Air India is the best example for a government-run business. Like most government-run businesses even Air India is not run efficiently. It is still buying planes when its debt burden is mounting. If given a free hand, I am sure Air India management would have cancelled their orders, may be reduced its fleet size, let some employees go and many more actions which would have helped them turn around the airline's fortunes. But the government does not care. The results are there for everyone to see. Still we (tax-payers) keep throwing good money after a business in which I don't foresee any possibility of a turn-around. What is the best way out for Air India at this point? Before we get into answers, we need to set some context.
Air India (along with Indian Airlines) was the only carrier in India for a very long time till government decided to open up the aviation sector for private operators. When Air India had the monopoly over Indian skies, its efficiency of operation did not matter so much as it is now. When the government decided to open up the aviation sector for private operators, Air India along with Indian Airlines should have been sold to a private enterprise. In fact this is what the government did with VSNL before it allowed private operators into long-distance telephony. A lot of private enterprises would have been interested in buying into a monopoly even though it meant taking over government employees of Air India and Indian Airlines. An attempt was made in 2001 to sell, but it fell through for lack of buyers. I am sure even now the situation will be the same if an attempt is made to sell it.
The government allowing private operators and retaining control of Air India & Indian Airlines dealt a double whammy for both these carrier. The government control meant that most major decisions required government approval and this literally killed the airline while the private operators thrived. The private operators not only ate into Air India's market share, but also managed to attract performing employees from Air India. Left with mostly employees with not enough motivation to perform, Air India has been losing market share. I would not be surprised if it becomes bankrupt very soon.
What can be done now so that the tax-payer money does not keep going down the drain any more? The best option is to put it on the block and give incentives for the buyer. Without incentives no one will come forward to buy a sick government controlled business with so many demotivated employees as carry-on baggage. The incentives list should include some kind of debt-restructuring / write-off, a tax-holiday and a free-hand for the new owners to let go non-performing employees. With 40,000 Crore debt, no one will be ready to buy Air India. At the rate that Air India is losing money, as a tax-payer, I would be happy if I don't have to pay for keeping Air India afloat. Imagine what would have been the state of Satyam if government had continued to run it instead of giving it off to Mahindras for a pittance.
It is high-time the government gets out of running businesses and focuses on regulating them well. Whether it is oil or steel or telecom, it is a well-known fact that governments cannot run businesses efficiently. The government may have strong reasons to control some businesses but it should exit all services-centric businesses.
In summary, Air India should be handed over to private management as quickly as possible before the losses mount any further. Tech Mahindra bought Satyam because the pricing was attractive. Otherwise, with the kind of risks involved, no one would have dared buying Satyam at that point. Air India has vast assets which includes landing rights at key airports of the world and any good private businessman can run it profitably and this in turn will get money to the government by means of taxes.
No comments:
Post a Comment