Specials

The Maharaja and its disenchanted people

Richa Mishra | Updated on January 11, 2018

Protests take off Members of Air Corporations Employees Union staging a dharna on Tuesday against Air India’s proposed privatisation at the Air India GSD building near the IGI Airport in New Delhi Ramesh Sharma   -  Ramesh Sharma

The disinvestment plan sets the Government on a collision course with Air India employees



“Bricks and stones do not talk, employees do,” is a refrain you hear from the belligerent Air India unions, which staged a protest at the AI complex, Delhi, this Tuesday. The employees are opposing the privatisation of the debt-ridden national carrier.

Ever since June, when Prime Minister Narendra Modi and his Cabinet colleagues gave an in-principle nod to divest the government stake in Air India and five of its subsidiaries, its 21,000-plus employees have been in shock. Now, after a month-long series of meetings, they are gearing up to do battle.

“Shouldn’t they at least have discussed it with the employees before making such an announcement?” asks Vivek Rao, Regional Secretary, Air Corporations Employees’ Union (ACEU), saying they got the news from the media. The airline’s seven unions have banded together for further action.

A major grouse is about the timing. Why now? “Does the government want to sell the company for a song?” queries a member of the union. Air India has a debt of ₹52,000 crore, of which about ₹20,000 crore is aircraft-related and ₹32,000 crore is working-capital based. The buzz was that the government is likely to take over half the working-capital debt as part of its divestment plan. The airline has a fleet of 105 aircraft. As of March 2017, its assets were worth about ₹40,000 crore.

The Air India Unions Joint Forum Against Privatisation insists’: “We are not responsible for these debts.”

The unions had in 2007 opposed the merger of Air India and Indian Airlines as well but the government went ahead. In fact, in February 2007, the ACEU had held meetings with the then Civil Aviation Minister, and were assured there was no proposal to privatise the airline.

The Union also points out that in 2011-2012 Air India embarked on a turnaround plan (TAP) and financial restructuring plan (FRP) to improve its performance.“The company has almost achieved the targeted results with the complete co-operation and support of the employees. The move to privatise Air India comes despite it showing profitability and over 33 per cent increase in the number of passengers due to its membership in the Star Alliance,” the Unions argue.

Alternative mechanism

Civil Aviation Ministry officials soothe these concerns. “Discussions with employees will happen once the ball gets rolling,” a senior official in the Civil Aviation Ministry counters.

“Broadly speaking, we are committed to protecting the rights of the employees … specifics, if any, will have to be worked out,” the official said.“The Alternative Mechanism put in place will address all issues,” he says. The Mechanism is a group of ministers headed by the Finance Minister that will examine issues such as treatment of Air India’s unsustainable debt, hiving off certain assets to a shell company, de-merger and strategic disinvestment of three profit-making subsidiaries. “Once their recommendations come the Cabinet will have to approve them,” the official says.

Staff strife

With any disinvestment, the fear of layoffs is always very high. The number of Air India staff is huge (21,137 employees including those in subsidiaries). Besides, the unions fear for their dues, and pensions. They cite the example of Centaur hotels. “Employees were convinced that it was for their benefit. But, was it really to their advantage?” questions a union member.

Air India’s airline to employee ratio has often been criticised. Before the TAP it was 1:139. Reports say it achieved an improvement of 1:120 (excluding subsidiaries) post 2012.

The Civil Aviation Ministry official gets worked up at this. “You must remember Air India is one of the domestic airlines which has all the services – engineering, ground handling – within it. Airlines typically do not have them, others handlie it for them,” he defends.

“Comparing Air India to an IndiGo and others which do not have these services within them is not an apple to apple comparison,” he says. “These services of Air India are handled by different subsidiaries. So if you look only at it holistically, the ratio is comparable to other airlines and it is less then Jet probably. Second, there has been no recruitment for 20 years, except probably in the reserved category or pilots,” he says.

The unions contend that while performance and productivity have been rising, service conditions including the cost of labour have been declining year after year, from over 10 per cent of the operating cost to 4.1 per cent in 2014-15. They say this is is perhaps the lowest percentage of operating cost not only in Indian aviation but also the world over.

Air India’s contribution towards PF and gratuity has also been declining, they say, adding that NITI Ayog proposed the privatisation ignoring employees’ contributions to sustain Air India as a public sector undertaking.

“The government needs to have the employees on board for even the disinvestment to succeed. It is not about HR issues right now, but about why divest at all,” says ACEU’s Rao.

Several attempts to privatise Air India have been made earlier. JB Kadian, General Secretary, ACEU, says, “The Vajpayee government had tried it earlier as well but there were no takers.” In fact, it was keen to act on the recommendations of the Naresh Chandra Committee on privatisation but was opposed by the unions and employees. Can they succeed in derailing it now too?

Published on July 19, 2017

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