India at crossroads
Today, India is on the verge of greatness and world is looking up to this emerging economy with bated breath to finally arrive. It will be in fitness of things that this nation delivers for itself, for the sake of its people, for its great past and for the world that faces several serious challenges today. This nation has the wherewithal to lead the world in its quest for a better tomorrow and a better life for the future generations.
However, we still have a number of pressing urgencies - complex unsolved issues, priorities and difficult problems to deal with in our own backyard, before we even think of propelling ourselves into the club of developed nations.
Unaccomplished tasks
Despite brisk economic growth and achievements attained over the last couple of decades, there are still critical and important national objectives which remain unaccomplished. We still have huge socio-economic and developmental challenges to be taken care of.
Challenges abound for a majority of our fellow citizens on various fronts - poverty, disease, illiteracy, ignorance, lack of basic amenities, absence of dignified living conditions - sanitation / housing / health care, poor life expectancy and corruption.
Economic and regional disparities, systemic dysfunction and inefficiencies, injustices, deprivation, policy inertia and archaic laws are staring at our faces and questioning us for immediate and effective solutions.
More than 40% of our fellow citizens are still below poverty line. 45% of our rural areas are still without electricity. More than half of India doesn't get safe drinking water beyond a few hours. It is appalling to note that, even today, 10% of our people just don't have any access to safe drinking water.
More than 25% of our people still can't read or write. School dropout rates continue to be at alarming levels. More than half of our children are still malnourished. Spiralling prices especially of food grains, consumer goods, etc. have been hurting the poor for long.
Agriculture which employs more than 50% of our workforce has been stagnating for years. Irrigation, productivity and mechanisation remain big challenges in this sector. Dependence on monsoon for a good crop continues to threaten the economy.
Addressing PDS issue remains a non-priority for the government. Poor procurement policies and lack of adequate storage systems for food grains continue to be big problems. Land acquisition continues to be a hot button issue.
Unemployment is still high at 10%. Three out of every ten persons are either underemployed or are in disguised employment. Industry reports that only 25% of our engineers are employable for want of required skills and proper training. Higher education and research need immediate help and overhaul.
Poor infrastructure - road, power, ports, etc. remain a drag on economy. Economic and regulatory reforms are almost stalled for want of political will and focus.
There are serious governance and delivery issues in government which have been hurting the people and nation's progress for long. Corruption - which hurts our common man the most, is all pervasive in the government today. It is now an unfortunate social reality and a malaise that has been eating into the fabric of our polity for long.
There is a growing disconnect between the government and the citizen. A significant number of government schemes and programmes continue to fall flat and fail to deliver due to flawed centralised planning, top down approach, poor execution, far too many unattended systemic loopholes, poor understanding and coordination between centre and states, unchecked vested interests in play, etc.
More importantly, continued absence of accountability across the system of governance - bureaucracy, political class, regulatory mechanism, etc. leaves a lot to be desired and to be answered for.
The nation faces increasing threats to internal security from Pakistan sponsored and other forms of terrorism. Maoist and Naxalite menaces continue to pose serious threats to nation's safety and security.
Without a doubt, there is a lot on our plates to sort out and to change.
Educated youth in Politics – a game changer
Can there be a better platform than politics to bring this change and to help make a positive difference in people's lives. Arguably, there is not. Moreover, there couldn't be a better time to help prove Bertrand Russell’s comments - that politics is a last refuge of scoundrels, wrong and invalid, at least, in India's context.
In terms of general quality of political leadership, we, as a nation, have had what we voted and opted for in the past. So the responsibility has entirely been ours. Looking at the demographics today, India has more than 50% of its population below the age of 25 and more than 65% hovers below the age of 35. It is expected that, by 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan.
India, today, needs a political leadership that is in sync with the times and the aspirations of its people. A leadership that thinks and feels the pulse of its people, that is thoughtful and is brimming with ideas, is what India needs at the helms today. India needs a leadership that has a shared vision for the nation, that is motivated, that is result oriented, that is youthful and energetic and that puts nation and people's aspirations before every other consideration.
It is time now that the young and educated - who have the capability, who are conscious of people's suffering and of ills in the system and who are driven by a sense of sacrifice for greater good, come forward, take initiative, join politics, work hard and start contributing towards the change that people of India are desperately yearning for. It is imperative that the educated youth of this nation rises to the occasion and accepts this responsibility and challenge.
