The Descent of Air India (23 page)

At the following meeting, the advertising agency presented the art works. Not realising that the minister would not let them have any say, everybody came up with suggestions on what was required to be done to deliver the message for a fuller impact.

As the date of the campaign approached, Mudra, which had secured ad space at concessional government rates, asked for their dues as they had to pay the newspapers and TV channels. But it wasn’t forthcoming. I had advised my colleague at Airlines House in Delhi to stay off the fund collection drive and make the minister’s office chase the airlines and airports on the pretext that such payments will be released only at the intervention of Naresh Goyal for Jet Airways, Vijay Mallya for Kingfisher, and so on. The minister’s OSD Mr K. N. Choubey finally got the money to the agency. The six-part campaign cost
18 crore and was released in all newspapers and all channels. Mr Patel exhibited his business prowess by managing to get the campaign highlighting his performance without spending on it.

One of the reasons for the increased politicisation of the airline has been the excessive enthusiasm of the senior management to comply with ministers’ requests. If the chairmen had played by the airline’s rules instead of those of the politicians, Air India would have been spared its fate. There is another way to look at this: by not looking into the airline’s interests, were the chairmen and the senior management personnel in fact complicit in the airline’s destruction?

TAKING A STAND

To stand up to the politicians, one needs an unwavering commitment to the company one works for. It needs one to be able to distinguish between loyalty towards an organisation and towards one individual. However, a word of caution here—one may not always succeed in one’s endeavours, which may be disheartening and could push one to stay silent and submit to pressure.

I was perhaps encouraged to resist uncalled-for pressures because I had been fortunate in my dealings with bureaucrats and the political leadership, who were not as brazen in their disregard for rules as many are today. At Coal India, for instance, a bureaucrat who was visiting our mines with a parliamentary committee threatened me that if I did not provide the entourage with a more expensive gift, we might end up with a negative report. He even took the matter up to my chairman, who supported me in my decision to not bow to his wishes. Instead of keeping silent about this threat, I walked up to the leader of the parliamentary committee, K. P. Singh Deo, who not only appreciated my honesty and commitment to the company but invited me to New Delhi a month later for a special assignment that involved assisting in the organisation of the IX Asian Games. I was awarded the Asiad Jyoti Presidential Award for my efforts. Thus, I had seen the benefit of standing up for what was right and had been encouraged to stick to my principles by people whose commitment to their organisations and their work was exemplary. I never thought of changing my attitude and therefore paid a price for not being pliable. Many of the Air India employees and unions who are today blaming the management and the politicians for destroying the airline were at some stage or the other equally guilty of colluding with the corrupt and inefficient executives and chairmen/managing directors. They were chasing short-term gains at the cost of long-term losses.

While the instances just recounted can be described as successful examples of defending my company’s interests, it isn’t always the case. There are occasions when the minister’s office issues recommendations because they have been approached by acquaintances they cannot refuse. The story is, however, different if the minister has a vested interest or is unable to turn down the requests.

My attitude was evident to all who have worked with me, and I have often faced the brunt of my actions, such as in the year 2000, when I was the head of In-flight Services Department. Air India had invited bids for the catering contract at London’s Heathrow Airport for India-and US-bound flights from London. As the tender value was huge, I had, as a matter of abundant caution, requested the deputy managing director, J. N. Gogoi, to constitute a committee of directors over and above the Tender Committee so that no wrongdoings took place at any stage. However, on 24 August 2000, a day prior to the final negotiations, I received a call from the minister’s office asking me to postpone the negotiations. I informed him that the team representing the lowest bid was already airborne for Mumbai and it would not be fair to cancel the negotiations at this stage. After due consultations with the minister, he advised me to go ahead but not to take a final decision.

