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Stopgap arrangement: The appointment of new Air India chief Rajiv Bansal is pointless

As Air India careens towards a possible takeover, having a stable commander of the ship is important. This stopgap arrangement of the government could affect the sale of AI.

twitter-logo Manu Kaushik   New Delhi     Last Updated: August 29, 2017  | 13:07 IST
Why the appointment of new Air India chief is going to be pointless

At a time when the government is working out divestment plan for national carrier Air India, the appointment of Rajiv Bansal as its chairman and managing director raises serious questions. Bansal, who is additional secretary and financial adviser in the petroleum ministry, was given this additional charge after AI's former CMD Ashwani Lohani moved to railways board. It's a bit surprising that Bansal's tenure is going to last just three months, a time period too short to make any significant contribution to the ongoing disinvestment plan. By appointing Bansal for such a short term, it seems that he's not going to play a pivotal role in the disinvestment process.

As AI careens towards a possible takeover, having a stable commander of the ship is important. This stopgap arrangement of the government could affect the sale of Air India in more ways than one. For an airline that's fast losing market share, more operational slip-ups can hit valuations. AI's market share has tanked over the years -- from 18 per cent in July 2014 to 13.5 per cent in July 2017.

The appointment is rather redundant because the whole disinvestment procedure is expected to take more than a year, and Bansal's value addition in three months can be patently restricted. In June, finance minister Arun Jaitley had said that the government is looking at selling stake in the loss-making national carrier. Jaitley reasoned that private carriers already control 86-87 per cent market share, and they could handle 100 per cent market. Following this, an inter-ministerial group was formed to help government divest its stake in the carrier.

Air India is a bottomless pit. Previous governments have spent huge sums on its revival but in vain. The most recent attempt was made in 2011 when the government decided to pump in Rs 30,231 crore over 10 years to turn around the airline. In the sixth year of TAP (turnaround plan), some Rs 24,745.21 crore have already been spent out of that kitty. AI has a gross debt of Rs 46,570 crore as on September 30, 2016 and has accumulated losses of Rs 47,440 crore between 2007/08 and 2015/16.

The rush to appoint Bansal has befuddled industry experts who point out the government's habit of keeping key PSU (public sector unit) positions vacant for too long. For instance, in May, union minister Jitendra Singh told Lok Sabha that some 42 posts of chairman and managing directors were vacant in central PSUs (including Maharatnas) due to various reasons such as company being loss making or sick, scrapping of panels and non-availability of suitable candidates.

Bansal's expertise in handling civil aviation matters is fairly limited, at least in his official capacity. He had served as a director in the civil aviation ministry between 2006 and 2008. With this short-term appointment, Bansal could just be a figurehead who can keep things going as is without having to worry much about the overall performance of the airline. Also, a person with a long-term commitment would have saved time and energy of the government machinery which will now have to go through the rigmarole again three months down the line.

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