How Air India went into a nosedive

Lalit Shastri

Click for Podcast

Economic Times, today 28 Jan 2021, has aired concern and at the same time shared optimism over Air India’s new journey to return to its lost glory under the Tata Group. The newspaper says the airline under the new ownership will be fraught with issues such as older aircraft, inferior cabin products and human resources. The concern notwithstanding, the ET report also points to experts and its global competitors who visualise that the airline would become a challenger in the international space.
Now let’s go back in time and do a postmortem of things that were responsible for Air India going into a nosedive and finally the disinvestment of the national carrier.  Coming to the issues of older aircraft and inferior cabin products  –  one cannot ignore the role of former Civil Aviation Minister Praful Patel during UPA-1 and 2. 

The moment he became the Civil Aviation Minister in 2004, Praful Patel spearheaded the decision to merge the two airlines – Air India and Indian Airlines – and gave a huge order to purchase aircraft – both to Boeing as well as Airbus.

Of the eight Boeing 777-200LR acquired by Air India after Patel took over, five of these grossly under-utilised aircraft were sold to Etihad Airways in December 2013 as a part of the “financial restructuring” exercise.

By mid 2017, CBI registered three FIRs against Air India and others. The first case was registered under Section 120-B read with 420 of Indian Penal Code and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 against Air India, “unknown” officials of Union Ministry of Civil Aviation and others to investigate the allegations relating to purchase of 111 aircraft for national airlines costing about Rs. 70,000 crore to benefit foreign aircraft manufactures. Such a purchase caused an alleged financial loss to the already stressed national carriers.
The second case got registered under Section 120-B read with 420 of PC and Section 13(2) read with 13(1)(d) of PC Act, 1988 against “unknown” officials of Ministry of Civil Aviation, NACIL, Air India and private companies and unknown others to investigate the allegations of leasing of large number of aircraft without due consideration, proper route study and marketing or price strategy. It was also alleged that the aircraft were leased even while aircraft acquisition programme was going on.

The third case was registered under Section 120-B read with 420 of IPC and Section 13(2) read with 13(1)(d) of PC Act, 1988 against “unknown” officials of Ministry of Civil Aviation, National Aviation Company of India Ltd. (NACIL) – the entity formed by the merger of Air India and Indian, Air India and other unknown private persons and companies to investigate the allegations for giving up profit making routes and profit making timings of Air India in favour of national and international private airlines causing a huge loss to the national carrier.

A Preliminary Enquiry was also registered against unknown officials of Ministry of Civil Aviation and unknown others to enquire into the allegations relating to the issue of merger of the two national carriers -Air India and Indian Airlines – causing loss to the national exchequer.

What is the outcome of these FIRs and Enquiry, no body knows.

The merger of the two Public sector airlines has been criticised continuously by those in knowledgeable cirlces as one profit making airline was merged with a loss making airline. The propelling idea behind this decision was that there would be a common infrastructure. In the end, neither the personnel policies, nor the engineering policies or the routes matrix gelled and nothing worked.

Patel, in his capacity as Civil Aviation Minister, was sitting at the apex of the decision-making process when Air India became a customer of Boeing 787 Dreamliner and it came into service with lots of glitches. Of course, there were also guarantees, for example, if you don’t fly it for a certain number of hours we are supposed to compensate you. But whether or not the guarantee was used is a million dollar question.

Significantly, Boeing had offered the next generation of 787 but that was politely turned down on the plea that the Government of India procedures would take another about 4 years and the straight message to the aircraft company was that it should just supply what has already been ordered. In this context, it would be pertinent to note that Air India Board did not have the authority to take decisions, whereas a private player could promptly decide and place an order.

As a consequence of gross mismanagement and spate of irregularities, Air India went in red and was forced to fly with burden of about Rs. 50,000 crore.

Praful Patel got Arvind Jadhav- a 1978 batch IAS officer, as CMD Air India in 2009. He was known to be a blue-eyed boy of RV Deshpande, Minister for Large and Medium Industries of Karnataka. Deshpande and Patel are related.

Air India Express – a fallout of Vayudoot is another story… All the pilots in this airline, who were on contract, were absobed in Air India and were flying the 787s.

Last but not the least, a word on inferior cabin products…That certainly calls for a detailed probe. But I certainly know of one fact and that is related to an ex CMD Air India, who has had the shortest stint at that level in Aur India’s history. He was removed after it was got exposed that in a mad rush  he was instrumental in placing an order and acquiring cutlery for the entire fleet at one go and the lid was off on this purchase when it got revealed that the latest acquisition was not microwave-proof.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.