The Descent of Air India (36 page)

The tragedy is that the leaders have ignored even their own experiences with past mergers. Consider the Indian Airlines–Vayudoot merger that was brought about in the 1990s. After Vayudoot’s financial performance deteriorated beyond redemption, it was felt that a merger with Indian Airlines would help revive its fortunes. Vayudoot was a comparatively small airline with only 2,000 employees. But the merger proved to be tumultuous in terms of manpower issues, which are still unresolved.

Unfortunately, the HR heads appointed to oversee the Indian Airlines– Air India merger were either unaware of this history or preferred to pay no heed to past lessons. One of the key assumptions made at the time of the merger was that it would improve employee productivity because NACIL would have fewer employees per aircraft on account of a larger fleet through the procurement of additional aircraft and reduction of the employee base by around 4,000 people due to expected retirements over a period of five years. The employees have retired, leading to a reduction in manpower on the rolls of the airline, but productivity is still low because the work practices and systems have not been improved. There is an increasing reliance on the induction of staff on contract in subsidiary companies, such as the Air India Air Transport Services Limited, to undertake the work hitherto performed by permanent employees.

MISSING THE REAL PICTURE

The merger was officially announced in 2007, but the airlines have failed to make any progress on the integration of their key functions, especially the HR operations. Employees are disillusioned, given the problems that have ensued in terms of delayed salary payments, lack of promotions, ad hoc and arbitrary rewards to select personnel and frequent changes in policies. No serious effort was made to address the HR issues in the initial years. The ministry, then led by Praful Patel and directly in control of the merged entity, allowed issues to fester until Vayalar Ravi came in as minister and constituted a Committee of Experts under the chairmanship of Justice D. M. Dharmadhikari, a retired Supreme Court judge, on 11 May 2011. He set up the committee five months after assuming charge, but the merger was already four years old. For most of us who have watched the sequence of events closely and knew the way the government worked, the formation of a committee brought no cheer. We wondered whether this would turn out to be a way to sweep all the problems under the carpet, and we were hoping against hope that we would be proved wrong.

To understand the impact of the committee and its report, let us study what it set out to do and how it went about its task. The terms of reference were:

•  Examination of the principles of integration across various cadres and determination of level and seniority

•  Examination of the principles of pay/wage rationalisation and restructuring for all the employees of the erstwhile airlines

•  Examination of and suggestions on harmonised working conditions of various categories of employees of the erstwhile airlines, depending upon the requirements

•  Examination the aforementioned points in the light of the cost neutrality principle

•  Examination of of the principles governing the structure of pension schemes, death-cum-retirement gratuities and other terminal benefits having financial implications

•  Examination and recommendations with respect to the general principle parameters of the different productivity-linked incentive schemes and bringing them in line with airline practices

•  Tackling any other related matter that would be referred to the committee

The task was onerous, and the committee seemed aware of that. In fact, the report stated as much in the preface, ‘We could realise a deep sense of frustration and mistrust amongst the employees of two merged entities. However, as soon as they realised that the committee has been set up by the ministry of civil aviation and not by the management of Air India, they had self assurance of the impartiality and independence of the committee.’While this was commendable, what I am mystified by is why the report then did not factor in the bias perception that they had recognised. If a section of the employees believed they were being discriminated against, the committee should have heard out both parties and involved independent observers in the process. As the committee was entrusted with the responsibility of the merged airline it should have considered both points of view. The committee members did not do that, and as a result, the report turned out to be a one-sided recounting of events. And what should have been a rejuvenating exercise turned out to be a degenerative one that perpetuated the differences between the employees of the airlines.

The report also erred on facts: it proclaimed that Indian Airlines was older than Air India, missing the fact that Air India had existed as Air India International and before that as Tata Airlines long before Indian Airlines came into being. While this may not appear to be a major transgression, it is shocking that the committee members did not check their facts before putting them down, and this makes one doubt the validity of their recommendations. What was incomprehensible was that the committee sourced some its information from a website (
http://www.flyforfood.com
) that carries a disclaimer that it cannot verify the information it provides! The committee should have accessed information from authentic sources such as the airline personnel directors council which has members from all airlines including Air India.

Why did Justice Dharmadhikari, a learned retired judge of the Supreme Court heading the committee, not ensure that the report reflected the views of the people who had a stake in the airline’s survival? If he had done so, we may not have had to deal with the row over disparity in pilots’ pay in 2012, which has further debilitated the airline.

An opportunity that had been provided to bring about a harmonious transition of the two arms of the government’s aviation business into a single entity employing close to 30,000 people has clearly been missed. Even though Air India has set up an in-house implementation committee to redress the grievances arising out of implementation of recommendations, this is not a simple task, and nor is there a quick-fix solution. Both Justice Dharmadhikari and Air India CMD Rohit Nandan should have sought explanations from the concerned officials who briefed the committee about how discrepancies—inadvertent or deliberate—were allowed to creep in to make the report a subject of yet another controversy with serious and adverse impacts on the merger’s success. That the merger has caused irreparable harm to Air India is no secret now. The belated admission by a government functionary, Mr Ajit Singh—the incumbent civil aviation minister—that the synergy and other gains expected from the merger haven’t materialised yet came only in May 2012 in the face of the strike by the Indian Pilots’ Guild,. But we need to ask ourselves whether an acknowledgement of guilt is enough or if the guilty should be brought to book.

