Will the maharaja fly again?

Once again, the issues relating to the Merger of Air India and Indian Airlines came into focus when Pilots of Air India went on strike on 7 May 2012 Though it is more than five years, the HR integration below the level of DGM representing 80% of the staff, has still not taken place. Even today Indian Pilots Guilds (IPG) operating the Boeing aircrafts and Indian Commercial Pilots Association (ICPA) operating Air Bus fleet are two separate Unions - one representing the pilots of Air India and the other representing the pilots of Indian Airlines. The training for the Dreamliner Boeing 787 has been the primary basic bone of contention culminating in IPG which went on strike claiming their exclusive prerogative for flying Dreamliners and opposing the participation of the pilots of Indian Airlines in such a training programme. The strike has been declared illegal by Hon'ble High Court of Delhi and a contempt notice has been issued to the 67 striking pilots and IPG for disobeying its order.

The other issues that have created heartburn relate to the pay parity and career progression, integration across various cadres, rationalisation of  pay scale, allowances and incentives and overall restructuring of the entire staff of the two entities. No doubt, it is an example of corporate mismatch. It is very surprising that even after five years, the two organisations appear to be working as separate entities.

Air India is being called a 'Sinking Maharaja'. We look towards  it as an example of corporate dinosaur. A dinosaur is a very large creature, too slow in movement and too slow in changing with the dynamic environment. It has accumulated heavy losses and debts to the tune of about Rs 43,000 crore, a huge wage bill of over Rs 3,000 crore (18% of the operating cost) for 28,500 regular employees, a low load factor of about 65%, payment of over Rs 50,000 crore to be made for acquisition of 111 new planes, decline in projected yield, increase in the maintenance cost of the aircrafts, etc.

It is felt that the merger of 'two struggling companies will never make one great company'. In case of Air India, instead of the merger of two commercial organisations, the merger has been akin to the merger of the government departments and it is said to have been mismanaged by the entrenched bureaucrats.

And the CAG also endorsed this view in its report submitted to the government in September 2011 and opined that 'the merger of Air India and Indian Airlines has led to nothing but acrimony and emerged as the key reason for their dismal condition'. It went on to say that the 'Government has not been able to provide justification for the 'in principle approval' of the merger'. The decision of the erstwhile civil aviation minister Prafful Patel has also been a matter of controversy. The merger has been done in haste and the various aspects have not been weighed before actually going for it. Even the union civil aviation minister Ajit Singh is reported to have acknowledged the fact that the merger did not go 'as planned' and 'something seriously' had gone wrong. He made these observations while speaking to a private TV Channel.

Dharmadhikari Committee, which was constituted in March 2011, was to study the basic aspects of HR integration, particularly in view of the merger not yielding synergy - mainly because of the problems of Human Resources. The committee submitted its report on 31 January 2012. A three member panel has been formed to explore the possibilities of implementing the recommendations.

The Committee is reported to have suggested that - Air India should continue to maintain two separate seniority lists for pilots of pre-merger entities but the pilots of both airlines be allowed to fly aircraft of all types. The question right now is whether the pilots of erstwhile Indian Airlines be sent on training for new Boeing 787 Dreamliners? It is felt that the suggestion to maintain two separate seniority lists may not resolve the problem.

The Committee is also reported to have recommended a 10-15 percent salary cut for pilots and engineers to bring their salaries on par with the industry standards. It has however, reported to have recommended uniform salaries for both sets of pilots. Variable component, productivity linked incentive, will vary depending upon the duration and distance of the flights. The Committee has tried to bring the wage structure of the two entities strictly under the guidelines of the Department of Public Enterprises. One may not agree with the reported recommendation of the Committee on separate seniority lists, but there is no doubt that the other recommendations need to be implemented soon. Further, the selection of the pilots for Dreamliner's training should be based entirely on merit without differentiating between the pilots of Air India and Indian Air lines.

One may agree with the CAG recommendation that Government should adopt a total hands off policy from the day to day professional management decision of the airlines - the airlines needs to  be headed by a professional who has stake in the success of the airlines. It may, however not be easy to find a good professional but finding one is an absolute must.

Ajit Singh in a meeting with the representatives of thirteen recognised trade unions (except IPG, which has been derecognised recently on account of flash strike by pilots on 7 May 2012) on 21 May 2012 discussed the HR integration issues. He sought the support from the airline unions on the issue of rationalisation of 'performance linked incentives' by linking it to the profits. He assured the unions to consider their demands to start the process of promotions. He has also met a section of striking pilots to find some solutions but of no avail. However, sidelining the  IPG by the minister may not help in finding a solution to the problem.

We would like Air India to start believing that it can fly again with pride and therefore, the views of all the stakeholders are duly considered. Let us not forget that Air India operated for general public and all efforts should be made to instill a feeling of confidence in them. At the same time the government should give due importance to the genuine demands of the pilots and other staff members. Let us hope that good sense prevails and the prestige and honour of 'Maharaja' is restored.

Dr N K Kakkar is the Director General at Maharaja Agrasen Institute of Management.
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