On 28 September 2000, A. H. Jung, secretary of the Ministry of Civil Aviation and Chairman, Air India, summoned me to Delhi. While discussing other issues, Mr Jung asked as to why we were changing our caterer in London. I explained that the contract was being awarded to the LSG Sky Chefs, a unit of Lufthansa, on the basis of tenders issued as the existing contract was due to expire soon. I added that LSG Sky Chefs’ bid was 3.5 per cent (actually 4.97 per cent) lower than that of Abela, the present caterer, and would save Air India
10 crore over three years. All efforts to bring about a change in the decision were in vain as I stood my ground. It was no coincidence that I received my transfer order from the ministry soon thereafter, overruling objections from the managing director, M. P. Mascarenhas. This was not the end of the saga. Two officials, Sanat Kaul, joint secretary for the Ministry of Civil Aviation, and S. Punhani, director of the Finance Department of Air India, were dispatched to London to investigate the deal and report aberrations. They found none. However, two years later, I received a list of charges pertaining to the London contract from Parambir Singh, an IPS officer on deputation to Air India. My responses were detailed and tackled the accusations from every angle. For instance, it was alleged through a selective rendering of the tender document that the firm that the Tender Committee had recommended was not favoured by the local committee. I nailed their lies by revealing the entire document and further justified my decision by showing that every firm on the list had some adverse remark against it or the other. In the end, I was able to prove that the tender had been contracted as per the rules and that there was nothing unique about the firm that the Tender Committee had chosen, as was being made out. In the context of today’s environment, when honest officers can be maligned and tried by the media with debilitating effect, it is imperative to follow the rules, keep all the records and make sure that the enquiry committee receives a detailed reply so that nothing is left to imagination and misinterpretation. This attitude has stood me in good stead. For instance, years later, when I was openly critical of the airline’s management, Arvind Jadhav directed his people to inform the media that I too had been questioned by the vigilance department during my career in Air India. A few journalists called me up to confirm the veracity of his comments. My response, which was self-explanatory, was simple: ask for a copy of my response. If they still had any further questions, they could come back to me. But none did.

The minister–chairman nexus with a virtually ineffective board of directors has cost Air India dearly. The instances that I have cited here are just a small sample of the way events were playing out within the airline. There were many more such cases experienced by many of my colleagues which show how the board and the management allowed several decisions to go through unquestioned, even on deals that had a bearing on the airline’s future. The senior management team, barring those forming the coterie, was kept out of the loop. Also, since the minister had begun appointing people of his choice to the post, the periodic performance reviews became a meaningless exercise. It is important to understand that the airline’s fate was being sealed not just by politicians but also by weak and short-sighted leaders within the airline. And those who were at the helm during the period have played an equally dangerous hand in the airline’s decline.

CHAPTER NINE

a saga of financial
mismanagement

THE PICTURE, DURING 2004–08, was bleak. The number of foreign airlines operating out of India was on the rise. Domestic private airlines were due to commence international operations. And the Indian flier was getting more and more demanding. Air India’s market share had plummeted and was set to drop even further. Its traditional sources of revenue were also under pressure as the aviation sector was being opened up. To add to the problem, costs were rising and set to soar even higher with the planned acquisition of 68 new aircraft. The infusion of funds by the government to augment its equity base in Air India from a paltry
153.84 crore in the wake of aircraft acquisition and the merger with Indian Airlines, though recommended by Accenture, was also not forthcoming. The airline was in the throes of a crisis. The external environment had changed beyond measure, and internally, the vice-like grip of politicians, bureaucrats and unions and a weak management was preventing the airline from rising above its challenges. Air India’s future was looking grey.

Many of us within the airline knew that it was time to bite the bullet. We needed a plan to help the airline out of the storm clouds, the political will to see it through and grit and determination on the part of the management to weather the turbulence that this would cause. Instead, all problems were swept under the carpet. There was a deliberate attempt to keep the real state of the airline away from the public view. At board and interdepartmental meetings and during regular office interactions, a perception was sought to be created that it was ‘business as usual’. The real financial health of the airline was not revealed. Losses were shown to be lower than the actual figures by inflating revenues and suppressing expenditures. By straying from the established accounting standards and through smart juggling of numbers, the airline’s statement of accounts was made to look better than it actually was. The finances, according to the annual reports of the respective years, were: an operating profit of
49.29 crore in 2004–05 and operating losses of
399.60 crore and
1,431.18 crore in the years 2005–06 and 2006–07 respectively. Effectively, in these three years, the airline was taken from a state of marginal profits to one of rising losses. While it would be impossible to establish the real loss figures for the years being examined, the following examples will show how even the published loss figures were gross underestimates.