Letting go well cushioned jobs, easy and protected life, financial security, etc. for the rough and tumble of Indian politics may be slightly difficult. However, attending to the moral duty call towards the nation, harnessing one's energy and immersing completely in political and developmental work looks every step worth its salt.
Of course, substantive electoral reforms have become a necessity in the overall context of India's growth story and which look imminent in the wake of evolving domestic political discourse on corruption in political system. These reforms will certainly usher in some form of mandatory public funding of elections - both at national and state levels. These will not only facilitate our educated youth taking plunge into electoral politics and making our democracy more participative but will also help cleanse the political system to some extent.
Challenges and expectations
Given the challenges and goals before this youthful nation, the need for people of this country to rise above divisiveness and to stay together is, perhaps, more than ever today and this cannot be emphasised more here. It will, therefore, be incumbent upon the political leadership to apply itself in maintaining unity and harmony at all cost - so essential for nation's progress and for the nation to be able to suitably respond to priorities and challenges that it faces.
Learning from the past, the leadership, led by our educated youth, will have to gather all organisational and people skills to take everybody along and will have to find the common grounds. Lending a patient ear to all shades of opinions that exist within the vast diversity that characterises this nation, the youth leadership will have to redefine the national agenda and will have to provide appropriate strategy and direction for future.
It will have to set the house in order on priority and will have to think "out of box" to find innovative solutions to the national problems. The youth led leadership will have to capitalise on the enormous opportunities available out there and will have to substantively address both domestic and global aspirations. Who would understand and relate to the aspirations of a youthful nation better but the nation's educated youth itself.
The youthful leadership will have to raise the bar of efficiency, speed, quality and transparency of decision making and delivery. The leadership will naturally have to keep pace with times and will have to keep an eye on the future needs and threats. It will have to be a role model of integrity and probity in public life. Hence, the future leadership will have its task cut out to help this nation claim its rightful place amongst the frontline countries.
Defining moment
This is a defining moment in the history of modern India. The nation's character, ability, energy and resolute are on test today. This is a time of reckoning with the opportunities wide open and sky as the limit. Our educated youth needs to seize this great opportunity and help shape India into a great world power again. Else, we as a nation may miss the bus for ever.
Aug 31, 2011
Case for BCCI under Draft Sports Bill / RTI?
Yes, BCCI runs its own show and it doesn't depend upon government grants for funding. Without a doubt, BCCI, as the apex cricket body in this country, should retain its independence and autonomy as far as functional activities are concerned. It is also true that BCCI does market and monetise cricket well and it deserves credit for the same. But the fact is that BCCI's marketing and monetisation efforts lead to drawing its operational funding from people of this country - sometimes directly and mostly indirectly. BCCI also generates sponsorship funding from various business organisations in this country and abroad.
In fact, BCCI is a commercial sporting body. It is significantly run and funded - directly or indirectly, through people's money and government's help - be it match ticket/entry fees, government's tax exemptions at both Centre and State levels, free use of stadiums built on government land, advertisements and promotions in the stadiums during matches, and utilisation of free government services - like security during international/domestic matches, other local administrative help, etc. Use of DD/AIR airwaves (another public asset) for match telecast/broadcasts, satellite rights - thanks to people driven TRP ratings, etc. are some other indirect benefits that BCCI draws from the people and government. It would be impossible for BCCI and its affiliates to carry out their primary sporting activity i.e. organising matches, without the aforementioned help (involving use of public assets and costing taxpayer's money and time).
More importantly, BCCI's cricket team is recognised as the National cricket Team - irrespective of the format. By virtue of being the sole representative body for cricket in India and by virtue of representing India at the International Cricket Conference (ICC), it becomes obligatory upon BCCI to be accountable to the people and government of this country. Indian embassies and consulates around the world provide logistics support and help, as required, to BCCI's cricket team/s on tours abroad. Such eminent privileges, for sure, do bring responsibility and carry accountability towards the nation.
