It's an old bird, well over 50, and it's crippled, but not because of hardening arteries. In fact, in India, there's no better time to fly than now, but the oldest member of the flyers' club seems to be lurching from bailout to bailout.
"If you want to do a thesis on how not to run a company, Air India is your best case study. The rot in all its departments, operations, engineering, planning, personnel, commercial - have an interesting background," says a pilot with over 20 years of experience in the company. The latest misfortunes to befall Air India are the disastrous transfer of all flight operations from Mumbai to Delhi's messed up T3Terminal at the beginning of a fogladen winter and more cancellations of the bestoccupied routes.
Route Tampering
Take the ColomboChennai flight. It was running for 28 years and occupancy was over 80 per cent for all those years. It was an extremely lucrative route. But it was withdrawn this winter and now Spicejet operates daily flights, apart from Kingfisher. "The same happened in Kuala Lumpur as well," a member of the operations team said.
After the open skies policy, Indian Airlines' schedules have time and again been changed to suit private airlines. For instance, IC917 ChennaiBangalorePune return, IC951 ChennaiBangaloreAhmedabad, IC559/560 ChennaiBangaloreMangalore were all cancelled to accommodate Jet and Kingfisher. IC975 ChennaiCoimbatoreCochinSharjah and return was also removed to accommodate Air Arabia while IC955 ChennaiKuala Lumpur's withdrawal helped Air Asia and others. "The schedules for profitable sectors were either withdrawn or shrunk to accommodate other operators. If that didn't work, the most popular flight numbers would be given to private operators who would capitalise on the brand recall of that series. For instance, take IC997/998CalicutDohaBahrain. This was virtually a brand name on this sector and consistently maintained more than 80 per cent seat factor for most of the year. It was removed for reasons of nonviability," an operations personnel said.
Decisions like this rouse the worst suspicions, but it is only part of the story. The waste involved can be staggering. One mail from company insiders to AI pilots listed how the CMD had given a bill of Rs 4.5 crore for the purchase of pen drives. "Our aircraft have been painted from Indian Airlines to Indian to Air India and now Air India
Express, with the tail having a combination of six colours! The cheapest rate quoted for external painting of A320 aircraft is US$65,000 for neutral white. So the figure can be multiplied by the number of aircraft," the mail highlighted.
"Our CMD ordered the return of all leased aircraft to save on the lease rental that came to US$5,000 (approximately Rs 2 lakh) per aircraft for A320 and A319. VTEVO, EVP, EVQ and EVR were due to be returned in one and half year's time. But when the premature return was proposed the lessor demanded a penalty of US$30 million as there was no clause in the agreement on this issue. How could the authorities be so blind?"
The airline is also forced to sponsor a number of junkets. "There was this Hindi seminar in Toronto. MPs were flown and put up at our cost. They were accompanied by their wives and freebies were doled out. Airport managers personally carried their suitcases," a commercial manager revealed.
Appraisals, too, are very costly. Take this gem. "Local staff in Singapore were due for a salary increase of $50 a month. The decision could have been taken on the spot but a team flew in and stayed in a 5star hotel. So $600 worth of appraisals cost us $20,000 in 1996." In another case, a catering inspection team flew to Sharjah where the department is strictly controlled by local authorities and no one is allowed to enter. "In the name of inspection, appraisals, whatever, they do these trips at huge expense, and then talk about not having enough to pay staff," says a senior pilot.
Here's another. An RTI reply to Capt R S Ottal, in September 2009 revealed that 22 offices maintained in foreign countries where Air India doesn't operate flights cost the company about `151.21 lakh a month. AI employs expatriate pilots and the agencies through whom they are recruited charge over $45,000 a month for the service. These stories, however, are about small change, the little scams that are a part of the life story of every big company. Now to the big stuff, which comes from gfiles, a little known magazine meant for bureaucrats.
The Rs 98,000 cr land scam:
On the surface, the following figures appear innocuous, unrelated: Cost of land at Mumbai and Delhi airports at market value - `98,000 crore; cost of construction of new airports at Mumbai and Delhi - `14,300 crore. The beneficiaries of these sweetheart deals - which would have been denounced under accountability and anticorruption laws in most responsible democracies - are laughing all the way to the bank with a `83,000 crore booty. The beneficiaries: GVK Power Infrastructure and GMR Industries, cleverly disguised in publicprivate partnerships.
