Saturday, 27 August 2011

Air India on ventilator - lack of Succession Management

Air india is on the ventilator. In the recent past Air India has had so many emergency treatments that one wonders if these are an easy way to get priority treatments guaranteeing quick attention by doctors. Why does our national carrier need such treatments so frequently? It has been suffering with multiple diseases for quite some time now; some of which may be due to wrong decisions by the government or the airlines itself. Airlines industry by its very nature is an oligopolistic industry making entry and exit difficult. Further, scale of economies works only up to a level, and beyond that the advantage of scale may not be there. This was amply established by a study conducted by the British Government in mid-seventies. Was any scientific study made by the airlines or the government before the merger to determine if the merger was going to be useful or was it just the conjecture and enthusiasm of some individuals which led to the merger? Whether the merger of Indian Airlines and Air India has actually paid off in terms of economies of scale is not known. There is perhaps no post-merger study undertaken to establish this aspect. Can the mounting losses of Air India now be attributed to a wrong decision of the government or the airlines? The answer is visibly yes as there have been severe losses! 
About thirty years back both Air India and Indian Airlines were renowned airlines of the world with a competitive fleet, competent flight crew and quite robust maintenance systems. At that time both the airlines were managed by aviators or persons with excellent background and experience in aviation. The DGCA, the regulatory body, was also headed by experienced aviation persons until early nineties but since then it has been headed intermittently by administrators not having any regulatory experience in the area of aviation.  The beginning of this trend could be traced back to the appointment of India’s representative in the International Civil Aviation Organization in the mid-eighties when for the first time a non-DGCA official was appointed the representative, since then the position has been occupied by people not having any professional exposure to aviation.  This practice was slowly extended to our national airlines and we have not heard since then that these airlines are doing well. Many of us will recall that when the merger was being discussed Indian Airlines went through a name change and all its fleet was repainted with a new logo etc. It has been repainted again with Air India colours. Repainting an aeroplane like B737 may cost about Rs 60-70 lakhs (www.airliners.net & www.blog.airbaltic.com) considering the paint has to withstand extreme temperatures, humidity, wind speeds, encounter with abrasive objects and remain flexible. In addition, repainting will add to the operating empty weight of an aeroplane eating into the payload and hence loss in revenue. One is talking of about Rs 60-70 crores expenditure on a fleet of 100 aeroplanes, which adds up to Rs 120 crores if the fleet was repainted twice. Did anyone take this into account while deciding on the name change or has anyone now questioned these expenses?
Let us look at the difference in the safety standards followed in civil aircraft industry as compared to other industries. A civil aeroplane is designed to maintain safety levels such that only one incident should take place in one million flights and this level is ensured through tight control over many design and operational parameters. No industry of any sort follows such high safety standards. An aeroplane is a precision machine with a factor of safety of only 1.5. Even then the machine is one of the safest machines. No overdesigning is recommended as that will spoil the economics of operations. In other transport industries the safety margins have been much higher. In civil engineering industry the margin of safety could be many times higher going from 10 to 30. The point being made is that you cannot appreciate the sensitivities of the industry if such finer points are not known to and understood by you. Achieving such severe standards (one incident in one million flights) demands very close working between maintenance, operational and management teams. No team can be superior to others and each operational change needs to be carefully thought out. Such a safety level cannot be achieved on a continuous basis by writing orders on files because such orders are not understood by aeroplanes. There is a large element of practical and conceptual skills and professionalism required to attain such goals.
The situation today is that all the essential organizations Air India, the Civil Aviation Ministry and DGCA are headed by people of the same service with very little experience in aviation and there is no difficulty in drawing some obvious conclusions - continuous costly emergency treatments at the cost of tax payers. Are there any other airlines in the country which are managed operationally by non-aviation persons? The answer would be no. One wonders if tomorrow Indian Air Force will be headed by some generalist and slowly all related wings will have the same fate. One would not be surprised as this is how the decision makers have started thinking in the recent past. And would we accept this at the cost of national security? Why should we then sacrifice professionalism for the benefits and fancies of some select people? The irony is that the government does not find any senior person within the airline to take the responsibility (and who is at fault for not building a succession line?) but again finds that a person inexperienced in aviation can head the airlines! How and why should the board of directors be happy to work under the chairmanship of a joint secretary level officer? We are very good at knee jerk reactions because there is hardly any accountability of officers of the airlines, ministry and other related departments and it has become so easy for each successor to put the blame on predecessors. The tax payer keeps paying the price. Imagine how many mid-day healthy meals can be provided to needy children with the subsidy being awarded to Air India which is comparable to the many scam figures. We are not accustomed to think in terms of opportunity costs because the governmental system does not believe in reaching out to its clients, the people, but always wants clients to come to them with their problems so that the officers can dole out help and keep the people either obliged or subjugated. Anyway that is a much larger issue.
We cannot afford our national carrier to be on a ventilator or allow it to die. When our people are stranded in foreign countries due to local disturbances, it is the Air India which lifts them back to India. Private airlines are not matured enough to play that role. Political bosses, civil servants and aviation experts have to put their minds together and find a long term solution. What we need is professional management trained in aviation business helped by a competent technology team. Outsiders from the industry should not be encouraged yet again to head these organizations. Instead a robust succession plan should be put in place. As an Indian I would like Air India to be a competitor for undertaking space tourism whenever it becomes a reality and for the present and the future we need to institute good knowledge management systems. 
(Contributed by Raghav) 

2 comments:

  1. air india is at a ventilator stage simply because no specialist doctors have been appointed for its treatment when it started with a small flu,like the idea of merger.later on various quacks tried their hand and experimented with their dangerous and no first hand clinical experience which led to the worsening of the condition.

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  2. I agree. A very specialised industry is being headed by not just a non-expert but by someone with no experience in this area. The decision makers need to understand that managing an aviation company means more than application of administrative principles......

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