Failure to launch PDF Print E-mail
Friday, 25 February 2011 00:00
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While finance minister Pranab Mukherjee is likely to allocate Rs 3,000 crore on Monday as his contribution towards Air India’s turnaround plan, he’d do well to take a closer look at whether he’s just throwing good money after bad. Many argued Air India should have been closed down years ago, given its falling market share and increased capital needs, but for whatever reason, the government decided it would give the airline one more chance—one could be that if Air India was closed down, it wouldn’t have been able to place Rs 50,000 crore of orders for new planes. Once the government took a decision to keep it afloat, it has to be said, it seemed serious about it. So, a rarity in a PSU milieu, was the decision to appoint a professional COO (and a foreigner at that). Though Air India has a long way to go—its domestic market share slipped to 15.8% in January as against 17.6% a year ago, and its seat factor last month was 69% compared to IndiGo’s 88.6%—it has been making cash profits for three months now.

Another turnaround plan has been finalised and the airline’s board is to meet to approve it within three weeks; the government seems more committed to give it the much-needed funds (equity and some loan writeoffs). But the turnaround team is on the verge of quitting. After Gustav Baldauf was appointed COO, he appointed a chief training officer (about 8-10% of Air India’s pilots aren’t certified to fly on the new planes) and a COO for the low-cost airline. Vicious boardroom politics ensured the low-cost airline COO was asked to go, the training officer has put in his papers, and Air India has been asked to give a written explanation for why Baldauf gave interviews criticising the politicking that was going on—insiders feel it is a matter of time before Baldauf too puts in his papers. The new aviation minister Vayalar Ravi, who met all 14 of the airline’s unions last fortnight, needs to be asked what his turnaround plan is, and who he thinks will spearhead this.


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