Air India Disinvestment

Asis Ranjan Sengupta

Disinvestment, or the out-right sell of public property to private players, is a favourite destination of the Modi regime. This is nothing new. In the NDA ministry, led by Vajpayee, a special ministry was created under the charge of Arun Shourie, and successfully converted the Telecom Department into split Public Sector Undertakings like, Bharat Sanchar Nigam, and Videsh Sanchar Nigam, and then sold VSNL, a highly profit potential PSU to TATA telecommunications, at a throw-away price. After 2004, that is the fall of NDA regime, the Department was abolished, but the topic ever remained hot favourite with subsequent two UPA Governments. Now with this Modi-led RSS dispensation, it is considered to be the panacea to cure all the ailments of the economy. Recently, the preparation for lavish sell-out of Air India, is going on in full swing, along with the agenda of PSU Banks' consolidation, the first step towards their Disinvestment.

All this Privatisation is popularly described as 'Reform', now everything which robs the people of their shares in social asset, for the benefit of a handful of cronies, is conveniently termed as 'reform' to give the organised plunder a respectable name. The Disinvestment of PSU airliner is being implemented when the organisation is showing definite signs of recovery and restoration of health. The idea is the sell of healthy Goat will fetch more money than the sick animal, and must be beneficial to the exchequer as well as to the pockets of shopkeepers.

In the month of June this year, Union Cabinet Committee on Economic Affairs accorded "in principle" approval to the proposal of "strategic sale" of the Air Lines to private companies, and retaining a negligible stake in the Management. A special body was formed, namely "the Air India Specific Alternative Mechanism'' (AISAM), consisting of a group of ministers and Finance Minister Arun Jaitley at the head, to guide the process of disinvestment. A breathing space was allowed, necessitated by the two-pronged attack on the very basis of economy, namely 'Demonetisation' and GST. Now that the dust has somehow settled down, and the fiscal deficit is widening, with steep rise in prices of daily use products, edible or otherwise, the issue again came in the forefront, and the impatience is visible.

The major issues in hand are whooping debt of 52 thousand crore, which has been suggested by NITI Ayog for outright offloading to some shell entities, and selling the profit making subsidiaries like, Air India Engineering Services Limited (AIESL),which provides state of art repair and maintenance (MRO) services, Air India Air Transport Services Ltd (AIATSL), that provides ground handling services, All India Charters Limited (AICL), Alliance Air Services limited, which operates, Alliance Air, and Hotel Corporation of India Ltd (HCL), which is a stake holder in Canteur Hotels. In addition to all these Air India runs a ground handling and in-flight catering services provider service at Changi Airport, Singapore, known as Air India Sats, or AISATS. All these subsidiaries are consistently profit earning units, unlike its parent body, which again posted operating profit in last two years. The so-called 'strategic' sale of the Republican Maharaja, designated as the "national carrier" is like selling your property without knowing where it is, and how it looks like, and the existing and even retired employees have been threatened with 'dire consequence', by a circular, if anyone opens mouth, with a negative comment in the media. And all this foul strategy is mooted by the present NDA regime, having in the background, the blunders of previous Vajpayee regime, of the Aluminium giant BALCO sell to the Vedanta Group, and the financial scandals of Centeur Hotels sell-off.

The first round of strategic blows to the survival of Government Airliner, was hit by the successive governments, declined the proposal or stalled the expansion of Air India, for one decade since, when the Airspace was thrown open to novice private players. But no expansion plan was taken up in case of Air India or Indian Airlines, creating operational and commercial handicaps. And again in 2005, 2006, the purchase of 111 new Aircrafts, in a hectic manner like purchasing sacks of Potatoes, or Onions, proved counterproductive. The second round of fatal blow was dealt is the manner, by which, the two separate Liners, Indian Airlines, operating in the domestic field, and Air India confined to the international arena, having different systems, work culture, were merged carelessly, in 2007, causing a lot of operational difficulties and shortfalls, in rendering passenger services. Take for example of having a common service platform, it took four years after the hasty merger, to evolve a uniform ticketing system.

