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BW Businessworld

Those Air India Papers

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Yawn, yawn, yawn. Last week, I came across what must be the nth report on Air India (we need a Wikipedia on these) and its possible turnaround plan. This one is a critique of the latest plan prepared by a bunch of bureaucrats in October 2011. I am, by now, convinced that the government is full of the deaf and the dumb who just cannot comprehend what they have been told repeatedly by a series of consultants, former bureaucrats and technocrats over the past 30-odd years.

Over the years, reports have focussed on whether the airlines ought to be merged (when they were separate); where they were headed or, recently, on ways to curb losses. In 2009, soon after the extent of the crisis became evident, SBI Caps was assigned to prepare a roadmap. The losses were roughly Rs 250 crore every month. In 2009, Air India's chairman and managing director (CMD) also asked consultancy firms Booz Allen and Rothschild to guide the airline on its cost rationalisation and debt restructuring strategies. While Booz Allen focused on strategy, Rothschild was selected for its expertise in providing investment, corporate and private banking and trust services to governments, corporations and individuals. Their reports, though, were never accepted by the board (CMD Arvind Jadhav was at loggerheads with many board members and senior officials) and I do not think Booz Allen ever got compensated for its efforts.

In December 2010, Deloitte was appointed to review the turnaround plan drafted by SBI Caps and Air India. A route planning and capacity exercise was carried out by aviation consultancy Simat, Helliesen & Eichner. Around the time of the merger of Air India and Indian Airlines, during the reign of  never-free-of-controversy minister Praful Patel, a report by Accenture (commissioned in 2006) talked of the amazing savings and gains from the merger and listed out a long series of benefits from the move. In fact, it had been even decided that Accenture would assist with the transition strategy for the carrier in the event of a merger. Whatever happened to that I do not know since the merger did proceed as planned.

In 2003, prior to Indian Airlines being rechristened Indian, the government had set up a committee under former cabinet secretary Naresh Chandra. It looked at a host of issues in civil aviation including the competition Air India and Indian Airlines faced and their future role. The committee had also made several recommendations. In 1998, accountancy firm AF Ferguson was asked to prepare a report on the two airlines. It had suggested setting up a holding firm under which the two airlines would operate — a suggestion many still believe would have been wiser than what was adopted.

In the mid 1980s, Prime Minister Rajiv Gandhi seemed keen on the merger of the two airlines. An expert panel — headed by M.P. Wadhawan, erstwhile chairman of Indian Iron & Steel Company, and consisting of experts from the IIMs, the Administrative Staff College of India and deputy managing directors of Air India and Indian Airlines —had studied the proposal and submitted a report. Officials also recall, so do I, an excellent report by former finance secretary Vijay Kelkar on Indian Airlines. Kelkar's report seems prophetic today. It had accurately predicted what would happen to the airline if certain things were not done — which, of course, were not done.

Barring all these paid-for reports (which with the new consultancy firms have been burning a neat hole in Air India's pocket), there have also been a wealth of internal reports produced at different stages. These were prepared by former CMDs of the airlines as requested by various secretaries and ministers of civil aviation over the years. Many of these never saw the light of the day.

Two or three things have always struck me about reports on the carrier. One, I have always been intrigued by the secrecy that surrounds most of them — almost as if they contained some gems that could be stolen. Secondly, many of them contain little new matter and many seem like a rehash of earlier ones — except, of course, the numbers (debt, losses, salaries) kept getting larger and more intimidating. And, of course, remarkably few of the recommendations made by various experts and committees have ever been adhered to. There is no dearth of good advice available to the government, but it seems to have mastered the art of ignoring it.

Meanwhile, are there any more consultants who have not churned out a report on Air India? Raise your hands, it is your turn next. And if there are any reports that I have missed or any more in the offing, do drop me an email.

anjulibhargava(at)gmail(dot)com

(This story was published in Businessworld Issue Dated 20-02-2012)