The financial position of Air India is untenable with the possibility of further deterioration and the government is not amenable to advice from the former COO which is not only sound but if accepted, would do the ailing carrier a lot of good

Just when the tide appeared to be turning for Air India, the airline is once again in the news but this time for all the wrong reasons. Air India’s flight schedules could be seriously disrupted as the Indian Commercial Pilots Association, which represents pilots of Indian, the erstwhile domestic segment of the combined entity Indian, has served a notice to the airline management to strike work beginning March 9, 2011. The slew of complaints include failure on the part of the management to fulfil commitments made in the past, inept handling of industrial relations by the senior levels in management, failure to take the pilots into confidence about the airline’s turnaround plan, lack of progress in the merger initiated three years ago, disparity in salaries and working conditions of pilots of the erstwhile Indian and Air India, substantial difference in emoluments and perks between Indian and expatriate pilots smacking of racial discrimination, portraying fake shortage of senior commanders to continue the services of expatriate pilots resulting in lack of career progression amongst Indian pilots, frequent delay in payment of salaries, violation of a memorandum of settlement signed in November 2009, non-implementation of the recommendations of the Sixth Pay Commission and issuing flight operation circulars without approval from the Directorate General of Civil Aviation.

There appears to be multidimensional crises of confidence afflicting Air India. The independent Directors appointed on the board last year to help craft a turnaround strategy for the airline, in their first meeting recently with the new Civil Aviation Minister Vayalar Ravi, have conveyed their reservations about the way the airline was being run and that there had been no improvement in the quality of its management over the last one year. The management displayed little concern in respect of critical aspects such as discipline and on-time performance. The senior executives ought to be held accountable for lack of action. On the other hand, the Ministry of Civil Aviation (MOCA) is of the view that as the top management is incapable of infusing the required level of confidence amongst the airline staff, chances of success of the turnaround strategy were somewhat remote and hence it would not be possible to sustain financial support to the airline for long. The Ministry of Finance on its part is neither happy with the airline’s turnaround plan nor convinced of proper utilisation of funds infused in the airline so far. In a meeting to discuss allocation of additional Rs. 2,000 crore for the airline, Finance Minister Pranab Mukherjee made his displeasure known to the Civil Aviation Minister. Anand Mahindra, an independent Director has reportedly submitted his resignation citing compulsions of business ethics related to conflict of interest as the ostensible reason. But perhaps the most embarrassing development has been the resignation of Captain Gustav Baldauf, the COO, on February 28. Baldauf quit as the COO when he was served a show cause notice by the MOCA that was somewhat riled by his public utterances wherein he cited difficulties experienced in the work environment on account of unwarranted political interference in the running of the airline. He alleged that “the government played too prominent a role in routine operations”. Under the contract, Air India would have to shell out Rs. 4 crore to Baldauf as part salary for the residual period of contract, further aggravating its own financial difficulties.