The way in which the ‘at random’ purchase deals were struck, raised a volley of questions, and remain well documented, in subsequent Parliamentary Committee reports, and observations of CAG. Curiously enough the sudden over-enthusiasm in Purchases, without taking into account the economic and commercial viability studies, came only immediately after the striking of Nuclear Deal with USA. The connection between the two phenomena cannot be overlooked and overruled.

The whooping cost of Aircraft acquisition, proved a unbearable burden on the organisation, and step-motherly attitude, of the Government of India, the parent, proved fatal, as it is still under heavy debt burden, consequent upon the debts incurred in the process of non-strategic buying spree. The next issue is that, the "Open Sky" policy benefits were handed over to the private Liners, but the 'National Carrier' was denied the benefits. After the reorganisation process, the situation necessitated the vacating some viable domestic and international routes temporarily, but those gaps were immediately captured by private players. Even then in the existing profitable routes, private players were consciously allowed to schedule their flight departures, immediately before the Air India flights, having a more or less fixed time schedule for decades last. Again Private Liners were allowed to use prime slots, Ticketing Counters, lounges and other facilities, and increased passenger facilities in domestic and international Airports in India, often even at the cost of the national carrier. As national operators, the representative Liners all over the world enjoy certain rights and privileges, the most important among them is the right to use and major port as a hub of flights from and to international destinations. Ethihad, in Abu Dhabi, Emirates in Dubai, and the other Gulf Airlines as well as Changi in Singapore and those in South Asian countries enjoy such freedom. There are ample proofs that Governments in respective countries play a very proactive patronising role in promoting their own flagship liners, but Indian Governments never allowed such privilege, on the contrary, smaller domestic Airports, were opened to the overseas operators, who were initially allowed to use the facilities of major Airports, causing much operational inconvenience to the domestic carrier. In a simple language, Air India was disallowed the "level playing field" with the novice entrants, resulting obviously in its sickness, by way of fall in passenger share and fading presence in the aviation market, for which surely, Government policies are more to blame than the alleged inefficiency of the Air India management.

Another important thing is the untruthful portrayal of Indian Airlines or Air India are the only failed entities, causing stress on the tax payers' money. After the liberalisation of the economy, many such unscrupulous entries, mushrooming overnight, withered away more speedily, leaving the trail of bad loans in the books of Nationalised Banks, which had to be written off in turn by the Bankers, causing a strain on their balance sheets, which is also a stress on the tax payers' and ordinary depositors' money. The story of Kingfisher Airlines, which again rescued the stressed entity of Sahara Airlines, and the MD Vijay Mallya, playing hide and seek with the Indian government and masses, probably need no further elaboration. Even Jet Airways was on the brink of closure, until Ethihad, Abu Dhabi, rescued it by bail out. Spice Jet, was reportedly in deep trouble, a few days back. These were preceded by the collapse of Damania, Modiluft, Nat West and a number of similar other private players that vanished after a certain period. After all, in spite of all complaints against either Air India or Indian Airlines, about service deficiencies, no body heard of any physical manhandling by the ground or on board staff, but recently such incidents of scuffle are being reported by staff and crew members of private liners, especially the incidents of Indigo, occupied media and social media spaces as sensational breaking news items.

After the restructuring of public debts, and signing of a turn around plan in the year 2012, by the government of India, and occasional infusion of funds on a piecemeal basis, the performance of the company showed a steady recovery and gradual improvement. Apart from registering operating profit in pervious two years, the reports about the current year performance, are also optimistic. So the arguments put up by Jailey and Company has no legs to stand upon and lacks substance. The tale of Air India, is one of neglected child, thrown out by the step mother /father, kicked around, and put to death by a criminal conspiracy against the nation and the countrymen. Like all other privatisation drives, in the name of so-called reforms, this is another example of gigantic scandal, operating on a grand scale.

Frontier
Vol. 50, No.25, Dec 24 - 30, 2017