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BW Businessworld

Revolving Rusty Doors

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Recently, the government changed the chairman and managing director of Air India yet again, and Rohit Nandan took charge from Arvind Jadhav. With the help of a former senior official of the airline, I have got hold of some data that I think may be of interest to readers.

In 32 years — from 1979 to 2011 — the airline has had a total of 15 managing directors, an average tenure of two years and one month. If three long-serving incumbents are pulled out (Raghu Raj served for five years, Michael Mascarenhas served for four-and-a-half years, and M. Thulasidas served for four years), the average comes down to one year and 10 months.

Compare this to some of the global airlines. Colin Marshall remained at the helm of British Airways for eight years, Air France's Jean Cyril Spinetta dedicated 12 years to the task, Akbar al-Baker held charge for 13 years at Qatar Airways, Duncan Bluck steered Cathay Pacific for 10 years and Ryan Air's Michael O'Leary has been and is still holding fort since 1994.

Of Air India's 16 managing directors, only five have been its employees, with almost 20-25 years of airline experience. However, with typical government wisdom at play, at least three of these were never confirmed, which created a fair amount of uncertainty during their tenures. Moreover, all five of these were only designated as managing directors, with the hallowed post of the chairman always being occupied by an IAS officer — usually the secretary of civil aviation. This, slowly but steadily, led to further politicisation of the airline. Typically, none of the secretaries or CMDs really had any experience in the aviation sector. Air India's board came more and more under the control of the government and its nominees, and decisions were usually taken more at the behest of what ministers desired rather than what was in the interest of the carrier. In fact, since 2003-04, the post has only been held by IAS officers — a further indication of how the government wanted things to be run.

Many of the IAS appointees have, in fact, become in charge of affairs of the airline due to their powerful relations and connections. Some appointments even violated the rules, which say that an additional secretary-level officer will be given  charge (at least 2-3 past CMDs have been of the joint-secretary-level).

A few feeble attempts at sorting out the mess or introducing some professionalism were made by whichever government was in command by trying to induct private sector managers. 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. More recently, none of the board members appointed from outside (Anand Mahindra, Amit Mitra, and others) have managed to stay on in what they must have seen as a pointless exercise.

Meanwhile, a word on the recent Comptroller and Auditor General's (CAG's) report on Air India tabled in Parliament. While it may have gone into questions like the indiscriminate handing out of bilateral rights and aircraft acquisition, the report has stayed away from the steady politicisation of the airline and the excessive control by subsequent governments. Even with the aircraft acquisition, the report focuses more on the speed at which the order was given (frankly, this is not fair — if planes are not ordered for years, the government is blamed for being slow; and if planes are ordered, they are blamed for doing it too quickly!) rather than at the actual prices negotiated with Airbus for the aircraft, or the size of the fleet acquisition in the case of Air India. If one goes into the details, he will find two questionable actions.

One, the planes that have been bought for Indian Airlines from Airbus could perhaps have been bought at a much lower price. The price inflation would indicate that some people stand to benefit from the large order.

Two, in the case of Air India, the then managing director, Thulasidas, was asked by then minister Praful Patel to relook the size of the order, and was urged to be more ambitious, and go in for a bigger order at a time when the airline was already struggling to fill its existing planes.

What needs to be examined closely is whether any study was done of how the seats of the new aircraft would be filled and on which routes they would prove viable before signing on the dotted line.


(This story was published in Businessworld Issue Dated 03-10-2011)