The fact that BCCI runs on people's money and government's help, clearly, there is a case for some regulation that makes BCCI accountable – at least for the financial side of its business. It must be transparent in the way it handles money received from the people and from domestic commercial public organisations. Secondly, BCCI also receives money from international organisations against sale of TV / promotional rights, IPL Team ownerships, various sponsorship related contracts and bids, etc. As a responsible national sports body, BCCI must be transparent and be accountable for the funds that go into its coffers from abroad. Any funding received from abroad without proper authentication and money trail could result in a serious breach of government regulations or a potential national security threat.
Moreover, when even small private autonomous NBFCs (leave aside banks) which directly collect money from the people for deposits, etc. are regulated by the government ( through RBI), why shouldn't BCCI's financial transactions be regulated under appropriate laws of this country. If a NBFC markets and monetises its products well and successfully collects deposits from the people, does this mean that it should not be held financially accountable and be unregulated under prevailing laws. Should the depositors and their interests be left unprotected at the hands of such successful NBFCs? If people are contributing from their pockets, they have a right to know what happened to their money, how and where their money got spent, who made the decisions about their money, was the expense justified or not, etc. Clearly, people's interests need to be protected.
It is difficult for people in this country to have a sense of assurance that everything is fine in BCCI. There is no way to find out whether BCCI is spending its money in a dutiful, appropriate and accountable way or not. There is very little transparency except that its final accounts are made public post-facto. Yes, BCCI does have an internal audit and it does file its Income Tax returns. However, BCCI, neither makes its audit reports public nor does it inform on actions taken against major violations or wrongful deviations unearthed during those audits. The general public perception is that there are too many things - hidden and under wraps today, within the secretive fiefdom named BCCI.
Today, people have no clue to questions like how and why BCCI spent a particular amount under an expense head; what was the justification behind a major financial decision; were the transactions (credit or debit)- especially the big ticket ones executed appropriately, lawfully and as per BCCI rules; whether procedural and process compliance - right from approvals to payments, strictly followed or not; whether due diligence was done especially in financial transactions like bids, auctions, awarding of contracts; was there any case of conflict of interest amongst the administrative office holders; were the rules subverted or manipulated in any way to favour any specific party or individual and who was the culprit; who amongst the BCCI folks were parties to any particular big ticket transaction that went wrong; and so on and so forth.
BCCI can run its operations independently but it must be financially accountable under the relevant laws of this country. What if, required oversight or appropriate control mechanism in a critical area of their financial system is absent; what if, a group or a powerful individual in BCCI is cooking up a big scam there; what if, somebody with active connivance of others within the system is swindling money; what if a powerful individual and his cronies are exploiting and manipulating the system without getting caught; etc. Is there a way to get clear answers to such questions under the existing BCCI framework. It is quite doubtful.
BCCI has had an unregulated run for long. It's time now that it is brought under some kind of effective financial regulation [and not functional) without impacting its independent functioning so that it truly acquires a national representative character, proper compliance is ensured and people's interests are well protected. Else, it should lose the status as India's only representative cricket body and its teams shouldn't be called as Team India.
In fact, BCCI is a commercial sporting body. It is significantly run and funded - directly or indirectly, through people's money and government's help - be it match ticket/entry fees, government's tax exemptions at both Centre and State levels, free use of stadiums built on government land, advertisements and promotions in the stadiums during matches, and utilisation of free government services - like security during international/domestic matches, other local administrative help, etc. Use of DD/AIR airwaves (another public asset) for match telecast/broadcasts, satellite rights - thanks to people driven TRP ratings, etc. are some other indirect benefits that BCCI draws from the people and government. It would be impossible for BCCI and its affiliates to carry out their primary sporting activity i.e. organising matches, without the aforementioned help (involving use of public assets and costing taxpayer's money and time).
More importantly, BCCI's cricket team is recognised as the National cricket Team - irrespective of the format. By virtue of being the sole representative body for cricket in India and by virtue of representing India at the International Cricket Conference (ICC), it becomes obligatory upon BCCI to be accountable to the people and government of this country. Indian embassies and consulates around the world provide logistics support and help, as required, to BCCI's cricket team/s on tours abroad. Such eminent privileges, for sure, do bring responsibility and carry accountability towards the nation.
The fact that BCCI runs on people's money and government's help, clearly, there is a case for some regulation that makes BCCI accountable – at least for the financial side of its business. It must be transparent in the way it handles money received from the people and from domestic commercial public organisations. Secondly, BCCI also receives money from international organisations against sale of TV / promotional rights, IPL Team ownerships, various sponsorship related contracts and bids, etc. As a responsible national sports body, BCCI must be transparent and be accountable for the funds that go into its coffers from abroad. Any funding received from abroad without proper authentication and money trail could result in a serious breach of government regulations or a potential national security threat.