CHAPTER TWELVE

the critical years

THE YEAR 2008 was a tumultuous one for the world. The global financial infrastructure was collapsing, and the economy seemed to be shrinking in double time. Uncertainty and fear gripped the markets worldwide, and if there was anything that one could be sure of, it was that everything was about to change. At Air India, things were no different. V. Thulasidas was retiring after serving an extended term as the chairman and managing director. He had helmed the airline for four years and three months, a tenure longer than the tenures of most other chairmen in recent years. His reign marks a critical juncture in Air India’s history as the airline, after a prolonged period of decline, had just entered a phase of cautious optimism. His immediate predecessors had shown courage and foresight in dealing with some of the airline’s longstanding problems—they had dealt with the unions firmly and also cut down on expenses, which had ballooned to an unmanageable extent. Emphasis had also been laid on enhancing revenues. It was also the time when the aviation sector was being opened up more liberally in India than ever before. Competition was nipping at its heels, and Air India needed someone who had the vision and perseverance to see it through some rough times.

LOST OPPORTUNITIES

V. Thulasidas, when he joined the airline, had on several occasions stated that he wished to take Air India to the heights of its glory. His words brought hope to many of us in the airline as we had begun to glimpse a turnaround in its fortunes owing to the fact that Mr Thulasidas’s predecessors had set the airline on the road to recovery. But by the time he retired on 31 March 2008, all of our hopes had been dashed. Under his watch, the airline’s fortunes had gone from bad to worse. Air India’s losses were higher than ever. Ambitious projects launched with a lot of fanfare had either been abandoned or were half-done. Political and bureaucratic meddling had reached its zenith. His tenure, having begun with a flicker of hope, was ending under a cloud of despair.

I had, on several occasions, locked horns with him about union high-handedness, about neglect of the product and poorly planned projects. He was also responsible for transferring me out of the HR department at the behest of a handful of union leaders. In fact, I had written many letters to him to document my displeasure on the way things were being run. But his response, apart from agreeing with the points raised in my letters, had been to do nothing. On his last day, all the functional and executive directors from all over the country and abroad had been summoned to the conference room of the Air India building at Nariman Point. Generally considered an opportune occasion for the chairman to talk freely to his colleagues without the burden of office, these meetings were congenial affairs. But the mood was sombre. Some of us who were aware of the financial disaster staring us in the face were relieved that Mr Thulasidas was making way for another because we were hopeful that the airline would get a fresh chance for survival, but a set of loyalists who praised his efforts publicly and agreed with all that he said were unhappy. We were all in the room, waiting to bid our goodbyes to the man in the chair. But Mr Thulasidas kept us waiting. He turned up almost two hours late for the meeting. His office staff told us that he was with Praful Patel at his Mumbai residence. Why should a chairman—on his last day in office—see fit to visit his minister before the rest of his colleagues? He never shared the details of his meeting with us, and he was not under any compulsion to do so either. When Mr Thulasidas finally arrived at around noon, the meeting was kicked off with paeans in his honour. References to how he had shown courage and ambition in placing one of the largest orders for aircraft in Air India’s history were made. Some of those present at the meeting also thanked him for providing exceptional and inspiring leadership to the company in its critical hour; they said they had learnt a lot from him. Whether they said this because it is customary to say so on such occasions or because they really meant it—it would be difficult to say; but clearly, they were unaware of the true state of the airline. They did not know that Mr Thulasidas was leaving Air India with a balance sheet dyed in red. When the numbers were released a few weeks after he left office, we saw how precarious the situation was. Air India was poised on the brink of bankruptcy—it had a
40,000-crore aircraft acquisition deal to honour, while its market share was being eroded by the day.

Meanwhile, the farce continued in the corridors of the Air India building. Mr Thulasidas was unwilling to go without a fight. Although protocol demanded that the chairman relinquish his duties on the afternoon of his last day, he stayed back well beyond the office hours. He was there long after we had left office, literally burning the midnight oil on his last night in office. We found out the next morning that he had been busy issuing orders for promotions and transfers, withdrawal of disciplinary action and signing orders for post-retirement jobs for a few chosen employees. He issued promotion letters for 30 officers who were to be made general managers, another 25 to be made deputy general managers and some others as executive directors. Many of the orders were to come into force with prospective effect—even two months later. Mr Thulasidas’s actions were in violation of the All India Service (death-cum-retirement benefits) Rules, 1958, and also went against the moral and ethical stand that a chairman should have taken. Some of these decisions imposed a financial burden that the airline could ill afford. Interestingly, only a couple of years earlier, in 2006, Mr Thulasidas had kept in abeyance 38 applications of employees of the Hotel Corporation of India (HCI), a subsidiary of Air India, for voluntary retirement on the plea that the applications had been recommended for acceptance by the HCI managing director in his last few days in office. It was a case of blatant doublespeak.

Mr Thulasidas’s actions were criticised by a section of the airline’s management team and also by commentators and journalists in the media. He was never forthcoming about the reasons for his decisions but it was possible that he was taken by surprise when the government did not extend his term further. There were rumours that he had sought an extension to his term, which were fuelled by the fact that his successor, Raghu Menon, an IAS officer, who had been named three days earlier, did not come to Mumbai for a formal transfer of charge on the last day of his term. He arrived the next morning.