Who is really running Air India?

ASHWINI PHADNIS | Updated on March 01, 2011 Published on February 22, 2011

Whatever decision has to be taken should be done post-haste as, notwithstanding the operating profits for two months, Air India is bleeding.

What ails Air India has been visible over the last few weeks. The Ministry of Civil Aviation finally stepped in to end the four-month-long issue of whether the Chief Operating Officer (COO) of Air India Express, Captain Pawan Arora, should be sacked or not.

 Last November, the airline Board had terminated his duties alleging irregularities. Despite the Board's decision, Captain Arora continued to function as COO of the state-owned low-cost airline.

It finally required a missive from the Ministry seeking a status report on Captain Arora, which sealed his fate. Captain Arora was inducted into the team to kickstart Air India Express's operations.

However, soon after his appointment, it was alleged that both his and Stephan Sukumar's appointment, who was also inducted as part of the turnaround team by Captain Gustav Baldauf, the Chief Operating Officer (COO), were illegal as the Board had only approved the appointment of Captain Baldauf.

 The Board questioned whether the airline could afford the huge salary packages that were being offered to these two employees. Besides, it was also alleged that Captain Arora had not provided correct documentation at the time of applying for the post in Air India Express.

Functioning of the airline

 Captain Arora's final marching orders again bring to the fore a key issue — who is really running Air India? Is it the Ministry of Civil Aviation, the Board of Directors or COO Captain Baldauf and his hand-picked team of which Captain Arora was an integral part?

If the answer is the Ministry of Civil Aviation, then steps should be taken to either sack Captain Baldauf or clear instructions should be given on how he should run the airline.

Or, if it is the Board, which comprises four independent directors — Mr Anand Mahindra, head of Mahindra and Mahindra; Mr Fali Major, retired Chief of Air Staff; Mr Amit Mitra, Secretary General; Federation of Indian Chambers of Commerce and Industry, and industrialist Mr Harsh Neotia. The Board is expected to ensure that Air India functions in a manner prescribed by law and that due processes and procedures are followed.

Master plan

 But if the decision of running the airline is to be left to Captain Baldauf, appointed for a three-year term after a global search in June 2010, then, he should be allowed to carry out his job. And, more importantly, with a team that he is comfortable working with.

His team includes Captain Arora (who has since been removed) and Sukumar. Captain Baldauf was also keen to get three or four more players, including a Chief Technical Officer for his turnaround team.   Soon after taking over, Captain Baldauf had drawn up a master plan for reviving the airline.

Among the steps he had outlined were strengthening its domestic operations and launching a feeder service to feed passengers not only to domestic operations but also to international ones. This plan was said to have been approved by the Ministry.

 If one goes by recent facts, the plan is showing some progress. The airline recently issued press statements showing how Air India had made cash profit for two successive months.

The airline reported an operating surplus (cash profit) of Rs 49.48 crore in December 2010, up from Rs 21.66 crore in November 2010. What is important here is that Captain Baldauf as well as Captain Arora and Sukumar were working in the airline at this time.

Challenges in the air

 Further, two events which could shape the fortune and future of the airline are on the anvil — induction of Boeing 787 Dreamliner and Air India's possible entry into Star Alliance.

 Entry into Star Alliance poses a bigger challenge for the airline as common code integration, a prerequisite for joining the alliance, has not yet happened. An entry into the Alliance is expected to provide millions of additional passengers and, thereby, more revenue annually. The induction of the Boeing 787 opens the possibility of launching new routes.

 But given the public nature of the goings-on in the airline, it seems that implementing the turnaround plan is low on the list of priorities. And, now, with a key part of the operational team being dismissed, it is anyone's guess as to what shape things will take.

Whatever decision has to be taken should be done post-haste, as notwithstanding the operating profits for two months, Air India is bleeding.

It is said to be losing about Rs 8 crore daily and its passenger carriage in the domestic market has touched the fourth place among the six domestic carriers currently operating regular services.

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Published on February 22, 2011
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