The stalling of the privatisation process of the national career, Air-India, and state-owned Indian Airlines hardly came as a surprise. The spanner of pseudo-nationalism has finally derailed the privatisation process as was feared by foreign airlines contemplating investment. On April 15, 2003, the final nail in the divestment coffin was hammered as India’s Cabinet withdrew both airlines from the list of 35 companies being offered for sale. The decision was made at a meeting of the cabinet committee on disinvestment headed by Prime Minister, Atal Bihari Vajpayee. And mind you, the financial advisor to the ministry of civil aviation had actually favoured disinvestment saying it was necessary to improve the financial health of the carriers. The reason given was that the carriers are not attracting satisfactory bids, especially, as the international airline industry is going through a slump. Hence, the decision was that the airlines would be modernised to face competition.

Press Trust of India quoted Shahnawaz Hussain, ex-civil aviation minister, as saying, “No major airline is at present willing or in a position to invest.” If memory serves us right, the bidder for Air-India, Singapore Airlines together with India’s private sector conglomerate, the TATA group, walked out of the bidding round, citing opposition from within the government to the privatisation process. Not because they lacked fund. And of course, the bidders for Indian Airlines were disqualified, When we read between the lines, things do not seem as straightforward as it sounds.

Politicians and bureaucrats with vested interests have always stymied the privatisation process of PSUs, if the recent interview of disinvestment minister Arun Shourie on NDTV 24x7 is anything to go by, the statement is vindicated. “Personal interests are camouflaged by repeating clichéd rhetorics like national interest, security, monopoly, etc. Disinvestment is indefinitely postponed by saying let’s turn it around and then sell,” he said while speaking to Shekhar Gupta editor-in-chief of Indian Express. And the case in point is no exception. Sharad Yadav, ex-minister of civil aviation, would never have agreed on disinvestment in the first place hadn’t he faced stringent criticism over the alleged ‘hijacking’ of an Indian Airlines flight by certain politicians to Patna in 2000. Such action speaks volumes.

For ministers, the state-owned carriers are their private property. After all, they are people’s representatives and misusing public property is their legislative right. According to sources, ministers and a few top bureaucrats allegedly dole out free tickets to relatives and friends, which are accounted under ‘commercial requirement’. Incidents of offloading paying passengers from aircraft to accommodate some biggies’ relatives are not uncommon. The money Indian Airlines loses for such generosity is ‘unimaginable’. The management swallow the losses instead of incurring the heavyweight’s wrath. Privatisation would mean ‘pay and travel’. Those out to make hay while the sun shines can’t allow the sun to eclipse, after all.

Air-India and Indian Airlines have listed ambitious growth plans. Indian Airlines management has recommended the purchase of 43 Airbus aircraft between now and 2008 at a cost of Rs 101 billion (US$ 2.1 billion). Air-India has said it will acquire 17 long haul aircraft costing more than Rs 130 billion (US$ 2.7 billion). According to official sources, some upright bureaucrats in the ministry opposed acquisition of aircraft on grounds that why should the government spend money when the airlines are being disinvested. Instead, they suggested the dry leasing option for the interim period. The proposed fleet requirement, they argued, may not fit the bill of the new company. The argument was enough to convince people who matter that disinvestment is not the right step in the right direction for it would simply mean sacrificing money.

In a system that is benchmarked for corruption, the amount of money that will change hands during acquisition and fill the kitties of the right people is anybody’s guess.

Last year, when Air-India spent Rs 45 crore to change its business class seats to 180 degree slipperettes, allegedly some were left richer by a few lakh and crore of rupees. So, the national carriers’ financial health was sacrificed for personal gains.

Further, India does not have any Air Force 1 to fly its Prime Minister on his umpteen foreign visits. A regular flight is withdrawn from service for a week or so to serve the purpose. This again leads to revenue loss because the money paid to Air-India for to and fro travel cannot compensate the revenue a 300-seat capacity aircraft would have generated by flying for seven days. With the stepping in of private players, such facilities will become a question mark.

After 9/11, the airlines across the board became lean and mean machines to keep their bottom lines healthy, reducing costs and excess manpower became necessary to survive in a cutthroat competitive scenario. Look inward. Jet and Sahara have 200-250 employees per aircraft, as compared to Indian Airlines’ that have 550-600 people per aircraft.

“Many people in higher positions are inefficient and are not there by dint of merit but by virtue of their proximity to the minister,” said an official on conditions of anonymity. No wonder, IA leaves much to be desired in terms of service quality, performance and passenger satisfaction.

Of late, the market leader’s share has dwindled to 38 per cent. There was a time when Air-India and Indian Airlines were not only making profit, but Air-India was among the best international airlines. The first airline to introduce white glove services. Then also, the government was the owner, but professionals ran the carriers. However, years of interference from civil aviation ministers have reduced it to a pale shadow of what it once used to be.

“What Air-India needs is professionalisation of management with zero interference from the minister,” said Anil Bhandari, MD, International Travel House, who was closely associated with the board of the airline once.

Disinvestment would certainly have meant a fresh lease of life for these airlines with ageing fleet, as investors would have pumped in money. The cash-strapped government would have been spared from loosening its purse strings. The non-productive, decorative workforce could have been de-weeded making the airlines lean and efficient. But, how can a minister accept such a raw deal like preventing him from throwing his weights around? So, disinvestment is stalled for now.