In January 2006, consortia led by GVK and GMR were awarded the work to operate, develop, design, construct, upgrade, modernise and manage the Chhatrapati Shivaji International Airport (CSIA) and Indira Gandhi International Airport (IGIA) on land owned by the Airports Authority of India. The AAI conducted no price survey or evaluation of the land before entering into identical agreements with GVK and GMR.
At the time, the land was being used on lease by the National Aviation Company Ltd (NACIL), formed after the merger of Air India and Indian Airlines in 2007.
It should be noted that when the new airport comes up at Navi Mumbai in 2014 and the existing CSIA becomes redundant, GVK becomes the owner of this land automatically as per the Companies Act. Surprisingly, there is no mention in the agreement with Mumbai International Airport Pvt Ltd (MIAL) of whether the company will be dissolved and the land repatriated to AAI.
Had the land been valued by experts and sold or even given on lease to GVK and GMR, the revenues generated could have wiped out the entire debt of the merged IA and AI, instead of burdening the national exchequer with a `50 billion bailout plan.
So what GVK and GMR had to do was shell out US$1.2 billion (`5,500 crore) and $2.6 billion (`8,080 crore), respectively, for construction, development and management of these airports. This land transfer arrangement with MIAL and DIAL gave GVK and GMR instant assets of `83,000 crore.
This is how it works out. Land value: Rs 98,000 crore. GVK and GMR invest: $1.26 billion and $2.6 billion, respectively, totalling Rs 14,300 crore.
The alacrity and rapidity with which the deals were allegedly closed by Patel probably set a record in the annals of ministerial and bureaucratic decisionmaking in India. Those present at the first meeting on October 4, 2007 to implement the whole idea were the Joint Secretary, KN Srivastava, Chairman, Airports Authority of India, K Ramalingam, CMD, NACIL, V Thulasidas, the Secretary, Civil Aviation, and representatives of MIAL and DIAL. The proceedings (of which gfiles has a copy) were orchestrated. With minor suggestions/objections, all discussions went as per the minister's wishes. The government's safeguard tools (bureaucrats) were in mute mode. Even more shocking, NACIL land valued at Rs 3,000 crore within the airport complex was also surrendered to the consortium.
So, yes, the maharajah is old and ailing, but insiders believe it is as much the result of slow poisoning by his stewards as advancing age. It brings to mind the old adage, with friends like these, who needs enemies?
The Gfiles expose
Gfiles is the country’s first independent magazine written, designed and produced for the civil services. Every month it reaches 20,000 individuals with a universe of more than 1 lakh readers.
Its audience is the men and women who lead the Indian Administrative Service, the Indian Foreign Service, the Indian Police Service, the Indian Revenue Service, Class I Union Services, as well as a host of Allied Services.
It is edited by India’s seniormost journalists — with substantial contributions from serving and retired officers. The magazine cuts through rumour mills and hearsay and helps India’s civil servants reach out to one another, share and become acquainted with their issues, practical problems, everyday challenges
and the intricacies of their working environment
On August 8, 2010, it carried an article saying Air India was systematically bankrupted by Praful Patel to pave the way for vested interests.
“When Mr Patel asked the Government of India to pump in...Rs 5000 crore, every frontal union of workers of the newly formed NACIL wrote strong letters of protest regarding the decisions that led to the seeking of the bailout and merger of Indian Airlines with Air India....” Their letters, addressed privately to the Prime Minister and top politicians and rulers, fell on deaf ears.
“The revenue earning opportunity was skewed heavily in favour of foreign airlines, allowing privileged private Indian operators to fly international routes. Criteria were decided such that, apart from Jet Airways, only Air Sahara (which Jet Airways eventually acquired) qualified to operate international services, keeping other domestic airlines at bay for 3-4 years.
The complicity was so blatant that Jet applied for slots in Singapore and London within the first month of Patel’s tenure at Rajiv Gandhi Bhavan (a fact
reported in newspapers in June 2004) – a full six months prior to the government of India announcing the change in policy, permitting private airlines to fly on international routes, in December 2004.”
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