Tata Sons set to take over the ailing Air India
There are rumors in the grapevine that the Cabinet has green-signaled the take over of Air India by Tata Sons. Although some government spokesperson refuted the news, it is all but certain that the Tata Sons will be the new owners of Air India. Together with Air India, the Tatas will get the 100% ownership of Air India Express, and a 50% shareholding in the joint venture, AI-SATS (between Air India and Singapore Airport Terminal Services).
Air India has accumulated a staggering loss of Rs.70,000 crores, and incurs a loss of Rs.20 crores each day. In the past, Air India has been the cash cow for corrupt ministers and bureaucrats. Purchase and leasing costs of Air India are well above that of private airlines. The corrupt ministers took hefty cuts while finalizing the deals. Managers below them took the cue from the ministers and board members, and learned to take cuts from suppliers of every single commodity. All these continued for years with no corrective action by the Board. Bureaucrats belonging to the Indian Administrative Service occupied positions in the Board and contributed little to improve the management. Now, banks and the government will take a huge haircut in having to write off a major portion of this outstanding loan.
The Tatas are already owning and running two other airlines —Vistara and Air Asia India. These two airlines are well-run, and their maintenance and service standards are quite satisfactory. The Tatas have been particularly careful not to allow sloth and corruption to blight the operations.
On the contrary, Air India and Air India Express are notoriously corrupt and inefficient. Aggressive Trade Unions have helped to build a culture of impunity in staff in all levels. Staff strength is way above what is required. Redundant staff add to cost and fuel indiscipline as they don’t have much to do in the work place.
The trade Unions are deeply entrenched in the system, and have traditionally enjoyed the patronage of the ministers and bureaucrats in the Ministry of Civil Aviation. Unless the government totally severs its ties with the trade unions, weeding out surplus and inefficient staff will prove to be an uphill task for the new management under the Tatas. Even improving punctuality, inflight service, engineering maintenance etc. are going to prove difficult when vested interests among the trade unionists resolutely resist such efficiency-enhancing measures.
It’s an open secret that mandatory maintenance records pertaining to the aircrafts are generally fudged. This is a very serious issue, and the new management will have to grapple with. In the new management’s pecking order, safety of the passengers and the aircrafts must come on the top to bolster confidence of the passengers.
When the five bodies –Air India, Air India Express, AI-SATS, Vistara, and Air Asia India come under the same management, a lot of staff will be relocated to different locations. Some may even be shunted to Tata’s other units. A good number of inefficient staff will have to be terminated. For the HR department, it will pose formidable challenge.
Vistara and Air Asia India have put in place efficient maintenance procedures. Their work cultures are comparable to the world’s best. When the lethargic and lackadaisical engineers and technicians come to mingle with their counterparts in Vistara and Air Asia India, the effect can be quite undesirable. Motivating the legacy workforce of the newly acquired airlines could be quite a daunting challenge.
In a nutshell, considerable turbulence awaits Tata Sons as their mangers take the reins of the three newly acquired entities.