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BW Businessworld

Fly By Wire

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Pilots are familiar with the term ‘Fly By Wire'.  However, officials at Air India — from secretaries and peons to senior directors — will tell you it's not just a technology but a way of life for them.

This is because the controls of the carrier are firmly in the hands of the civil aviation ministry. Most decisions on the airline are taken by the ministry and the central government at present.

Although not by design, civil aviation secretary Nasim Zaidi finds himself in the hot seat, and he is extremely cautious. He understands the sector better than many of his predecessors. He is not, however, on the board of the airline. Joint secretary Prashant Sukul is.

"Each and every decision relating to the airline is being taken in Delhi. Whether chairman and managing director Rohit Nandan is there or not is immaterial," says a senior director with Air India, who when this reporter asked to meet in Mumbai said that there was no point in meeting anyone in the Nariman Point headquarters as the controls were in Delhi. Of course, the aviation ministry is running the show, but the buck stops with Zaidi.

Air India employees have long complained of interference from the government. Now everything is run from the centre. Even the last (November 2011) board meeting was held in Delhi since most board members who attended are with the aviation ministry. Two independent board members — Amit Mitra and Anand Mahindra — had resigned from the board earlier in 2011. Two others appointed at the same time — Harsh Neotia and a former air chief marshal Fali. H Major — often don't attend the board meetings. "Frankly, none of the outsiders wants to have anything to do with this hot potato. This problem is now firmly the government's baby," says one official.

A few feeble attempts at introducing professionalism were made in the past when private sector managers were inducted. That is why people such as Raghu Raj, Rajan Jetley, Russi Mody (he was the only chairman) and Y.C. Deveshwar found themselves at the helm of a business they had little experience in. Deveshwar, according to senior airline officials, resigned after he got fed up with ministerial interference in the airline's daily affairs.

"All such attempts came to naught because very few private sector people can deal with the kind of bureaucratic systems and procedures followed," says a former chairman and managing director of Air India. He blames former minister Sharad Yadav for the state of the airline today arguing that the airline may actually have been disinvested at that time had Yadav not stopped it from happening.

Over the years, Air India's board has come more and more under the control of the government and its nominees, and decisions were taken more at the behest of what ministers desired.

Industry analysts say that the appointment of the new chairman and director Rohit Nandan (and removal of both Arvind Jadhav and Gustav Bauldoff) were clear indications of where things were headed.

Air India's crisis continues even as banks are trying to restructure loans. Salaries to the airline's 26,000-odd employees are being delayed every month and one component of the salary — the productivity linked incentive — has not been paid for three months.

(This story was published in Businessworld Issue Dated 09-01-2012)