ED starts probe into alleged wrongdoings in Air India

twitter-logo Manu Kaushik   New Delhi     Last Updated: May 15, 2018  | 20:11 IST
ED starts probe into alleged wrongdoings in Air India

A successful institution is nothing more than a set of right decisions taken at the right time by its key people and supported by rank and file. The current mess at the loss-making Air India (AI) could be linked to lapses by its management in three years to 2007, the year the airline was merged with its domestic operations arm, Indian Airlines.

As the government plans to sell 76 per cent stake in AI, the Enforcement Directorate (ED) has started investigations into several alleged wrongdoings in the national carrier. Last year, the Central Bureau of Investigation (CBI) had filed three cases against unnamed officials in the civil aviation ministry and the airline for gross irregularities.

The most glaring lapse pertains to the ordering of 111 aircraft - 68 Boeings and 43 Airbus - worth about Rs 70,000 crore. It was alleged in a CAG report in 2011 that the aircraft acquisition was "a recipe for disaster" for the airline and contributed significantly to its debt pile. As per Air India's EoI (expression of interest) document, the airline has an outstanding debt of Rs 48,781 crore.

The CAG report had pointed that it took nearly eight years for the airline to finalise the plan to buy 28 planes, but the number was revised upwards to 68 in a short span of time, and too arbitrarily. The revision was made without any audit scrutiny and appeared to be supply-driven (unlike the situation where an airline orders aircraft to meet the growing passenger demand).

The ED would now examine the processes that were followed in finalising the aircraft contracts and the implementation of the aircraft acquisition plan. The ED is already examining decisions taken by AI to surrender its profit-making routes and schedules to allegedly favour private carriers.

For AI, the bad phase really began in 2004 and got worse with the merger with IA (which is also under CBI's scrutiny), and subsequently led to erosion of market share (from 42 per cent in 2004 to 13.4 per cent in March 2018), rise in debt and losses, and wastage of more resources to recoup losses. The airline is still reeling under the burden of poor decisions taken more than a decade ago.

While everybody seems to acknowledge the mistakes, nobody has the antidote to the AI's problems. For instance, AI's former CMD Ashwani Lohani, in a blogpost in 2016, had said that AI's merger led to a mess. Last year, former civil aviation minister Praful Patel, who was the heading the ministry at the time of merger, said that the decisions were "multi-tiered and collective".

The government now thinks that privatizing AI is the only way to turn it around. Whether there were irregularities or not, only time will tell, but the fall of AI from a market leader to an also-ran makes it a fit candidate for a case study in management textbooks.  


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