SOS from the heavens

Tie a man's hands behind his back and ask him to play a competitive game. That has been the state of affairs at Air India for as long as anyone can remember. The chickens came home to roost long ago for this perverse policy. But the government has given a fine imitation of an ostrich in the whole affair. Its reason is simple. Politicians find it easier to bleed the airline and the consumer than admit to a humongous mistake, drop its phoney nationalism and stop sending good money after bad. So it is that Air India managing director Michael Mascarenhas had to say at a Press conference that unless the airline is bailed out with a huge new infusion of capital, the game is over for it. Listen to him, even at this late stage. Here is a man who has attempted sensible things in an impossible situation such as a three-day week for the world's most overstaffed airline. The Air India disinvestment plan will go nowhere unless fresh money is forthcoming from the government. It should be allowed to have it, but not beforethe government can bring itself to leave the airline to manage its affairs on normal commercial principles, apart from pressing ahead briskly with disinvestment plans. If it is not willing to do this, then it must give up its attachment to the idea of a flagship carrier. Air India, and certainly the hapless Indian international traveller, have done nothing to deserve this Chinese water treatment.

For what is going on in practice is a policy of discriminating against private Indian carriers in favour of foreign airlines. To add insult to injury, all this happens in the name of shielding Air India from competition. Because of its unviability Air India is unable to fly to a hundred different lucrative destinations. Instead it is selling these slots to different foreign airlines on different sectors. True, this gets it an unearned income to offset other losses which have been forced on it. But not only is this unproductive income, it is doing nothing to convert Air India's fat into muscle: if the airline wasflying on these sectors itself, it would have to work hard at being competitive. This is also nothing like optimal income. The incremental profits that are derived from expanding business on these slots go to the foreign airlines once they have bought them from Air India, not to Air India or to private Indian airlines.

As ever in India's perverse and apparently public sector-oriented policies, the public sector does not benefit while the private sector actively loses. Worse, assuming that India's civil aviation does become a free market one day, imagine the advantage that is being bestowed on foreign airlines in terms of letting them capture market share now. As to Air India, how could it stand a chance of being competitive when even to sell its outdated aircraft it must await the decision of a dozen different committees with every bureaucrat in sight having his say even as prices nosedive? How could it be competitive with its outlandish staff to passenger ratio? Significant disinvestment would itself bringgains to Air India provided it is given freedom. If not, let the government forget its national carrier fetish and let the private sector into international skies.

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