Moreover, when even small private autonomous NBFCs (leave aside banks) which directly collect money from the people for deposits, etc. are regulated by the government ( through RBI), why shouldn't BCCI's financial transactions be regulated under appropriate laws of this country. If a NBFC markets and monetises its products well and successfully collects deposits from the people, does this mean that it should not be held financially accountable and be unregulated under prevailing laws. Should the depositors and their interests be left unprotected at the hands of such successful NBFCs? If people are contributing from their pockets, they have a right to know what happened to their money, how and where their money got spent, who made the decisions about their money, was the expense justified or not, etc. Clearly, people's interests need to be protected.
It is difficult for people in this country to have a sense of assurance that everything is fine in BCCI. There is no way to find out whether BCCI is spending its money in a dutiful, appropriate and accountable way or not. There is very little transparency except that its final accounts are made public post-facto. Yes, BCCI does have an internal audit and it does file its Income Tax returns. However, BCCI, neither makes its audit reports public nor does it inform on actions taken against major violations or wrongful deviations unearthed during those audits. The general public perception is that there are too many things - hidden and under wraps today, within the secretive fiefdom named BCCI.
Today, people have no clue to questions like how and why BCCI spent a particular amount under an expense head; what was the justification behind a major financial decision; were the transactions (credit or debit)- especially the big ticket ones executed appropriately, lawfully and as per BCCI rules; whether procedural and process compliance - right from approvals to payments, strictly followed or not; whether due diligence was done especially in financial transactions like bids, auctions, awarding of contracts; was there any case of conflict of interest amongst the administrative office holders; were the rules subverted or manipulated in any way to favour any specific party or individual and who was the culprit; who amongst the BCCI folks were parties to any particular big ticket transaction that went wrong; and so on and so forth.
BCCI can run its operations independently but it must be financially accountable under the relevant laws of this country. What if, required oversight or appropriate control mechanism in a critical area of their financial system is absent; what if, a group or a powerful individual in BCCI is cooking up a big scam there; what if, somebody with active connivance of others within the system is swindling money; what if a powerful individual and his cronies are exploiting and manipulating the system without getting caught; etc. Is there a way to get clear answers to such questions under the existing BCCI framework. It is quite doubtful.
BCCI has had an unregulated run for long. It's time now that it is brought under some kind of effective financial regulation [and not functional) without impacting its independent functioning so that it truly acquires a national representative character, proper compliance is ensured and people's interests are well protected. Else, it should lose the status as India's only representative cricket body and its teams shouldn't be called as Team India.
Aug 11, 2011
Let's wish Air India's Maharaja the best....
With Air India’s accumulated losses reportedly touching a whopping Rs.23000 crores, its working capital debt reaching a high of Rs.14000 crores, its total debt progressively climbing to a high of Rs.45000 crores and the daily operational deficit hitting Rs.26 crores per day mark, there is no doubt that India’s national carrier is now in dire straits. Recent defaults on interest payments, lack of available cash to pay even operational costs, piled up fuel dues, delayed employee salaries, extremely low employee morale, worsening employee-management conflicts and a half cooked merger that never took off clearly give us a snapshot of the poor health that this company is in now. It is an unfortunate story of a company which used to be India's pride just until a decade ago.
Serious management deficit, financial mess, ageing fleet, low load factor, poor aircraft capacity utilisation, corruption, operational inefficiencies, poor vision, ill-conceived policies, absence of a sound business plan, lack of readiness to combat onslaught of competition, loss of traffic on account of rationalisation of air traffic routes, loss of home country advantage, continuous neglect, bloated wage bill, huge and unsustainable workforce (mostly non-critical), political interference and powerful unions in perennial conflict are some of the reasons that appear to have contributed to the ever declining fortunes of Maharaja's empire.
Instances like Air India/IA’s decision to buy more than 100 planes in one go on unfavourable contractual and financial terms (poor purchase deals, costlier loans, escalated payments, faulty financing), delays in return of leased aircrafts, postponement of delivery of new Boeing aircrafts for months due to lack of proactive planning and absence of organisational preparedness in areas of route and fleet planning, hiring and reallocation of crews, financial planning, etc. are some glaring examples of shallow planning, directionless and inconsistent business strategy, mismanagement and poor execution.
