Arvind Jadhav, Chairman & Managing Director, National Aviation Company of India (Pic by Bivash Banerjee)

Jadhav says the day he took over he found a balance sheet in tatters, a declining market share, poor loads, poor on-time performance, business-class seats occupied only by the airline’s own staff and their families, aircraft flying to routes that do not make money and not flying to routes where everyone else seems to be making money. In other words, a “typical” public-sector organisation that was spiralling down towards a debt trap. Its net worth is slowly, but surely, getting eroded. To add to this, he found an “organisation where people felt nothing has gone wrong” and “that they were doing their best”. Post-merger, there are two people for every activity of Air India, no single chain of command and a hugely excess pampered staff.

Jadhav has put forward a proposal to the Centre seeking a hike in equity to Rs 10,000 crore in a phased manner and says that the airline needs a loan of around Rs 10,000 crore (government guaranteed or zero-coupon interest) to tide over the present crisis. What he is likely to get will be clear after the committee of secretaries meeting on 25 August. The finance ministry is also being asked to intervene and discuss a deferment of loan repayment for two years with the US EXIM bank.

If the government allows Jadhav a free hand and lets him do what he thinks needs to be done, the next few months in Air India could be worth watching. Excerpts from his first interview to the media since he took charge, with BW’s Anjuli Bhargava:

Is your total staff strength a worry?
Any like-to-like company has around 12,000 staffers; we have 32,000. So, yes, we have around 20,000 excess staff. The explanation I often hear is that we do everything ourselves unlike the private companies, but that is not true. We also use contracted labour and are outsourcing everything we can. Despite that I have 32,000 employees on the staff, which works to 226 people for every aircraft. I would like to have an aircraft-employee ratio of 1:90. In a downturn, every airline sends back leased planes, disposes of aircraft. Now, in any airline, if aircraft are reduced, staff will also have to be pared. This does not happen in Air India.

What is even more worrying is that there is no crisis in the airline as far as employees are concerned. The staff doesn’t see any problem at all. Meet the people, see their lifestyle, see the way they work. The entire world is going through recession. Aviation is getting battered. Is there any dent in any average Air India person’s lifestyle? This is the best job in the world to have. Recession-proof.

What about your wage bill?
Jet, for instance, has a wage bill of around Rs 1,200 crore a year and ours is Rs 3,600 crore, with roughly the same number of aircraft. But in Air India most categories are very highly paid, and fiercely resist any cut in allowances and perks. But with 20,000 excess staff and a downturn to boot, either they have to take a wage cut or half the staff has to go. You can either save your perks or your job.

I have to renegotiate all contracts with every union. People who have been given the job of negotiating with the union are former union members. What do you expect? I see no reason why we should pay a pilot, who is sitting at home, 80 hours of flying allowance. Pilots and crew are 15 per cent of my staff, but 50 per cent of the yearly productivity-linked incen-tives (PLI) goes to them. How can a company that is making losses pay bonuses (PLIs) of up to Rs 1,500 crore a year? Employees of the organisation, who want to be so insulated from the rest of the world, should join insurance. Here, you have to face the music.
I said on my first day itself — when I looked at the balance sheet — that this organisation is ready for a strike (decisions will have to be taken which will give employees reason to strike work). Pilots and employees have to necessarily take the pain. The CMD alone cannot take the pain.

But you can’t just fire people…
Why? If I find in 32,000 people, 8,000 are medically unfit, you think I will keep them? I am running a corporation under the Government of India Industrial Disputes Act. There is no special law applicable to us. Just because we are a public sector company does not mean we cannot fire redundant staff. There has been a freeze on recruitment for a while. Despite that, we have recruited.

Let me say this very clearly. If Air India had been private, it would have closed down long ago. Then what would happen to all the staff? Surplus staff will retrain or go home.

But you cannot retrain and absorb all the staff. There won’t be enough jobs within the airline...
Why not? We are an organisation where hardly any effort is put into marketing. I have asked my staff to focus on getting the maximum yields. For instance, on a Delhi-New York route, if a top-level government official travels, I get Rs 4 lakh for a first-class seat. The same seat is offered to corporates after discounts and after they brow beat us into offering our best fare at Rs 2.30 lakh. Now, who should I give the red carpet treatment to? We have to rejig our marketing totally.

But people say morale is already very low in Air India.
Morale is low because their perks are going to be hit. It is like instead of drinking Evian water, you have to swallow Bisleri! A 15-day pay deferment and morale is low — that is the extent to which you are pampered. We have to get work done from those who don’t want to work or are not used to working. Obviously, morale will be low.

The integration has resulted in the organisation getting even more top-heavy than it was before, hasn’t it?
Yes. It is like two magazines being put together with two editorials, with two letters pages, two last/end columns run by two editors. There is a duplication of every activity, and no single chain of command. So, clearly the organisation will not function properly.

What then is your biggest priority?
Cutting costs. We have to look at every nook and corner, every square inch of space, every minute of our time. My revenues are Rs 14,000 crore and my costs are Rs 19,000 crore. I need to cut costs to the magnitude of Rs 6,000 crore annually. It is not that I can raise fares and increase revenues overnight. I can’t simply raise the tariffs. There is severe competition. Competitors are coming in with younger aircraft. Any talk from me that I will increase revenue is literally kite flying.

We have 22 offline stations (where we no longer fly), but there is staff at all these stati-ons. We need to close these and bring the staff back (Jadhav has recently asked four execu-tive directors in Dubai, Paris, New York and Hong Kong to return). We need to give up all leased office space wherever possible and lease out space where it will fetch us revenue. We can’t have engineers sit hours away from the airport (say at Air India’s Nariman Point building).