Gyanendra Kumar Kashyap
The latest twist to the Indian
aviation story is provided for by the stir called upon by the pilots of
Kingfisher over non payment of salaries for the last five months. This has
masked, the not so much in news now, the agitation being staged by IPG. With
the agitation staged by IPG entering its 57th day, (the longest being in 1974
when IPG’s agitation lasted for 90 days on account of cost cutting measures) is
not only causing financial losses, but is also causing a lot of embarrassment
and harm to brand ‘Air India’
In July 2006, the high-level panel
consisting of officials from Air India, Indian Airlines, ministry of civil
aviation, and ICICI Bank chairman emeritus N Vaghul were zeroing upon a consultant
to chalk out a roadmap for operationalizing the mega merger between two state run
carriers. The well intentioned overwhelming thought then was to create a
competitive national airline on the lines of British Airways and Singapore
Airlines. Air India and Indian Airlines were merged on March 1, 2007 to create
a new company called National Aviation Company of India Ltd, later changed to
Air India Ltd. However five years post the mega merger, it is apparent that the
amalgamation was ill – conceived, whimsical and a marriage of two incompatible
individuals. In the lack of oversight and of leadership Air India has literally
slipped into an abyss.
In the present context, the agitation
called by the Indian Pilots Guild, IPG, which represents the Air India pilots’,
started on May 8, 2012 when the pilot members took mass leave protesting the
move to provide Boeing -787 Dreamliner training to pilots from the erstwhile
Indian Airlines. Now in its sixteenth day, the so called agitation has lead to
a loss of over Rs. 600 crore. The pilots have made four demands which include
exclusive flying rights on Boeing 787 aircraft, payment of arrears from 2007
onwards, travel on first class when not working, and the right to be promoted
as commanders within six years. The agitation in itself is not new, even last
year in March, a group of pilots from the erstwhile Indian Airlines under the
banner of Indian Commercial Pilots Association, ICPA, had adopted the same
strategy to make their dissenting voices and demands heard. The rivalry between the two wings of
the merged entities has not only derailed the operations of the national
carrier but has also caused a lot of embarrassment and harm to brand ‘Air
India’. As a matter of fact the market share of the once dominant Air India has
reduced from over 60 percent to just about 17 percent. Ajit Singh, the minister
for civil aviation, has often in his media interactions specifically mentioned
that the merger of the two erstwhile airlines in itself is the root cause of
the crisis.
It is critical to delve deeper and see
beyond the superficial and analyse as to what are the underlying reasons for
the agitation – is it merely the exclusivity of flying rights and issues of
career progression or are there inherent malaise that has gradually led to the
mega merger not working out as planned. Why is it that the benefits as
advocated by the consultants, Accenture with Ambit Corporate Finance, in terms
of synergy, economies of scale and profitability not happen? Synergy is a far
off cry for this merger. To this day, the merger is only 70 percent complete.
Significantly, critical Human Resource functions, which go to the core of the
problems over the clash of cultures, haven’t been merged. The truth is that
there are several human resources issues unresolved among the pilots of both
the sides. There are differences in their salary structures, work schedule,
perks, training & orientation programs, and even promotion schedules. Even
to this date, Indian Airlines employees are always given orientation towards
domestic operations while Air India employees are trained for international
operations. The differences are not just with the pilots; the case is similar
for the engineers, cabin crew-in-charge, cargo managers, and other
functionaries of both entities. They too are voicing the same resentment over
the merger.
Talking of profitability, in Air
India’s case the merger was expected to result in a saving up to Rs. 1200 crore
from 2010. It is an all together different issue that the merged entity is neck
deep in debt and losses; the net loss for Air India in 2010-11 was Rs. 6,994
crore and the provisional loss figures for 2011-12 stands at Rs. 7,853 crores.
This wide gap between what was projected and the reality raises the question as
to whether it was indeed a merger or a murder; critics however prefer terming
it a murderous merger. Interestingly both Air India and Indian Airlines were
making cash profits till fiscal 2006-07 but have been witnessing losses soaring
thereafter. As of now the total debt for Air India is a whopping Rs. 44, 000
crore while the accumulated losses turn out to be Rs 20,000 crore. The
underlying truth is that the merger hasn’t spawned the promised benefits
primarily because till date the merger has merely remained on paper.
Justice Dharmadhikari Committee Report
Post the agitation staged by ICPA and
the fact that the stop gap solution for pay parity did not find many buyers;
the ministry set up Justice D R Dharmadhikari committee in March 2011, with the
task of studying and making recommendations on matters of HR integration,
level-mapping and pay parity of the two organisations that were merged to
create the 28,500 employee Air India in 2007.
The committee submitted its report on
January 31, 2012. Reports in the media state that the committee has recommended
a voluntary retirement scheme, VRS, to prune the workforce at Air India;
implementation of a ‘no work no pay’ concept and a comprehensive analysis of
the pay structure across the airline to bring it on par with other public sector
units. The committee advocates that both sets of pilots should get uniform
salaries. Further the report recommends cross-utilisation of pilots, which
means Indian Airlines pilots can fly Dreamliners, and Air India pilots can fly
Airbus aircraft after obtaining requisite endorsements and training. Cross
utilization would imply that neither set of pilots get monopoly over a
particular aircraft type or on international routes. IPG would certainly not be
happy with this recommendation as they claim that the pilots’ career
progression is under threat, and that they alone should fly the new Boeing 787
Dreamliners. With computerization of pilot duties, which until now was done
manually at the behest of pilot unions, would mean that erstwhile AI pilots
lose their hegemony over lucrative long-haul flights to Europe and USA.
Why now?
It can be reasoned that the strike is
an expression of all the prejudices against the merger; the present agitation
by IPG and the previous one by ICPA are telling examples of their animosity,
reasons enough as to why the merger of the two erstwhile airlines - AI and IA-
matter little to either of them. Experts
and independents observers alike have condemned the agitation calling it
untimely and premature. This is so because the recommendation of Justice D R
Dharmadhikari committee is with the government and it will soon be implemented.
However, the myopic vision of IPG can be gauged from the fact that at a time
when the bailout package to the tune of Rs. 30,000 crore was approved by the
government and with Dreamliners joining the fleet would in effect help reduce
operational cost & optimise capacity on routes; the union has opted to
agitate.
What next?
The civil minister did lend his ears
listening to the grievances of 13 unions (excluding IPG) and said that there
would be no victimization of the agitating pilots. However, till date the Air
India management has sacked 101 of the agitating pilots bringing to open the
clear disconnect between what is said and what is done. The agitating pilots
union also claim that the management is yet to respond to its overtures. In
their second press conference, IPG minced no words in stating that they are
willing to talk to the minister and that they don’t want their core demands to
be met right now. What they want is the reinstatement of the sacked pilots and
an assurance that their demands would be discussed. They went on to the extent
of stating that they are willing to join the duty ‘right now.’ Well now they want the PM and UPA chief to
look into the matter...
Thus it is amply clear that the ball
is in the government’s court. While no union should be allowed to dictate
terms; the ministry as in past should reinstate the sacked employees, listen to
the demands of the union, explain to the agitating unions the larger picture
and benefits that can be derived from the merger and come to an amicable
solution. Procrastinating the issue will help none. The AI – IA merger should
not be allowed to go down in history as a FAILURE.
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