Air India has about 32000 employees. As per reports, out of Air India’s wage bill of around Rs.3700 crores, pilots’ wages account for about Rs.800 crores i.e. about 22%. The wage share of non-critical employees is way too high. If we compare the cost structure of Air India with other top airlines like Jet and Spice, the wage bill looks extremely disproportionate. Air India’s reported employees cost is about 35% of the total costs compared to 9% at Spicejet and 13% at Jet Airways.
Government’s policy decisions and external factors like mandated high sales tax and surcharges on Aviation fuel, removal of routes with heavy loads and opening them up to private airlines, significant aviation fuel price hikes, government's disallowing of hedging and forward purchases of aviation fuel, past global economic and airline downturn, fare regulation by DGCA on some routes, government's policy of 35% capacity commitment on international routes, forced maintenance of untenable regular full time jobs due to existing labour laws, etc. have also significantly contributed to this mess of gigantic proportions.
It is also alleged by some that the ill-conceived merger of Air India with Indian Airlines also contributed to and hastened the airlines downfall. Both entities have had their own cultural DNAs such as internal processes, procedures, systems, and the ways to do their internal businesses. Post-merger, the worsening trust deficit between crew and management, unkept promises of parity between Air India and Indian Airlines pilots, strikes, poor execution, etc. didn't help either.
However, whether this merger should have taken place or not could be a new subject of conversation given the inherent opportunities of compatibility, operating synergies, economies of scale and integration that could be availed out of this merger. For instance, the benefits of compatibility of (nature of) both businesses, utilisation of unused capacity, supply chain integration, enhanced purchasing power, assets reallocation and utilisation, realignment of internal systems, reduction in operational costs, rationalisation of organisational structure and employees in merged entity, leveraging strengths of merged entities, etc. were on the table.
Operationalising of mergers between entities needs a clear and consistent vision, management's immense skill and commitment, a defined integration path with milestones, proactive planning, adequate organisational preparedness, process and systemic integration, employee integration, proper inter-cultural and information dissemination and a conflict resolution mechanism. And mergers, of course, are a time consuming process.
What needs to be done from here on in order to save our national carrier is a million dollar question. Some of the solutions are no brainers but require leadership, maturity, immaculate planning, commitment and execution. Privatisation - reducing government's stake to a minority - say 20%, running the organisation on purely business principles, appointing business like professional board members and management, having zero tolerance for political interference and indiscipline, restructuring the business plan, realigning business strategy to meet competition, rationalising and optimising costs across the company, strategic modernising of fleet in phases, inculcating a culture of professionalism and performance, initiating customer centric policies and strategies, shedding off the flab in workforce through job rationalisation and cuts in both non-critical full time and contract labour, slashing pay and entitlement cuts as required, driving austerity initiatives across the organisation, establishing performance linked incentives, retaining pilots and talent, engaging employees and their participation in decision making, honouring past pledges, renegotiating contracts with Unions and Vendors, etc. are some of the apparent measures that come to mind. There could be several other measures if this revival exercise is pragmatically thought through.
The recent decision to infuse fresh equity of Rs.1200 crores at PM's behest and a bailout package of Rs.5000 crores looks another doze of oxygen for this dying entity. Yesterday's news that Government aims to revamp Air India board and management by bringing in "fresh" talent - appointing three new independent directors from corporate world and a new CMD - from IAS who would be operating under the overall supervision of present Civil Aviation Secretary appears to be another half-hearted attempt by the government to set things right. Under the proposed dispensation, it is difficult to believe that the so called “independent’ directors on board would have the required operational freedom to execute what they think is best for the airline. This policy decision doesn’t seem to have been thought through and do not exude enough confidence.
In the aftermath of this policy decision, government today sacked the existing CMD - a Karnataka cadre IAS officer and appointed a Jt.Secretary rank IAS officer as the replacement. It is interesting to note that the new CMD is a 1982 batch officer armed with a MBA from University of Hull and has about two years of experience in Civil Aviation. Based on the available information, between 2000 and present, i.e. after his MBA in year 2000 and prior to his two year stint in Ministry of Civil Aviation, incoming Air India CMD has worked in State government departments of Welfare and Rural development. Prior to his MBA in 2000, several of his assignments have been in State government marked with some stints at Centre in Departments of I&B and Culture. It is one thing to run a small department in a State Secretariat of few hundred employees and another to run a large, complex, global commercial organisation.
