Air India sale to Tata Sons a right decision long overdue

An Air India Airbus A320 plane. REUTERS/Gleb Garanich/File Photo

The decision of the Central Government to sell off Air India to the Tata Sons group needs to be really appreciated. This is the right answer to the question which has been lingering in our minds for quite some time that why the government took over the complete control over the aviation sector and maintained it for so long.

Why the government acquired an airline which the Tata Group established and astutely nourished before we gained Independence? How come the government later could not run the organisation properly? Why the government had done the tedious job of running hotels and airways when it found struggling to spend money for the common good of the public? Questions were plenty, but there were no convincing answers.

I took over the reins of the Secretary of the Civil Aviation Ministry and as the Chairman of  Air India at a time when no one was willing to buy the airline, and the Union Government had the sole option of running the public carrier on its own. During those times, though the Air India was a small player among giant airlines operating in the international arena, it didn't have any financial woes unlike the spate of economic turmoils which the company faced later.

The onset of decline
The main reason for Air India's plight today can be attributed to the two major decisions taken by the then Union Government in 2004. I retired from the service prior to these developments.

The decision to buy and hire a number of flights indiscriminately for operating on routes where Air India was going on in a no-profit and no-loss mode was the first decision which hit the aviation company badly. Nobody could ever decipher the logic behind such an unwanted purchase of planes. The inquiry into the purchase is still going on at a snail's pace. But we had seen the unbelievable financial growth of those people who were behind such a decision. The second decision that proved costly for Air India was the government's decision to merge the national carrier Air India with Indian Airlines, which serviced the domestic routes primarily.

An Air India Airbus A320 neo plane takes off in Colomiers near Toulouse, France. REUTERS/Regis Duvignau/File Photo

Credible answers are yet to be forthcoming from the powers that be with regard to the logic behind these two decisions which resulted in the loss of crores of rupees for the public exchequer.

Healthy competition denied
Though both Indian Airlines and Air India were in the government sector, they grew up by competing with each other. It was necessary to keep both the domestic and international airlines together under one platform. But being two distinct companies having different cultures, both the companies should have been kept as separate entities under a single holding company in order to maintain their competing spirit. This was the advice received by the government too. But to bypass this suggestion, a new consultancy firm was appointed to give a new report. It gave a report, favouring the forced amalgamation of two companies. This decision led the Air India to the brink of a total collapse.

Air India flight 185 arrives from New Delhi. REUTERS/Jennifer Gauthier/File Photo

Stagnation set in long before
But it would be wrong to say that only these two decisions led to the downfall of the company. Even before the implementation of these important decisions, the growth of the company had become stagnant. The political interventions that took place from time to time were the main reasons behind such a pitfall. It is not that all those who were at the helm of affairs at Air India were problematic. The management of the Air India was forced to take certain decisions for achieving short gains that have had a long-term negative impact on the airline. Such situations would have been avoided had the government taken the wise advice of the officials, who were well aware of the organisation and who were interested in the growth of the company.

Hard lessons
We felt all the more painful when we came to know that it was the same Air India which was once instrumental in supporting the launch of Singapore Airlines, which is now considered to be one of the leading airlines in the world. The lesson we have learnt is that the air transport is not a sector where the government should directly run services in the guise of safeguarding public interest.

After the civil aviation sector was opened up for competition, there were many positive changes that had been brought in. The airfares became cheaper. More places were linked via air route. Had there been no competition, it would not have happened. It is a fact that had the Central Government fully divested the shares of the Air India earlier, so much money of taxpayers would not have been spent for the maintenance of Air India. Anyway, the decision to privatise the Air India is a laudable step even though it comes late.

(The author is the former Chairman of Air India and former Secretary of the Union Ministry of Civil Aviation.)

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