Airline Protest in India

The government must do a Satyam on Air India. Just as it did not trust the anointed lieutenants of Ramalinga Raju to salvage the company after he stripped it clean, Air India's rescue cannot be left to the civil aviation ministry and its appointees, who, over the years, have run the airline to the ground. Another set of names will not revive the airline, so long as it is ministry that calls the shots. For Air India to fly, it must shed adipose - and government ownership as well.
After Civil Aviation Minister Praful Patel's meeting with the Prime Minister, Air India has been given a month to craft a turnaround strategy. The committee of secretaries headed by the Cabinet Secretary will reportedly oversee the revival, with government support tied to the achievement of agreed milestones, including reduction of the staff strength of 31,000 people.
Patel has reportedly said that this is the "first and last time" that the government will bail out the airline. All we can be sure is that this will not be the first and last time that a minister will make such a statement. It is not even seen as a threat. The unions have threatened a strike over delayed salaries.
Air India's slide into Rs 5,000 cr loss did not happen without the ministry's knowledge. As trustee of the people, who are the sole owners of the airline, it should have stepped well in time to take evasive action. To trust it now with revival would be a leap of faith.
Reports say that Air India wants Rs 10,000 cr for revival. The figure has not been officially confirmed, but it is likely to be large. Instead of giving money to the airline, would it not be a better strategy for the Prime Minister to direct the civil aviation ministry to change the board and appoint experts - in management and aviation - like in Satyam, with a mandate to sell the airline by a certain date to a buyer of proven credibility on least-subsidy basis? The government has said it will not privatise state-owned companies. But this undertaking to Parliament does not apply to loss-making firms.
26/06/09 Vivian Fernandes/Blogs/IBN Live

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Categories: NACIL Jun 2009