The Comptroller and Auditor General of India’s performance audit of Air India says the hasty order for Boeing 787s and the decision to allow foreign carriers more flights are responsible for the airline’s losses. It ignores the dozens of wrong calls and missed opportunities that have brought the airline down.
Strengths Never Leveraged
- AI Engineering: Excellent maintenance facilities with airplane, engine and avionics shops. Only such certified outfit in the entire sub-continent. The hangars and 5,000-strong team of trained manpower was never used optimally.
- AI Cargo: Half a century of cargo operations around the world. With domestic linkages, it could have cashed in on India’s growth. Lost to Emirates, Cathay and Lufthansa.
- AI Ground Handling: Handled dozens of foreign airlines. Marginal investment, training and customer orientation could have made it impossible to beat.
- Since 2003, Air India has been run by IAS officers with no experience of running a complex, global business. The last incumbent, Arvind Jadhav, was secretary of industries in Karnataka and his predecessor V. Thulasidas was the chief secretary of Tripura. Rivals like Jet Airways hired expat management. The AI chiefs looked to their super boss, the secretary of civil aviation, for direction.
- Ministers Ananth Kumar, Sharad Yadav, Shahnawaz Hussain and Praful Patel, who were at the helm when the decline was the steepest, have never been able to put the airline on the course to recovery.
Wrong Commercial Calls
- Union Grip: 19 unions with political links have wrested control from the management over the years.
- Bad Agreements: Lopsided agreements make it impossible to push for higher productivity.
- Poor Work Ethics: Over the years, little pride in working for the airline and a sense that the politicians (and management) are responsible for all problems. Pilots struck work in May 2011 for more pay, even as accumulated losses were touching Rs. 20,000 crore.
- No New Hires: No fresh hiring (except pilots and crew) has taken place for about 18 years.
- New Planes: Brand new, well-fitted B777s and A320s could never be leveraged for higher fares. The non-stop flights connecting India and the US had the best timings but flights were losing money until recently.
- Low Fares: Lost its image for business and first class passengers. Began morphing into an airline focused on labour traffic between India and the Middle East.
- Wrong Routes: Wrong calls on routes with many of them being operated because of political reasons.
- Merger Mishap: Integration between AI and IA is still a distant dream.
(This story appears in the 07 October, 2011 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)