Can Air India be a ‘poster boy’ for PSUs awaiting disinvestment?

Air India saw the loss of market share, delayed payment of full emoluments to pilots, cabin crew and aircraft maintenance engineers for years, as the airline had little or no scope for growth and losses were only mounting. (File image)

It took the government over two decades to disinvest its stake in Air India. The bureaucrats entrusted with the task in earlier years neither had the requisite determination nor the experience to draft the sale proposal with conditions that would be lucrative for potential buyers. The politicians of various hues consistently dubbed the disinvestment exercise as selling the family silver. Employees' unions resisted the move because they wanted to stay in the comfort zone of receiving pay cheques every month, even if the company’s future looked bleak in a competitive environment.

When the government did eventually succeed it was only after most options of revival had ceased to exist. The civil aviation minister, Hardeep Puri, had in the year 2019 emphatically stated in Rajya Sabha that the loss-making Air India would have to be “closed down, if not privatised” because the government cannot keep infusing money in perpetuity to keep it operational.

The threat to survival was indeed real. Air India’s market share had been fast dwindling. While domestic airlines were aggressively expanding their fleet and network, international airlines were increasing frequencies and expanding their footprint in India. Air India couldn’t meet the challenges because it lacked funds to expand, besides the much-needed vision. The unions’ stand was nothing short of paradoxical: it wanted government ownership to continue even as they held the government’s decisions responsible for leading the airline on the path of ruination.

The response and feelings to disinvestment have been more or less the same with stakeholders of other public sector undertakings in the non-strategic sectors like steel, tourism, urban development and healthcare, from which the government wants to disinvest. Companies awaiting privatisation in the near future include the Shipping Corporation of India, BEML, Container Corporation of India and RINL or Vizag Steel, as well as the big ticket IDBI Bank.

Air India’s Grand Revival

With Air India under Tatas, the airline’s original founder, set to successfully emerge out of turbulent clouds - the mega order for 470 aircraft placed earlier this month providing ample proof of the bright future ahead - can Air India become a poster boy …company for other PSUs awaiting disinvestment? The loud-and-clear message from Air India’s performance in the short post-disinvestment period of one year for various stakeholders is that a company can indeed be better off after disinvestment than under government ownership, particularly when the latter has given up on it. Those averse to disinvestment need not look through the prism of negativity always that future has to be worse and cannot be brighter. Air India’s story of re-emergence is thus worthy of being told and retold to convince all the naysayers among various stakeholders.

In the years preceding the disinvestment, besides increasing marginalisation, Air India saw the loss of market share, gradual trimming of staff perquisites, delayed payment of full emoluments to pilots, cabin crew and aircraft maintenance engineers for years, restricting of promotional avenues as the airline had little or no scope for growth and losses were only mounting. Even when survival was under threat, most employees, which unfortunately included senior management personnel, were averse to a change in ownership as they did not apparently wish to board a flight to an uncharted destination. In their defence, one can only aver that they had no example before them of a successful disinvestment of a high-profile PSU.

Jobs Not At Stake

The government had stipulated in the disinvestment document that the acquiring entity will have to necessarily retain employees for a minimum period of one year. The same lapsed on January 27, 2023. Did employees desirous of continuing to work lose their jobs? No! Those harbouring doubts about employment need to understand that an entity acquiring a company by paying for it isn’t doing so for the heck of it but to grow it commercially and that they will need experienced hands. Why should employees be diffident about their own capabilities?

One can argue that government ownership allows even the unproductive and inefficient employees (generally, also the most vociferous) to survive and thrive but should this segment be allowed to risk the future of the organisation and other employees who can deliver? The focus of the unions should thus be more on seeing that not only an organisation with the right credentials acquires the company but their legitimate interests are protected. Blindly opposing or placing hurdles leading to delay/prevention of disinvestment often leads to erosion of its worth. One can only imagine what the global stature of Air India would have been by now had its disinvestment been successful more than two decades ago when it was first attempted. It would have also fetched the government far more money than it eventually got from the Tatas.

Buyer’s Credentials

As the government has ambitious plans of exiting from several non-strategic PSUs, Air India has become a fine example for both dispelling motivated and misplaced propaganda unleashed by those opposed to disinvestment as also for convincing stakeholders that disinvestment can ensure a brighter future for them and that jobs are not necessarily at risk. The eco-system and political environment also have to change for the good of the Indian economy by looking at the Air India example. A caveat, of course, is that the government’s focus should be on getting the right buyer who wishes to grow the organisation rather than one who may be interested in asset-stripping. After all, not all companies can have an enviable track record like that of Tata companies.

It may be a far-fetched wish at this stage but if the government ensures a couple of more successful disinvestment cases like Air India, a time may perhaps come when employees of PSUs, foreseeing restricted opportunities for personal and organisational growth in the competitive business environment, may just begin to seek disinvestment when the going is good and not when value erosion has taken place, like in the case of Air India because of prolonged delay.

Jitender Bhargava is former executive director, of Air India & author of the book, The Descent of Air India. Views are personal, and do not represent the stand of this publication.