Opinion - Interviews

Air India should put its house in order: Praful Patel exclusive

Continuing with the same portfolio of Civil Aviation in the second innings of the UPA government, Praful Patel is presiding over the ministry at a time when Air India is struggling to tide over the worst financial crisis in its history. In an interview to The Hindu, Mr. Patel defends merger of Air India with Indian Airlines and asks AI employees to shape up and turn India’s flag carrier around. Here are the excerpts of the interview:

I have been speaking continuously for the past three years that everybody needs to have a wake-up call, particularly in the competitive environment that we are now in. Due to economic slowdown, there is an urgent need to perform and rise to the occasion. The global aviation industry is facing difficult challenges and that is why we have been telling Air India that you have to put your house in order.

Fleet acquisition was one of the biggest issues facing Air India and Indian Airlines. Can you imagine Air India without fleet acquisition? Only 40 per cent of what we have ordered has joined the fleet. And if the Air India management does not want to take more planes, it is for them to decide, the government has only approved what the Air India Board decided.

It is a competitive environment and when others are having newer planes, better service, better connectivity, it is for Air India to have a choice as to what they think is best to take on competition.

One was to buy planes. If Air India has any doubts about their fleet acquisition programme, they are free to do what they wish to do in future. Another was about merger. The Air India-Indian Airlines merger was something well thought of, it was not done in haste. It was done with the collective wisdom of the government. We made a presentation to the Prime Minister who in turn set up an empowered Group of Ministers. We appointed the best consultants. The Committee of Secretaries went into great detail. Only when everybody saw merit, was a decision on the merger taken. All employees unions were consulted and a large section supported the merger.

That is correct. If today Kingfisher and Deccan can merge without noise, Jet and Sahara can do so without noise and if airlines across the world like Air France and KLM merged without any issue and Delta and North West have merged, and many other models are there ... I fail to understand why there is problem with Air India when not a single job has been lost. Airline and service sector cannot be run like a government department. They have to be run on the basis of the needs of the customer. There may be other issues but on time performance, cleanliness of the aircraft, passenger satisfaction, these are not the issues, which the government can dictate, but the market will dictate who the preferred carrier is. Therefore, it is imperative that they face the challenges of competition. In today’s environment it is impossible for the government to say there will be only one carrier, it does not happen.

The word “bilateral” by definition means it is a two-way traffic. If a right has been given to a foreign carrier, you also have an equal right to fly to that country. And why has Air India not made the fullest use of opportunity? If somebody says they can fly from one country to 18 cities of India, why can’t we fly from 18 Indian cities to that one city?

Who has not supported Air India? Which government has not supported Air India? Which government has shirked away from its responsibility? If your load factors are dipping, you have to do some self-introspection. Global fuel prices have shaken every airline of the world, even profitable airlines like British Airways are almost on the verge of financial collapse. Does BA attribute anything to the government of Britain?

It is for them to decide how they will restructure. They have to find out what is good for them. Let them apply their mind. If on one side you say the government is running the show, it is a misconception. The government does what you tell us to do. We do not decide profit or loss making routes, or schedules.

We have always said that Air India should have an Initial Public Offering (IPO). Some disinvestments of Air India should be there. One of the reasons for merger was this. The merged entity was giving much better evaluation. Other reason for the merger was entry into the global Star Alliance. And it really baffles me why IT integration could not take place in the last two years. It is not because the government decided something, if they cannot complete the process, all I can say is that I feel sorry.

There is no reason to be pessimistic. Everything is possible, for this everybody has to work with the vigour and vitality that is required.

Oil prices in 2007-08 gave a big knock to civil aviation in India as they did in the world and combine that with the economic recession. Today with lower fares because of the economic slowdown, flights are not being filled up. There will be an economic revival and aviation will also have one. The Ministry of Civil Aviation looks at the larger interest of the country’s connectivity, ability of larger section of people to fly, the country’s economic interest and tourism potential. All this has to be looked at in totality.

Low-cost Air India Express is already there. There is a space for full service carrier but there is a larger space for low-cost carriers so there will have to be redefinition of their model and see how best they can serve the two segments. And capacities will have to be allocated accordingly. The new business model has to be for everybody. It applies to other full service carriers also. They are already doing it by starting low-cost services, why can’t Air India do it?

My only message to them is self-introspection. It is unfortunate that employees want to abstain from work and go on strike. It will create a wrong impression among the travelling public and people will shirk away from flying Air India. Employees should understand this and do their best for the carrier to turn around. Employees have to decide about it. We are going to support their initiative. We will not decide what they should do. They have to decide and come to us, we will support them.

Airports across the country will not suffer. A year or two of slowdown will not affect their long-term projections. The Airports Authority of India can go for infrastructure bonds if they so desire. And like the airports in Delhi, Mumbai, Hyderabad and Bangalore, we will look at charging a development fee in Chennai and Kolkata airports.

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