NEW DELHI, June 27:
A global aviation consultancy firm has suggested that Air India should be placed under a special administration, like in the case of telecom company Satyam, to facilitate its turnaround.
The Sydney-based Centre for Asia Pacific Aviation (CAPA) also warned that the unresolved human resources issues would continue to be a source of labour unrest, like the ongoing pilots’ strike.
In a report released globally today, it said Air India planned to launch a low-cost carrier in the domestic market by converting its fleet of 12-14 aged Airbus A-320 planes into single-class configuration, claiming that at least two aircraft have already been reconfigured.
Observing that the airline continued to “lurch from one crisis to the next”, suffering from low productivity, high costs, significant unresolved human resource issues and an unviable business model, it said, “Air India should be placed in special administration, similar to that adopted for Satyam, if any meaningful progress is to be achieved.”
After Satyam’s founder admitted in 2009 to a massive accounting fraud, the government stepped in to set up a new board for the IT firm. Following this, Tech Mahindra bought 46 per cent stake in Satyam which is now called Mahindra Satyam.
Regarding HR issues, CAPA said problems relating to pay, allowances and career progression have remained unresolved and “this continues to remain a source of industrial unrest going forward”.
Justifying that the national carrier should be placed under a special administration, it said the management would soon experience a senior-level overhaul as 16 executive directors were due to retire over 12 months. Its board had also not been strengthened after two of its members quit.
“The new team could be faced with a highly charged and complex situation,” it claimed.
CAPA said that after “years of neglect”, Air India continues to “lack decisiveness and willingness to take difficult decisions, in the absence of which no meaningful recovery can occur”.
The consultancy firm said though integration of the organisational structure at former Air India and Indian Airlines has been completed, “most critical issue” like integration of human resources has been “ineptly handled and almost wilfully ignored”.
“Nobody within the airline’s senior management or at the level of the government” have taken responsibility, it alleged.
On a positive note, CAPA said Air India experienced a strong 30-35 per cent year-on-year improvement in revenue between January to April and added that its average domestic revenue per passenger has been strengthening since this year.
It said that parallel operations of the two erstwhile carriers have also been eliminated resulting in improved efficiency, while operations on several loss-making routes have been suspended.
As many as 31 poorly-performing routes were under evaluation, some of which could also be terminated, the report said, adding that 13 routes accounted for approximately 75 per cent of the airline’s losses, including seven routes to North America and Europe. (PTI)
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