while rumours of a lockout were rife, the civil aviation secretary M.M. Nambiar was quoted by The Times of India as saying that lockout was not an option “in the interest of passengers”. Even the Prime Minister Dr. Manmohan Singh, an economist of international stature, pulled the rug from under Jadhav’s feet forcing him to accede to the demands of the pilots.

“Interest of passengers?!?!” Oh please!!!!

For the interest of the majority of India, especially its tax payers who are being forced to carry Air India’s debts on their backs, the government has to step back and let Air India management do their job — handle the airline’s affairs.

In a government-spoilt work environment, draconian measures are all that is left to start with. Disciplining not just the pilots, but all the staff, is desperately needed. Already other sections of employees have been emboldened to strike work. Yesterday while hectic parleys were going on between the airline management, the ministry of civil aviation, and the prime minister’s office, the executive ground engineers announced they were going to strike in support of the executive pilots, while the two other pilots’ unions also announced “moral support”.

Already Air India’s long term viability is doubtful at best right now. A massive dose of iron will is critically required. The iron is present within the management in the form of Arvind Jadhav, it must be complemented from the government. If the government cannot reform its approach at the lightning speed needed, at least it can prevent further ruin by stepping back and not interfering with operational issues.

Air India has to start by amending all the existing employment contracts. Provide both strong incentives and even stronger disincentives. For example, specify the steps that will automatically apply if an employee joins a strike — warning, followed by immediate dismissal, all within a period of 48 hours. If the staff at Air India do not agree, the exit door is always available. Sorry, but desperate situations call for desperate measures.

However, cost savings cannot be achieved on the backs of employees alone. Air India has to undertake a comprehensive network review. For example, three of its wide body aircraft spend the greater part of the day (14 hours) idling at New York JFK and Newark Liberty airports. Aircraft only earn money when flying and the idling costs the airline monstrous amounts. The airline has to forgo the old “babu” culture and get out from the clutches of the parasites at the civil aviation ministry who milk the already bleeding airline with needless expenditure, and politicians who force the airline to fly ridiculously unprofitable routes just for political mileage.

Majority of the travelling tax payers of India are cynical of any reform of Air India, thanks to the complete lack of professionalism and sound business operations that surround Air India, both within and from outside.

Iron willed steps based on sound business logic and a concrete plan of revival will have a salutary effect not only on employee performance, but also the opinions of the millions of Indians who have just about enough of the antics at Air India; and this would be the first and strongest step in Air India’s revival. Otherwise, there is always the door of oblivion for the Maharaja.

For reference — some employee cost cutting measures undertaken at various airlines across the world.

Singapore Airlines : Pilots have agreed to one day’s compulsory unpaid leave per month; Similarly Managers and Administrative Officers are taking one day a month either as unpaid leave or from their annual leave. Two Unions – SIA Staff Union and the airlines Executive Staff Union have accepted the Shorter Work Month Scheme. 50 Cargo Pilots are on unpaid leave;

British Airways: The airline has frozen pay and cut around 2,500 jobs since last year. BA has also axed 500 senior managers in December 2008. The airline is seeking 4000 voluntary redundancies, besides asking the employees to work for free for one month.

Cathay Pacific : The airline has asked all its 17,000 employees to take up to 4 weeks of unpaid leave in the coming 12 months while simultaneously reducing passenger and cargo capacity by 8 and 11 per cent respectively;

Japan Airlines has announced plans to cut 1,200 jobs by March 2010. The airline is also minimizing refilling of posts by improving productivity.

American Airlines will cut up to 1,600 positions by August 2009 and reduce capacity by 7.5 per cent;

Delta Airlines is planning to eliminate jobs besides cutting capacity due to recession, decreased demand and rising oil prices. Delta has already cut its workforce by 6.5 per cent since February 2008

Air France – KLM are planning to cut between 2,500-3,000 jobs in the next two financial years. The airlines have cut 2,400 jobs in the financial year ending March 31,

Qantas will cut five per cent of its workforce including 500 additional management positions and up to 1250 full time operational position in Australia;

Jet Airways has put a freeze on recruitment and reduced benefit of Executive and Management salaries. The airline has terminated 50 employees on contract and 60 probationary cabin crew. Salaries have been reduced for other employees.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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