It is hard to comprehend that a person with so little functional / technical experience and national exposure has been given the charge to turnaround an ailing national behemoth like Air India (NACIL). Such an appointment in private sector would be akin to committing “business hara-kiri”. His appointment is surely a backward step and another shooting in one's foot exercise. Moreover, this is another example of Air India being allowed to become a training ground for IAS officers who have no or little knowledge of the aviation sector and have no experience of running a large international commercial enterprise. Furthermore, this appears to be another blatant attempt to maintain a stranglehold over the Airlines by Ministry of Civil Aviation.
To everybody’s bewilderment, the outgoing CMD Arvind Jadhav –another IAS officer who miserably failed as Air India boss and who was hugely responsible for escalating the recent mess, was simply and quietly repatriated to his parent cadre, Karnataka. How about the accumulated losses of thousands of crores that he supervised during his three year tenure, how about several permanent damages that he caused to the organisation due to his non-experience, lack of skill, reported dictatorial approach and high handed attitude. How about the AI-IA merger that he couldn’t execute and which added to the accumulation of losses and to the damage of airlines future. How about the reported low employee morale and perennial conflicts in the organisation that he caused and was majorly responsible for during his tenure. The question now is how and when the government will hold him accountable for his actions. Will he be dismissed from service (that he deserves) or will he be forced to retire and tried in a court for his illogical decisions is something that the government needs to give a thought over. It will be interesting to see if our Parliamentarians raise Mr.Jadhav’s accountability issue in both Houses for the government to reply and act. By the way dismissal from service would be the least punishment that is meted out in a comparable situation in any private sector enterprise - big or small.
The person who is entrusted to oversee and supervise the new revival team of CMD and three "independent" Directors, interestingly, remains the same. The present Civil Aviation Secretary, Mr.Naseem Zaidi - a 1976 batch IAS officer has also been a DGCA and a Jt.Secretary in Ministry of Civil Aviation for several years. Having held such critical positions in the Ministry of Civil Aviation since mid-1990s, Mr.Zaidi would definitely be considered a part of the policy making team which supervised [notwithstanding political interferences] the progressive downfall of Air India. In other words, we have a unique situation here. We have the same person entrusted now to oversee Air India's revival who, as part of the policy making team, was responsible in many ways for bringing it down. Perhaps, Mr.Zaidi would be the one, who, the employees and unions, may trust the least in this revival process.
It is also worthwhile to mention here that Mr.Zaidi led the Civil Aviation Directorate until recent past. The organisation under his tenure saw its credibility diving to its lowest ebb. The office of DGCA, according to public perception, is considered to be a den of corruption, mismanagement, nepotism and unprofessionalism. The recent startling revelations about a number of illegal and fake pilot training institutions in operation across the country, instances of fake pilots being certified by training institutes in collusion with DGCA officials for a price, lack of firm action for years against such fake institutions and against colluding DGCA officials despite string of clinching evidences, poor aviation safety management, etc. speak a lot about the rot that DGCA is in today.
So where is the infusion of professionalism, new vision, fresh talent, vigour and energy, corporate culture, operational independence, and business like orientation in this government strategy? The government doesn't seem to be learning from its past mistakes and looks determined to let Air India bleed further towards bankruptcy. Cynics would opine that this could perhaps be a secret government policy to take Maharaja’s empire further down the dumps so that it can be privatised easily and sold cheap at throwaway price to a favourable party/s. Who knows?
Anyways, now that a new CMD has already been appointed, one can only wish him good luck and pray for his success as we want him to revive Air India. The odds though are heavily weighed against him.
Serious management deficit, financial mess, ageing fleet, low load factor, poor aircraft capacity utilisation, corruption, operational inefficiencies, poor vision, ill-conceived policies, absence of a sound business plan, lack of readiness to combat onslaught of competition, loss of traffic on account of rationalisation of air traffic routes, loss of home country advantage, continuous neglect, bloated wage bill, huge and unsustainable workforce (mostly non-critical), political interference and powerful unions in perennial conflict are some of the reasons that appear to have contributed to the ever declining fortunes of Maharaja's empire.
