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Another demonstration of why the government should not run Air India

A report in The Financial Express discusses a 26-point missive sent to national carrier Air India by its boss, the minister of civil aviation Mr. Ashok Gajapathi Raju. Official termed “guidelines” these are practically a diktat. These guidelines were sent after reports of serious concerns at the Star Alliance, the world’s largest grouping of airlines which Air India joined just a month back, that needed changes at Air India would not be implemented due to the impending departure of Mr. Rohit Nandan as Chairman and Managing Director of the airline.

Though airline has missed most turn-around targets under his tenure, there is little doubt Nandan has brought some semblance of order to Air India during his three year tenure at Air India.

(READ ONLINE: Our analysis on Air India missing its turn-around targets by 25%).

Building on the need for continuity of leadership, the ministry had proposed a two year extension to Nandan’s deputation to the carrier from the Indian Administrative Service (IAS). The Modi government has shot that proposal down, instead instructing the ministry to find a replacement within the next three months. It would appear the government wants their person at the helm of affairs. and I think this is to placate the Shiv Sena, a powerful ally within the ruling NDA coalition and one who controls most of the employee unions at Air India.

Unionism is largely accepted as a major reason for contributing, if not causing, many of the problems plaguing the airline. The attempts of both Nandan and his predecessor Arvind Jadnav to stand up to the unions is well known. How will a “politically acceptable” CMD of Air India stand-up to the unions? Government knows best, or does it?

In his “guidelines” Raju instructs the airline to fill the premium classes by offering massive discounts of 50% eight hours before the flight. Thank you for devaluing what little was left of the premium classes of Air India Mr. Minister. Why would anyone buy a premium class ticket at full price knowing the fare will be discounted later? Minister knows best, or does he?

The report also quotes another guideline [bsu_quote cite=”The Financial Express, Aug 15, 2014″ url=”http://www.financialexpress.com/news/Govt-asks-Air-India-to-offer-unsold-biz-class-seats-at-50–discount/1279455″]To improve the brand image of the airline which has often been plagued by long delays, the minister also indicated that AI will not hold back any flights for VIPs. “This attitude has to change. We will offer VIPs a free ticket in the next flight instead. If you delay one flight, not only does the brand image get harmed, but there is a ripple effect on the rest of the flights in the day,” a ministry official said. [/bsu_quote]My question is why should that VIP (very important person) [read politicians, bureaucrats, and other “well connected” persons] get any free ticket at all? Just because they are in government and can create a scene? Isn’t it time for the aristocrat mentality to be eradicated? Even god perhaps doesn’t know when this will happen in India.

(READ ONLINE: How India’s modern day aristocrats misuse Air India).
(READ ONLINE: Why the Indian government will not relinquish control of Air India).

What seems to be missing from the diktat is how to deal with the rampant employee indiscipline that plagues the airline. I wish the minister had put a point in his guideline. Any employee violating the rules of the airline will be summarily dismissed; but then he would have to take on the unions and their political benefactor the Shiv Sena.

Government operations are like a blunt knife. All brawn with little finesse. This is demonstrated by the crude benchmarks expected by the government of Air India. The previous civil aviation minister Ajit Singh publicly declared a set of goals for the airline. One of them was improving seat load factor. This was achieved in quick order. The other, on-time performance improvement, was never achieved. Why? you may ask. To get more passengers on planes is easy. Drop the prices. On-time performance requires fundamental improvements at the operational level across all departments and functions. Something near impossible for the government run airline with a “chalta hai” (accept anything) attitude to achieve. None of the benchmarks related to reduction of cost, improvement of productivity, or improvement in employee efficiency.[bsu_quote cite=”Air India operational and financial analysis, Feb 18, 2014″ url=”https://www.bangaloreaviation.com/2014/02/air-india-performance.html”]Astoundingly, Air India still continues to lose almost Rs. 4,000 for each passenger it carries, which is a full 30.5% of its costs, though this is a significant improvement, if you want to call it that, from 2011~12 when the airline lost Rs. 5,642 per passenger, almost 40% of its cost.[/bsu_quote]Mr. Modi’s good days have come, and surprise surprise!!!! Nothing has changed. Your tax-payer Rupees continue to be squandered and we are powerless to prevent it. At least consider of getting a portion of it back by buying Air India first and business class tickets at a discount.

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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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