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Nationalisation did not kill Air India, politics did. Tata’s challenge lies beyond fixing it

A great airline cannot just be a bus service, it must stand for something. Tata might want to take clues from one of its hospitality brands: The Taj.

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Last week, I flew Air India from Chennai to Delhi. The trip had been planned in advance and I had no idea that it would be on the day it returned to Tata ownership. But, shortly after we boarded, the pilot made an announcement: “Today, Air India becomes a part of the Tata Group again…”

Conscious that, entirely by accident, I had been in the right place at a special time, I took my phone out and recorded the announcement. Later, I put it on Twitter. The reaction surprised me. More than 45,000 people watched the video and there was an outpouring of joy and support. It had been like that on the plane too. As the announcement ended, passengers turned excitedly to each other, pleased that the Tatas would now run Air India again.

In these cynical times, the Air India privatisation is that rare phenomenon: A commercial transaction that has thrilled many people, even those whose sole connection to the deal is that they may have once flown Air India. The Tatas embark on this journey with an unprecedented level of public support.

Also Read: From challenge to a challenger – Why Air India’s new journey has a lot flying on it

Nationalisation of Air India

Most of us would agree that it is fitting to have the Tatas back in charge of Air India, though perhaps we don’t fully understand the transition from private ownership to government control to private ownership again. When the government nationalised Air India in 1953, it was a small airline that had only launched its first international flight five years before. It was hardly the behemoth that it would become in a couple of decades.

Contrary to what some would have you believe, Air India’s nationalisation was not part of some radical Marxist agenda. In that era, many (most, actually) large international airlines, outside of America, were government-owned (i.e. British Airways — then called British Overseas Airways Corporation or BOAC — Air France, Alitalia, etc). In India, as in many other countries, the rationale was that too many small airlines (India had many in those days) would not have the capital to operate large fleets, so it was better to have one or two large carriers backed by the government.

What we regard as the ‘glory days’ of Air India came after it was nationalised. It was the first airline in Asia to fly the Boeing 707 and it went big on the Boeing 747 before other carriers did. Air India’s reputation for its in-flight service and for marketing (there was a time in the 1960s when the ‘Maharaja’ was among the world’s most recognised corporate mascots) all came during the period when it was owned by the government.  Such was the regard in which it was held that other Asian airlines followed its model and, as in the case of Singapore Airlines, asked for its help.

Even in the 1960s, the Indian public sector had no reputation for global excellence. So how did Air India win so much international respect?

The short answer: Because the government left it alone.

Also Read: When a write-off is a triumph: Why Air India sale has both Tata & govt in buoyant mood

JRD Tata’s ‘passion’

Though the Tatas no longer owned Air India, JRD Tata stayed on as its chairperson and ran the airline. Since he had the respect of the Prime Ministers (Jawaharlal Nehru, Lal Bahadur Shastri and Indira Gandhi), no minister or civil servant dared tell him what to do. Such was JRD Tata’s dedication to the airline that he worked free of cost for Air India despite his critics within the Tata Group complaining that he devoted too much time to Air India, a company that the Tatas had no stake in. But JRD would not be swayed. Air India was his passion and he told people its success was one of his greatest achievements.

We forget now how innovative JRD and his marketing genius colleague, Bobby Kooka were. At a time when the world was dominated by big Western airlines, they looked for ways to make Air India stand out. JRD’s obsession was cabin service. When he travelled himself, he would walk down the aisles checking if passengers were content. If a tray of food went out with a cold main course, or even if a fork had a twisted prong, he would give the cabin team hell.

But Kooka and he also realised that they could turn Air India’s Asian origin into an advantage. They hit on the idea of Maharaja service (Kooka invented the Maharaja) and invented the concept of Asian hospitality. It was an idea that all East Asian airlines (and later, hotel chains) went on to copy. In those days, every airline flew identical planes and charged identical fares (all fares were rigidly controlled by the International Air Transport Association [IATA] cartel). Tata made Air India stand out from the rest of the world’s plain vanilla airlines because of its unique model of hospitality.

So what went wrong?


Also Read: Air India’s privatisation comes two decades late, but taxpayers should be relieved

The price of politics

In 1977, Morarji Desai became Prime Minister and decided he hated JRD and all that he stood for. Bobby Kooka, who had written an irreverent guide for passengers, was sacked and the guide was junked. Next, JRD was booted out and the airline was handed over to the politicians and the bureaucrats. That’s when the rot set in.

Indira Gandhi had a chance to change all that when she returned to office in 1980. But she couldn’t be bothered. She left it to her PA, RK Dhawan, to appoint the chairperson of Air India. Dhawan chose banker Raghu Raj, a loyalist (or stooge) who had expected to become Governor of the Reserve Bank of India and accepted Air India as a consolation prize.

From that point on, Air India was robbed of its autonomy. Every chief executive had to hang around the aviation ministry seeking approval for his decisions. In no time at all, the ultimate authority became, not even the Minister, but the joint secretary at the ministry who was in charge of Air India.

Still, the basic management structure was solid and when a forceful chief executive was appointed, the airline soared. Rajan Jetley had Prime Minister Rajiv Gandhi’s ear so he was effective. Y.C. Deveshwar was plucked from ITC by Madhavrao Scindia to be made Air India chairperson and he ran the airline so well that, way back in the early 1990s, Air India was making a profit of Rs one crore a day.

The initial success, however, could not last. The Indian Administrative Service decided that the Air India Chief Executive’s job was a cadre post and looked for IAS officers to give the job to. For obvious reasons, this did not work. In rare cases, when an IAS officer did turn out to be efficient, (say PC Sen) the minister himself turfed him out. On the rare occasion that an Air India professional reached the top (Michael Mascarenhas, for instance) the ministry embroiled him in bogus cases.

Also Read: The spirit of my great-grandfather, a shareholder of Air India, is now resurrected

The real challenge

Considering all the things that have been done to it, it is a wonder that Air India still survives.

In fact, Air India does not actually do too badly. A badly-executed merger with Indian Airlines crippled the airline’s effectiveness. Huge loans taken to buy aircraft led it into a debt trap. Active encouragement to Gulf carriers robbed it of its passenger base. And yet, Air India remains a preferred option for many travellers (such as myself) because of the skill and commitment of most of its core employees. Take away interest payments and the airline is not the financial black hole its critics make it out to be.

The Tatas start out with advantages: enormous public goodwill and dedicated employees. They are rid of the one factor that has nearly destroyed Air India: ministerial and bureaucratic interference. But it may not be enough. The airline flourished in the JRD days because he found an identity and a role for it. A great airline cannot just be a bus service. It must stand for something. Singapore Airlines stands for operational excellence with gracious Eastern hospitality. Virgin was able to take on the big boys because it embodied Richard Branson’s own buccaneering spirit.

On the other hand, not only does Air India now stand for nothing at all, even Tata’s own Vistara is curiously anaemic and characterless.

Perhaps the Tatas should look further inwards. The group already runs one of India’s great global hospitality brands: The Taj. Perhaps that is the direction they should take Air India in.

Fixing Air India will not be difficult. Making it relevant again is the real challenge.

Vir Sanghvi is an Indian print and television journalist, author, and talk show host. He tweets at @virsanghvi. Views are personal.

(Edited by Srinjoy Dey)


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