The Descent of Air India (37 page)

DOWN THE BEATEN PATH

Raghu Menon assumed charge on 1 April 2008. He followed the usual practices and made all the right speeches. It was a ritual that we were familiar with by now. Every new chairman would come in and garland JRD’s bust, which is located in the foyer; a photographer was present recording the moment for posterity; and then the chairman walked into the room once occupied by J. R. D. Tata. He would then say that he was humbled to sit where the great man once did and that he would endeavour to restore the airline’s past glory—or words to that effect. Mr Menon did the same. But there was one difference: instead of working in Mumbai for some time before going off to Delhi, he left barely a week after he joined. He went on a long leave on medical grounds, but speculation was rife that the financial condition of the airline had scared him away. He was, it was said, taken aback by the extent of losses and loans availed to run daily operations.

When Mr Menon resumed office (many said that he was forced to do so by his superiors in the ministry), he held a meeting with all the functional and executive directors on 26 May 2008 in Mumbai. The meeting was a monologue. It lasted a good two hours, during which Mr Menon revealed the financial state of Air India, its declining market presence and the flight of passengers to competing airlines. He shared his views on what the critical problems confronting the airline were, including the unsatisfactory progress on the merger, and opined that urgent remedial action was imperative, but, like his predecessors, did not spell out how to go about bringing the change. I was glad that the problem was finally being recognised and congratulated him for his candour after the meeting, hoping that he would hold some of the people responsible accountable for their actions. It was not that I sought a vendetta against my colleagues but rather that I was hurt and aggrieved at the manner in which the airline had been knocked off its position in the marketplace, the open plunder that had followed and also the way in which I had been transferred in 2004 because the unions had wanted it. I sent him a message (an SMS) saying, ‘Morning revelations very shocking. Shouldn’t people responsible be taken to task? Also, those who signed union agreements for personal gain.’ Mr Menon replied, ‘Let’s not go into the past,’ prompting me to respond, ‘I have reason for it. I paid a price for standing up to unions in company’s interest. Ferreira gained by signing agreements without protecting company’s interests.’

He replied, ‘Let bygones be bygones.’ I did not pursue the matter and thought that it was best to wait for a more opportune moment to take this up with him again.

By this time, I was getting increasingly frustrated by the way Air India was being led up the garden path by every chairman and minister. I had become cynical, but old habits die hard, as they say, and when Praful Patel called for a review meeting about six weeks later in July, I decided to write to Mr Menon. Acutely aware of the fact that my letters had been ignored on numerous occasions in the past I was emphatic that I was offering my suggestions for one last time. My letter was titled ‘Perform or Perish’ because that was a phrase Mr Patel often used with reference to Air India. The letter was blunt about the problems at hand and stressed upon the need to act fast. It set out a five-point plan for action. The first step was to ‘set an agenda for the company’ so that departmental heads had their task cut out for them. Second, I wrote that we needed to address the conflict between unions and the management because each held the other responsible for the airline’s decline. Third, I said, it was time to take a final call on ‘whether a soft approach will help us make Air India a better airline or a hard approach is imperative for effecting a change’. Fourth, I wrote, ‘It is possible that some [employees] may have reached their current positions due to sheer luck, seniority, external factors, sycophancy, by default and not necessarily merit,’ and the airline should look at whether the team in charge could deliver the desired results. Finally, I asked, ‘Can we hope to transform the airline when most employees work only from 9 to 5, five days a week, without realising the challenges before the company? Long working hours with enough work and clear-cut company goals should be made mandatory’ (see
Appendix 11
). I also wrote that the fact that a third of the country was illiterate was a tragedy, but the bigger tragedy was that those who could read couldn’t read the writing on the wall.

My letter was ignored. I was also quite vocal at internal meetings. However, the people in charge either found my suggestions too radical or too impractical, and ignored them. For example, in April 2009, the Commercial Department put forth a plan for introducing an Ahmedabad–Frankfurt flight, effective 1 July 2009. As one who had been in the airline for more than a decade and a half and seen all our Europe-bound standalone flights losing heavily, I sought Mr Menon’s intervention through a hard look at the economics of the proposed flight. Mr Menon asked me to talk to the commercial director Deepak Brara directly and for good measure added, ‘The trouble in Air India is that no one speaks to each other.’ I had deliberately taken the matter directly to Mr Menon not because we did not speak to each other in Air India but because, in my experience, suggestions, howsoever legitimate, were construed as interference by the concerned department. My objections were brushed away and the flight was operationalised, but the route had to be shut down within four months. Was anyone held accountable? No, because Air India, unlike other professionally run companies, did not have a finance department running a hawk-eye over such ventures. Nor did it ever assign clear accountability to the departments and their chiefs when such plans were implemented.

