It’s hard to believe now but there was a time when Air-India was regarded as one of the world’s finest airlines. This was in the 1950s and the 1960s when JRD Tata ran the show and positioned the carrier as the exotic ethnic alternative to the bland European and American airlines. Almost everything Air-India did in the Sixties was later copied by Singapore, Thai, Malaysian and a host of East Asian carriers who stole the airline’s identity.
So what went wrong? Several things. But three seem especially important.
First of all, JRD erred in buying the Boeing 747 Jumbo Jet. At the time, JRD was hailed as a visionary because Air-India was one of the first airlines to order the new plane. But in retrospect, it seems like a misjudgement. The Jumbo works if your primary routes are India to Europe or the US. But it is a large aircraft to fill and that posed its own problems. To fill the Jumbo, Air India had to ensure that flights went from Bombay to Delhi to pick up passengers before going elsewhere. This put Air-India at a huge disadvantage compared to other airlines that flew direct to Europe.
Moreover, when the Gulf boom occurred in 1973-74, it became clear that the Jumbo was ill-suited to medium haul routes which required different aircraft. But by then it was too late.
Secondly, Morarji Desai sacked JRD in 1977 for no good reason. Though there was a public outcry (JRD took only one rupee as salary from the airline), Desai --- a stubborn, foolish old man --- proved unrelenting.
Once that happened, the babus took charge. Air-India became the plaything of the government of India, used and abused by ministers and bureaucrats alike. The public sector mentality that JRD had kept out of the airline took over and Air-India became the airline world’s equivalent of ITDC.
When Mrs Gandhi returned to power in 1980, she should have returned the airline to JRD. Instead it was entrusted to a RK Dhawan loyalist called Raghu Raj and the decline continued.
Nobody claims that JRD was perfect. He made mistakes (the Boeing 747s, for instance), he could be irascible and he ran the airline like a fiefdom. But he was determined to create the world’s best boutique airline, wanted nothing for himself and had a long-term vision (and stake) unlike his successors who only wanted to show quick profits and get out when their terms expired.
And finally, the Gulf boom transformed Air-India. Till 1974 or so, relatively few Indians travelled abroad, there were no excursion fares and Air-India made profits that rarely exceeded five per cent of turnover (in common with the rest of the global airline business).
"Air India is a little like Doordarshan. The private sector has shown the government how it can be done properly. And we the shareholders, the people of India, are the poorer for it."
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But when Indian labour started flying out to the Gulf, the profile of the international traveller changed. Now, Air-India, passengers were not wealthy globe-trotters or businessmen but carpenters and masons. What’s more, Air-India made huge profits on Gulf routes – up to 25 per cent of total revenue on some flights.
Naturally, the airline began focusing on the Gulf at the cost of its more up-market European and American routes.
It’s possible for an airline to straddle this divide. You can run cattle-boats and still provide high quality service. But to be able to pull that off, you need a great leader. And with JRD gone, Air-India had no leaders, only venal politicians and short-sighted babus. As a consequence it so neglected the front of the aircraft that few Business Class or First Class passengers regard Air-India as their airline of choice these days.
There were opportunities to set these mistakes right. Air-India could have bought the right aircraft for medium haul routes. Instead, it bought the dire Airbus 310, an aircraft that few airlines bothered to fly. It could have hired great managers. But politicians frustrated these plans.
Rajiv Gandhi put Ratan Tata in charge of Air-India as non-executive Chairman but the Civil Aviation Ministry ignored him. Yogi Deveshwar did manage to turn Air-India around in 1992 (when the airline made a profit of Rs 1 crore a day) but he returned to the private sector too soon. A good internal candidate Michael Mascarenhas saw his tenure wrecked by Sharad Yadav who was then Civil Aviation Minister.
By the beginning of this century, it was too late to expect much from Air-India. It should have been sold to the highest bidder. But when the privatization process began, Arun Shourie refused to let Naresh Goyal bid for it and other politicians worked against a substantial bid from the Tatas.
Now, I think it’s too late. Air India is a little like Doordarshan. The private sector has shown the government how it can be done properly. And we the shareholders, the people of India, are the poorer for it.
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