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By Sushma Ramachandran
The civil aviation industry remains in
a turmoil with the latest short term strike
of the public sector carrier Indian creating
chaos for consumers. Though the strike
was thankfully resolved within a day or
two, it created headaches and heartburns
for the flying public who still regard
Indian as the most "reliable"
airline in the country. This reputation
has been badly battered as people of all
walks of life who had to reach destinations
on urgent work had to suffer undue hardship.
The strike came just as the public sector
company was in the process of merging
with Air India with the aim of becoming
one of the biggest players in the civil
aviation sector. At this critical stage,
its public image as the slow but steady
carrier has been badly bruised. Normally
Indian is the airline of choice for those
who put a premium on safety and reliability
as well as punctuality. It is well known
that Indian has considerable infrastructure
to maintain and operate its aircraft efficiently.
It also has the reputation of being a
safe airline. Besides, whenever there
is a traffic jam in the skies or in airports,
the civil aviation authorities give priority
to Indian flights, enabling them to be
more punctual than the other private airlines
in such situation.
In contrast, these two days of the strike
by the domestic carrier have given the
impression that the stodgy but solid player
can no longer claim that it is the most
dependable airline.
This comes as a blow to the newly created
entity that is already aware of the tough
competition in the field. The spate of
mergers and acquisitions that began with
Jet Airways taking over Sahara and followed
with Kingfisher's tie-up with Air Deccan
is still not over. Kingfisher is making
it clear that it is eyeing other acquisitions
like the smaller Spicejet or GoAir, depending
of course on their availability. Ultimately,
it is clear that there will be about three
or four large entities in the civil aviation
industry within the next few years.
In this scenario, the Indian and Air
India combine will have to show a lot
more pizzaz than they have recently to
beat the competition. Jet is slowly taking
over the space of the most reliable and
ontime carrier while Kingfisher has got
the tag of providing the most comfort
and luxe experience. It has yet to be
seen whether Indian-Air India will try
to launch a low cost carrier like the
other two biggies. Jet is swiftly changing
Sahara to Jetlite and Kingfisher has made
Air Deccan its low cost brand. In any
case, the merged public sector entity
seems to be lagging far behind the others.
The fact is that it is time to think
- yet again - about privatising Indian
and Air India. Globally, the era of the
public sector airline seems to be over.
Once upon a time, every country had its
own national airline which was often government
owned, like British Airway, Air France
and Lufthansa. But declining profits took
their toll as more efficient private airlines
forged ahead and most countries have now
privatized their national carriers. India
will also have to think in terms of privatising
though this proposal has always met with
stiff resistance from politicians. The
real reason for maintaining a government
owned national carrier is the patronage
and power that goes along with operating
such an entity. It is well known that
becoming the minister for civil aviation
is a plum post and these cabinet ministers
have virtually ruled the skies.
One has only to compare the Air India
launched by J.R.D. Tata to the Air India
currently operated by the government to
see the difference between private and
public sector management. When JRD ran
the show, Air India was a boutique airline
that was renowned globally for its service
and class aboard flights. In contrast,
Air India is now considered a lame duck.
Even Indians shun this international airline
which has become a byword for inefficiency
in the aviation world. Umpteen stories
have appeared in the media about the mishaps
that take place owing to overbooking,
prolonged delays and discomfort to passengers
in this airline. The simple fact is that
bureaucrats are not equipped to run airlines
and the job needs to be handed over to
professionals in the aviation industry.
Any whiff of privatisation, however,
elicits strong protests from politicians
of all hues. There is a feeling that selling
Indian and Air India would be like selling
the crown jewels of the economy. In fact,
the government could keep a minority stake
in the airline while making a strategic
sale to a private operator. This would
enable it to reap the benefits of revenues
from dividends in case the airline improves
profitability and yet retain a nominal
stake in the company. Maruti Udyog, the
Indo-Japanese carmaker for instance, is
a case in point where the government has
gradually eased out of the company which
has in turn become more dynamic as it
has been freed from bureaucratic controls.
The latest flash strike in the domestic
carrier has thus come as a warning signal
to the government. If it really wants
the public sector carriers to become effective
players in the aviation sector, it will
have to take a comprehensive review of
civil aviation policies and ultimately
take some hard decisions.
(Sushma Ramachandran is an economic and
corporate analyst. She can be reached
at sushma.ramachandran@gmail.com)
-Indo-Asian News Service
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