Mr Menon did not last long at the job, however. Praful Patel replaced him while he was on leave attending a family wedding in Kerala for alleged ‘non-performance’ as Mr Patel told the media after the ouster. The unofficial reason was that Menon faced the axe because of ‘non-compliance’ on certain issues. He had serious differences with Mr Patel on the joint venture with Singapore Airport Terminal Services (SATS) for the ground handling business. To quote Deepak Talwar, the Delhi-based confidante of Mr Patel, who told me and another colleague after the inaugural party of Indian Aviation 2008 which was held on 8 October 2008 at Taj Falaknuma Palace, Hyderabad, that ‘with Mr Thulasidas it was a two-way traffic, we used to do what he wanted and he did what we wanted, but with Raghu Menon it is a one-way street, he displays the rule book whenever asked to do something.’The compelling urgency to remove Mr Menon has remained a mystery because it was carried out while the 2009 general elections were on when decisions are generally left to the new government. Mr Menon was replaced with E. K. Bharat Bhushan, joint secretary in the civil aviation ministry, who was appointed as the acting CMD on 27 April 2009. His tenure lasted just about a week before the government appointed Arvind Jadhav, also an IAS officer, as the new CMD. The game of musical chairs that was being played with the chairman’s post was shocking and revolting. Air India was in need of stability, direction and dynamism, but the political and bureaucratic machinery was busy playing around with its leadership to further their own interests over that of the airline.

As a result, the chairmen in recent years have done little apart from tinkering with the airline. Instead of focusing on strategic issues, they’ve busied themselves with cosmetic changes. For example, one chairman changed the shade of red in the Air India logo, implying perhaps that whatever was done, Air India would continue to be washed in red! And then the hyphen between ‘Air’ and ‘India’ was dropped thus delinking India’s strong emotional connect with Air India; a new logo was designed after the merger but could not be hoisted atop the Air India building in Mumbai at its vantage position because it had a skewed ‘centre of gravity’. The lack of balance of the logo may just be indicative of the state of the airline today as it stands on the edge of financial oblivion. Also, the logo’s absence from the top of the building that used to be a city landmark at one time signifies the fact that Air India is gradually fading from public memory.

GAMBLING AWAY THE FUTURE

Arvind Jadhav was aware of Air India’s financial crisis, and soon after he joined, he blew the lid off the state of the airline’s finances. He also publicly admonished all who had worked closely with Mr Thulasidas and accused them of manipulating accounts. He had no time to listen to anyone, so he would hold long discussions where he was usually the only man talking. And in all his meetings, he expressed shock and anguish at Air India’s state of finances. He also spoke out against Air India to the media. He gave an explosive interview to
Business World
(‘The time for talking is over 16 August 2009.) within months of joining office where he described Air India as a ‘typical’ public-sector organisation that was spiralling down towards a debt trap. ‘Its net worth is slowly, but surely, getting eroded,’ he said. Also, he called Air India an ‘organisation where people felt nothing has gone wrong’ and ‘that they were doing their best’. He further stated that after the merger, the airline had two people for every job, no single chain of command and ‘a hugely bloated and pampered set of employees’
¹
. He also said that 25 per cent of Air India’s employees were physically unfit and that the airline was spending far more than it was earning—for
14,000 crore in revenue, he said, the airline was spending
19,000 crore.

Mr Jadhav, in a message circulated to the employees sometime in July 2009, observed that if immediate corrective measures were not initiated to improve Air India’s finances, the choice before the airline would be either austerity or oblivion. But he never stated what these ‘corrective measures’ were. Having identified the problem, he should have looked for solutions instead of taking his grievances to the media. He did not inspire his people; nor could he bring about a change in their work ethic. Instead, employees lost interest in their work and even those who were sincere in their efforts felt demoralised. Mr Jadhav would also, time and again, say that Indigo Airlines, a new player on the block at the time, would soon overtake Air India. Air India’s market share was 18 per cent of the domestic business, while Indigo Airlines held 12.5 per cent, and the two were number three and four on the list, which, he said, would change. Thus, it was not just Indigo Airlines, but almost every airline that was focusing on the economy segment, that raced ahead.

Air India ranked much lower than the industry average both on aircraft utilisation and load factors and there was ample scope for it to enhance its load factor and improve its aircraft utilisation. Jet Airways, the market leader, had begun increasing its capacity in the low-cost segment. Why did Air India not follow suit? It should have focused on the economy segment and leveraged its strengths to race past the competition. In fact, the airline announced its intentions at a press conference on 7 August 2009 where Mr Jadhav said that a low-cost airline was on the anvil. This was followed by a supporting statement from the minister, Praful Patel, who reasserted the airline’s desire to target the flier looking for cheap fares at a press conference on 25 July 2010 in the presence of the entire board of Air India, which included Gustav Baldauf and Arvind Jadhav and industry stalwarts such as Anand Mahindra and Amit Mitra. Yet, for reasons unknown, and despite the fact that the airline would have benefited from such an initiative, the plan never took off. It is difficult to apportion blame for the way things turned out and, while it may have been easy, it would be unfair to hold Mr Jadhav responsible. He was an outsider to the aviation business, and as he had no prior experience, failed to understand its requirements. Subsequently, in May 2011, as market shares dipped Mr Jadhav made all of Air India a low-fare airline. Its fares were maintained modestly above those of low-cost airlines but significantly below those of other legacy carriers. Air India’s operational costs were among the highest in the industry, and when fares were lowered, the airline slipped deeper into the red.