Instances like Air India/IA’s decision to buy more than 100 planes in one go on unfavourable contractual and financial terms (poor purchase deals, costlier loans, escalated payments, faulty financing), delays in return of leased aircrafts, postponement of delivery of new Boeing aircrafts for months due to lack of proactive planning and absence of organisational preparedness in areas of route and fleet planning, hiring and reallocation of crews, financial planning, etc. are some glaring examples of shallow planning, directionless and inconsistent business strategy, mismanagement and poor execution.
Air India has about 32000 employees. As per reports, out of Air India’s wage bill of around Rs.3700 crores, pilots’ wages account for about Rs.800 crores i.e. about 22%. The wage share of non-critical employees is way too high. If we compare the cost structure of Air India with other top airlines like Jet and Spice, the wage bill looks extremely disproportionate. Air India’s reported employees cost is about 35% of the total costs compared to 9% at Spicejet and 13% at Jet Airways.
Government’s policy decisions and external factors like mandated high sales tax and surcharges on Aviation fuel, removal of routes with heavy loads and opening them up to private airlines, significant aviation fuel price hikes, government's disallowing of hedging and forward purchases of aviation fuel, past global economic and airline downturn, fare regulation by DGCA on some routes, government's policy of 35% capacity commitment on international routes, forced maintenance of untenable regular full time jobs due to existing labour laws, etc. have also significantly contributed to this mess of gigantic proportions.
It is also alleged by some that the ill-conceived merger of Air India with Indian Airlines also contributed to and hastened the airlines downfall. Both entities have had their own cultural DNAs such as internal processes, procedures, systems, and the ways to do their internal businesses. Post-merger, the worsening trust deficit between crew and management, unkept promises of parity between Air India and Indian Airlines pilots, strikes, poor execution, etc. didn't help either.
However, whether this merger should have taken place or not could be a new subject of conversation given the inherent opportunities of compatibility, operating synergies, economies of scale and integration that could be availed out of this merger. For instance, the benefits of compatibility of (nature of) both businesses, utilisation of unused capacity, supply chain integration, enhanced purchasing power, assets reallocation and utilisation, realignment of internal systems, reduction in operational costs, rationalisation of organisational structure and employees in merged entity, leveraging strengths of merged entities, etc. were on the table.
Operationalising of mergers between entities needs a clear and consistent vision, management's immense skill and commitment, a defined integration path with milestones, proactive planning, adequate organisational preparedness, process and systemic integration, employee integration, proper inter-cultural and information dissemination and a conflict resolution mechanism. And mergers, of course, are a time consuming process.
What needs to be done from here on in order to save our national carrier is a million dollar question. Some of the solutions are no brainers but require leadership, maturity, immaculate planning, commitment and execution. Privatisation - reducing government's stake to a minority - say 20%, running the organisation on purely business principles, appointing business like professional board members and management, having zero tolerance for political interference and indiscipline, restructuring the business plan, realigning business strategy to meet competition, rationalising and optimising costs across the company, strategic modernising of fleet in phases, inculcating a culture of professionalism and performance, initiating customer centric policies and strategies, shedding off the flab in workforce through job rationalisation and cuts in both non-critical full time and contract labour, slashing pay and entitlement cuts as required, driving austerity initiatives across the organisation, establishing performance linked incentives, retaining pilots and talent, engaging employees and their participation in decision making, honouring past pledges, renegotiating contracts with Unions and Vendors, etc. are some of the apparent measures that come to mind. There could be several other measures if this revival exercise is pragmatically thought through.
The recent decision to infuse fresh equity of Rs.1200 crores at PM's behest and a bailout package of Rs.5000 crores looks another doze of oxygen for this dying entity. Yesterday's news that Government aims to revamp Air India board and management by bringing in "fresh" talent - appointing three new independent directors from corporate world and a new CMD - from IAS who would be operating under the overall supervision of present Civil Aviation Secretary appears to be another half-hearted attempt by the government to set things right. Under the proposed dispensation, it is difficult to believe that the so called “independent’ directors on board would have the required operational freedom to execute what they think is best for the airline. This policy decision doesn’t seem to have been thought through and do not exude enough confidence.
