Why is the new government so casual about the current goings-on in the management of the public sector airline, which is also a strategic asset of the country? Why cant the government act fast and arrange the necessary funds to keep the airline flying and its employees and staff paid their monthly dues in time until a decision on its long overdue financial and management restructuring is taken? The A-I merger was a government decision and not that of its employees. The ball has since been in the government's court. The latter should play it first.

In fact, it looks like the government is creating a situation whereby the Air Corporation Employees Union may have little choice but to call a strike. The A-I management is already talking about job cuts and pruning the wage bill by nearly 20 per cent to Rs. 500 crore per annum. Earlier this month, the payment of wages to employees was deferred and seniors were told to forgo a month's salary and productivity-linked incentives. Words are out from official quarters well in advance that the airline will incur a loss of Rs. 5,000 crore during this fiscal. Just a few months ago, ahead of the Lok Sabha polls, when Jet Airways served termination notices on 3,000 of its non-permanent employees, the government used its heavy hand to make Jet temporarily withdraw the measure. Now that the polls are over, the government is apparently showing its true colour to punish its own PSU employees.

The Prime Minister's assurance that the government would go full throttle to rejuvenate Air-India has unfortunately come with a strong rider, as revealed by the civil aviation minister after his meeting with Dr. Manmohan Singh. Curiously, it ignores the immediate concerns of employees. The pre-condition attached even before the committee of secretaries could assemble for its first meeting tends to simplify the issue as that of a huge surplus staff in A-I. It is another matter that the merger has understandably led to a surplus manpower which should have been streamlined without delay.

The real issue, which hamstrung the airline management — no one wants to talk about it openly — appears to be the government's deliberate policy to create space for private operators at the cost of the public sector airline over the years. The A-I management needs all the operational freedom and money to buy right types of aircraft to recreate its own space vis-a-vis its rivals at home and abroad. It needs the type of protection and operational freedom that the governments of the UK. Germany, Japan, Singapore, Thailand and China, among others, have been giving to the management of their own national airlines over the years.

Few will disagree that behind the current state of affairs in Air-India from poor load factor to high operational costs and surplus staff is constant apathy by the government in general and the ministry of civil aviation, in particular, towards this public sector enterprise. Individually, the union civil aviation minister, who is holding the portfolio for over five years at a stretch, is no less responsible for not being able to put his act together after a hasty merger of the erstwhile Indian Airlines with Air-India, both PSUs. Ever since their merger, the new entity has become more dependent on the government, which controls the management. The same bureaucracy and the old guards are running A-I. Old employment rules provide little flexibility to the management to try innovative ideas and practices to deal with recession and the uneven competition.

On the contrary, Air-India's domestic rivals have quickly streamlined jobs, rationalised operations and are behaving almost like a big cartel after they gobbled up some of the smaller private airlines. Air-India, instead of fighting the Big Two, is being forced to play a weak partner in the cartel. Even the airport management, after three large domestic airports have gone into private hands, are less accommodative to Air-India compared to its rivals. Air-India is a sick baby that no one wants to nurse. At the ministry level talks are on for a while to restructure the financial status of the PSU, expand the paid up capital, bring in the private equity participation and raise the borrowings. Such talks deliberately overlook the key point that private equity participation at this stage through an open offer will only benefit certain private investors by giving them an opportunity to grab Air-India shares at throw-away price.

If the government truly wants to save Air-India without shelling out much from its internal resources, it can look for a strong strategic foreign partner having long tradition and experience such as the German carrier, Lufthansa, or nearer home, Singapore Airlines. The Indian air travel and cargo business is pretty large. Until recently, it showed an exponential growth. The future of the business is bright at least in India despite high aviation fuel prices which are troubling airlines management across the world.

A strategic partner for Air-India, which may be allowed to hold up to 40 per cent equity in the Indian company with the executive management vested on it, will not only save the airline but also help the industry grow in a more competitive environment. The airline will have a two-tier board in keeping with the global practice and better corporate governance. The apex board of such a restructured entity will have 60 per cent representation from the government, which will also appoint the chairman. The executive management will have the operational freedom and may be allowed to rationalise jobs through training and relocation without affecting their livelihood.

Unfortunately, the Indian civil aviation scene has turned quite murky thanks to the constant intervention by successive civil aviation ministers, except for a brief period when the ministry was headed by late Madhavrao Scindia. The latter had some genuine plans to protect the industry, including the PSU operators, from frequent and often unpredictable business upheavals. The industry's history over the last 18 years, especially since the government allowed a carefully chosen section of private operators in the business, has been highly tilted towards non-resident Indian (NRI) investors notwithstanding the quick rise-and-falls of a number of private operators, all at the cost of minority investors, creditors and suppliers. But, never before had the very existence of the public sector operators been so threatened.

The recent disappearance of Sahara and Air Deccan, following the acquisition of the two airlines by Jet and Kingfisher, respectively, and the government's decision to allow these airlines to spread their wings into overseas routes has totally changed the profile of the business. The two airlines have suddenly emerged as the leading voice of the business, controlling the tariff, traffic and landing and take-off rules. They are operating like cartels to fix prices, fuel and other surcharges on air-travellers. Prospective players are being prevented from entering the business by the government on the ground that the aviation sector is bleeding. This, again, is for the benefit of the existing biggies.

Suffice it to say that the civil aviation sector requires an urgent revamp and the government should not be seen to be protecting only a select group of operators and businessmen at the cost of a healthy growth of the industry. The Indian metro-city air passengers and cargo operators deserve a better deal from the civil aviation authority. The government should urgently take up the construction of new airports near Mumbai, Delhi, Kolkata and Chennai for the security and future convenience of the growing number of air travellers to and from these destinations. In the meantime, the civil aviation minister and the government would do well to ensure A-I plays its designated role in both the domestic and global air traffic business. It is a big international brand. It needs to be protected and nurtured. (IPA Service)