Tata may face turmoil if successful business group emerges in bid for Air India
For the last few days, there is speculation about who will win. Privatization bid for Air India. Under the scheme, the Government of India is To sell your 100% stake 50% shareholding each, in Air India and Air India Express, and in the joint venture, AI-SATS (between Air India and Singapore Airport Terminal Services). Although Government of India has clarified That “media reports indicating approval of financial bids by the government… are incorrect”, indicating that the winning bid would be from Tata.
It could be a tricky merger
When Tata, with its joint venture with Singapore Airlines, launched an airline in 2015 under the Vistara brand name, it marked the culmination of a protracted battle, with all other airlines including Air India overcoming obstacles in their way. put away. While the group is yet to get out of the red in this aviation venture, they are now set to take on Air India and Air India Express, despite being told about the anti-national barb.
Tata’s second venture, Air Asia India, is also weighing them down. We have seen how Air India and Indian Airlines, which were in the black before their ill-conceived formal merger in 2007, fell into a bottomless pit to launder taxpayers’ money. In the event Tata wins the Air India bid, merging the four airlines (Air India, Air India Express, Vistara and Air Asia India) would require huge doses of the magic potion of Getafix of Asterix fame.
many speed bumps
Vistara has just started spreading its wings on long distance routes and has also set service standards in general with a Singapore touch. Under Tata-owned Air India, will it give that route to Air India or will there be duplication of routes? Can people forget the multiple duplication of routes, offices, staff etc on the merged entity’s international routes? If, as rumours, employees are to be retained for a period of one or two years, with some categories of people who cannot be given the golden handshake, being rehabilitated at other Tata enterprises, it will be possible for the existing skilled workforce to be rehabilitated. Going to demotivate.
Why did the Air India-Indian Airlines merger fail? The umbilical cord that each of these airlines had with the Rajiv Gandhi Bhavan (headquarters of the Ministry of Civil Aviation) was never cut. The kickback culture coupled with increased costs ensured that the enterprise simply went into debt. What Tata is getting now is a hydra-headed monster – an Air India-Indian Airlines unit and Air India Express. All of these work on the Peter principle with many types of aircraft. If one digs deeper, aircraft lease charges will be found to be several degrees higher than those negotiated by a professional organization.
Vistara, a very professionally managed organisation, is now going to be hit by undisciplined, incompetent and corrupt personnel and the shock waves are, undoubtedly, hurting. Has the Tatas foreseen how much damage this could cause to their culture? Will Tatas run an independent multi-airline system with the intervention of the civil aviation ministry? only time will tell.
The Tatas may have the finances to bear the brunt of the forced purchase. But do they have the means to bring in a safety and training culture of the highest standards, as envisioned by Air India founder JRD Tata? Air India’s training standards are known to include bogus records and substandard simulators that do not have essential equipment due to lack of parts. Trainers are promoted not for their professional standards or qualifications, but for their proximity to strengths. The Directorate General of Civil Aviation (DGCA) has blindly manipulated documents to show safety compliance. Dangerous exemptions and exemptions have been given by DGCA as they all come under one umbrella, Ministry of Civil Aviation!
At a time when the aviation landscape across the globe is in recession, Tata will only need to spend an estimated ₹24,000 crore for the airline business and stake in the SATS venture. Air India’s debt of ₹40,000 crore or more goes into a special purpose vehicle that will monetize Air India’s assets such as property and land banks. Air India’s training centers are also located in the same land bank. So, are these included in the deal, or are these hidden costs because someone else can bid higher for them and the Tatas end up shelling out a huge amount for the use of these lands? The training centers used by the existing Vistara and Air India Group will be completely inadequate for use by the new combination.
Staff issues, loose safety culture
One of Air India’s major problems is its Delhi-centric operations and staff approach. For Tata to bring in efficiency, many employees would need to be relocated to different parts of the country for optimum utilization of manpower. In this, Tata may face heavy resistance, supported by Deadwood’s political clout in Air India. The issue of manpower absorption is going to harm the new enterprise in a big way. If Vistara is to be merged with Air India, the reduction in standards will hurt Tata and result in a major motivation problem for Vistara and those who helped build Air Asia India.
Another major issue is the safety culture. Barring one incident in 2019 – a case of low fuel and an emergency landing in Lucknow – (the report was covered by the DGCA), Vistara has generally had a clean record. What Tata is getting now is an ‘airline combo’ with extremely poor safety standards and culture. Air India Express can be termed as an ‘accident/incident-one month probable’ unit. Its failures have resulted in the loss of about 180 lives. In addition, there are several close shaves at various airports and cases of serious damage to aircraft on record. Air India has also had its share of accidents and serious incidents due to the low safety culture of DGCA. All this is going to go in the lap of Tata. In the event of Tata winning the bid, any such safety incident shall be referred to as a Tata Airline accident/incident. Does Tata want such a tag? They have to break the whip and fix this deviation and culture, which is not going to be popular in Delhi.
Maintenance is another big issue with Air India. The culture of hidden fights and verbal reporting has to end. A mindset has to emerge that every passenger’s life is precious and a flight cannot be approved unless an aircraft is 100% safe. This is going to be the most difficult task for Tata.
flight path
Lastly, Air India and Vistara will be the only two full service carriers in India and they need to focus on yield rather than load factor. They need to learn from how British Airways handled the onslaught of the load factor mentality promoted by Lekar Airways. They need to focus on service, safety and high training standards. They need to weed out the poor performers in Air India. They should avoid filling the airline board with the cadre of the Indian Administrative Service as they have proved to be the most destructive minds for aviation in India. The collapse of many airlines in India and the huge debt burden of Air India is a living example of this.
The novel coronavirus pandemic has affected several airlines across the globe. Many have been reduced in size. And Tata might get a white elephant! It may be 2025 when aviation regains its glory after COVID-19. Are Tatas ready for the long wait?
Captain A (Mohan) Ranganathan is a former Airline Instructor Pilot and Aviation Safety Consultant who has flown over 20,000 hours. He is also a former member of the Civil Aviation Safety Advisory Council (CASAC).
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