In the aftermath of this policy decision, government today sacked the existing CMD - a Karnataka cadre IAS officer and appointed a Jt.Secretary rank IAS officer as the replacement. It is interesting to note that the new CMD is a 1982 batch officer armed with a MBA from University of Hull and has about two years of experience in Civil Aviation. Based on the available information, between 2000 and present, i.e. after his MBA in year 2000 and prior to his two year stint in Ministry of Civil Aviation, incoming Air India CMD has worked in State government departments of Welfare and Rural development. Prior to his MBA in 2000, several of his assignments have been in State government marked with some stints at Centre in Departments of I&B and Culture. It is one thing to run a small department in a State Secretariat of few hundred employees and another to run a large, complex, global commercial organisation.
It is hard to comprehend that a person with so little functional / technical experience and national exposure has been given the charge to turnaround an ailing national behemoth like Air India (NACIL). Such an appointment in private sector would be akin to committing “business hara-kiri”. His appointment is surely a backward step and another shooting in one's foot exercise. Moreover, this is another example of Air India being allowed to become a training ground for IAS officers who have no or little knowledge of the aviation sector and have no experience of running a large international commercial enterprise. Furthermore, this appears to be another blatant attempt to maintain a stranglehold over the Airlines by Ministry of Civil Aviation.
To everybody’s bewilderment, the outgoing CMD Arvind Jadhav –another IAS officer who miserably failed as Air India boss and who was hugely responsible for escalating the recent mess, was simply and quietly repatriated to his parent cadre, Karnataka. How about the accumulated losses of thousands of crores that he supervised during his three year tenure, how about several permanent damages that he caused to the organisation due to his non-experience, lack of skill, reported dictatorial approach and high handed attitude. How about the AI-IA merger that he couldn’t execute and which added to the accumulation of losses and to the damage of airlines future. How about the reported low employee morale and perennial conflicts in the organisation that he caused and was majorly responsible for during his tenure. The question now is how and when the government will hold him accountable for his actions. Will he be dismissed from service (that he deserves) or will he be forced to retire and tried in a court for his illogical decisions is something that the government needs to give a thought over. It will be interesting to see if our Parliamentarians raise Mr.Jadhav’s accountability issue in both Houses for the government to reply and act. By the way dismissal from service would be the least punishment that is meted out in a comparable situation in any private sector enterprise - big or small.
The person who is entrusted to oversee and supervise the new revival team of CMD and three "independent" Directors, interestingly, remains the same. The present Civil Aviation Secretary, Mr.Naseem Zaidi - a 1976 batch IAS officer has also been a DGCA and a Jt.Secretary in Ministry of Civil Aviation for several years. Having held such critical positions in the Ministry of Civil Aviation since mid-1990s, Mr.Zaidi would definitely be considered a part of the policy making team which supervised [notwithstanding political interferences] the progressive downfall of Air India. In other words, we have a unique situation here. We have the same person entrusted now to oversee Air India's revival who, as part of the policy making team, was responsible in many ways for bringing it down. Perhaps, Mr.Zaidi would be the one, who, the employees and unions, may trust the least in this revival process.
It is also worthwhile to mention here that Mr.Zaidi led the Civil Aviation Directorate until recent past. The organisation under his tenure saw its credibility diving to its lowest ebb. The office of DGCA, according to public perception, is considered to be a den of corruption, mismanagement, nepotism and unprofessionalism. The recent startling revelations about a number of illegal and fake pilot training institutions in operation across the country, instances of fake pilots being certified by training institutes in collusion with DGCA officials for a price, lack of firm action for years against such fake institutions and against colluding DGCA officials despite string of clinching evidences, poor aviation safety management, etc. speak a lot about the rot that DGCA is in today.
So where is the infusion of professionalism, new vision, fresh talent, vigour and energy, corporate culture, operational independence, and business like orientation in this government strategy? The government doesn't seem to be learning from its past mistakes and looks determined to let Air India bleed further towards bankruptcy. Cynics would opine that this could perhaps be a secret government policy to take Maharaja’s empire further down the dumps so that it can be privatised easily and sold cheap at throwaway price to a favourable party/s. Who knows?
Anyways, now that a new CMD has already been appointed, one can only wish him good luck and pray for his success as we want him to revive Air India. The odds though are heavily weighed against him.
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