Won’t fly in market

It is wholly the government’s responsibility that union blackmail doesn’t succeed in the state-run domestic air carrier. Even if competitors pick up some passengers left stranded by the strike, the rush in India’s growing busier-by-the-day civil aviation sector is so much that the effects of service disruption in any one of the major carriers cannot be fully absorbed. Unions are banking on this. So the decision to suspend some employees and threaten further action is right. The real test of Government resolve though will come if the strike continues. There’s the precedent of this government staring down Airport Authority of India unions in the run-up to airport reform. But there are too many precedents of official buckling down under union pressure. So the jury is out.

A verdict, however, has long been passed on the inherent disadvantages of sarkari services in sectors like banking, Oil retail and civil aviation in a modernising economy. One reason is that public sector service companies typically don’t have the labour flexibility so crucial for these sectors. Take the grievances of the striking Indian Airlines employees. Whatever the details of the negotiations, the crucial fact is that the carrier is hugely over-staffed and its ability to respond to changing industry norms on pay and benefits is constrained by its obligation to keep every job. Indeed, after the Indian Airlines/Air India merger was finalised, unions were promised that there would be no work force rationalisation. The new carrier will take over-staffing to new levels. So union dissatisfaction over pay and benefits may increase and so might the possibility of disruptive agitations.

This is something the government needs to think about. The merged entity will hit the market for funds. How attractive will investors find an airline that may be the only one with militant labour activists on its rolls? A few big strikes in the months before the IPO can really give the issue the wrong kind of buzz. That’s a good incentive for the management to be really tough now.

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