essay
The chewing gum case
31/8/2009  |  DNA

Given a choice, will you fly Air India a second time? Even patriotism does not work any more.

The only purpose of an airline is to transport people and goods over a given distance in the quickest possible time. Payload is the determinant of success in all transportation businesses.

In the media reports on the crisis at Nacil, the holding company of the two national carriers, have you read the words 'customer' or 'cargo' even once?

A passenger is not necessarily a customer who pays for the space. The management has been 'reportedly advised' to reduce the incentives for the employees; but what about increasing the incentives for the customers?

The original Air India's claim to fame was a magnificent brand created by focusing on the customer, and this was top priority for the founder-chairman.

The only way to win, boost and retain share in a free competitive market is to create, sustain and re-invent beneficial differences for the customer. Once the 'management' slipped into hands of people buying peace on way to becoming secretaries to the Government of India, the brand equity withered away.

Another pilot had arrested the endless rent-seeking from another public sector enterprise: Indian Airlines. As chairman, he had declared that it was the management's right to manage and made it stick. The fact that J R D Tata was a civilian pilot or P C Lal was a fighter pilot made no difference to their role as the CEO. They were managers.

One managed a business group, another managed the air force. To them, punctuality was important because customers want on-time travel, period. They would have been horrified with absurd practices like payment of productivity-linked incentive to the chief of anti-corruption!

As public sector enterprises, Air India and Indian Airlines were not permitted to engage in speculation; therefore, it has taken sustained effort over several years to lose Rs 7,000 crore and counting.

The 'management' and the 'ministry' were inseparable as long as the lenders had hope; 'control' on Air India and Indian Airlines was never an issue with the ministry of civil aviation. Now the minister and the ministry would have us believe that they carry no responsibility for the mess.

Going by media reports, the Prime Minister's Office has now taken over from the ministry! There was uproar about the role of independent directors in the Satyam debacle (incidentally, the reported losses are almost the same!).

What about the independent directors on AI and Nacil boards? What about the fiduciary responsibility of the various types of secretaries who served on these boards. What about the ministers who treated these companies as their 'fiefdoms'?

It's funny if not sad to watch the management of Nacil deciding to withhold salaries for a few weeks to save a few crore in working capital when the problem runs into thousands of crore, and waste time in negotiating modifications to the meaningless performance linked incentive (PLI) scheme; in any case, one did not hear of the management including the ministry taking any pay-cut!

There was another funny story: the brand-new CEO is to be backed up by a 'professional' COO! Whoever thought of this, managed to destroy the credibility of the entire 'management' from chairman down, in one stroke! After this revelation, which investor is going to buy Nacil equity?

The SAIL telephone directory is a key intellectual property for my good friend Lakshmi Mittal. The same is true for oil & gas, communications, manufacturing, shipping, even aviation. Managers nurtured in the public sector have taken the private sector to commanding heights. Private sector decontrolled from Ministries has achieved global scale and competitiveness.

To say that Nacil could not integrate the software between AI and IA in more than a year is beyond ridicule, it's unforgivable. After the merger, there are two sets of managers for every staff job. The managers are not protected by the labour laws.

What has happened to the two sets of executive directors, general managers and other categories of managers responsible for this failure? Has anyone been even charged with incompetence or negligence, or are they all enjoying the PLI? Financial re-structuring is obviously a priority. A problem of Rs 7,000 crore is to be solved by actions yielding hundreds of crore each in a matter of months.

Chasing a few crore of rupees in PLI is not going to help in this. In any case, what is 'productive' about a flight that does not make a profit?

Air chief marshal Lal had galvanised the entire public sector by questioning 'wasteful practices'. It is high time to reopen this issue, not with the unions but with the Nacil Board and then with the aviation ministry. The best of financial restructuring will not change the fact that the interiors of brand-new aircraft are already smudged with dirt, and getting dirtier.

My first flight was in 1962, by a private airline Dakota. My first experience of Indian Airlines was in 1965, in a Skymaster. My best in-flight experience was in 1989, having caviar with Stolichnaya vodka in a crystal glass for brunch in an Air India 747, first class.

In all these years, there was one mess for which IA cannot be blamed: the decision by Prime Minister V P Singh to ground 19 brand-new aircraft to score a senseless political point. This hardly helped Singh but the idling for nearly two years ruined the financials of IA. But they had some twenty years to bounce back!

The chewing gum story: I boarded the 'new' Air India, to be ignored by the hostess who continued to chew gum as passengers boarded, doors were sealed and even during the safety demonstration. She was sharing some joke with two colleagues at the rear of the aircraft, oblivious of the customers in between. One has experienced many frustrations on AI / IA, but a hostess chewing gum on duty was the limit.

It is unkind to generalise on the basis of this one incident but the point is that she did not have any sense of pride in her work; she did not feel that she 'belonged'; she did not care for the customer. Will anything change even if she is dismissed from service?

Raha is chairman, Team Raha Ideation Ltd. and former chairman of ONGC.
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