Sat Sep 17 2011,
In these furiously confused times when fiction sounds so much sexier than fact and when scorn and anger seem to be the bottom line of every argument, it is useful to recall Infosys founder N.R. Narayana Murthy’s favourite line: In God we trust, all others must bring data. So let us start examining the Comptroller and Auditor General (CAG) of India’s latest bestseller, its report on the ministry of civil aviation (MoCA), by what else but reading the report itself. The entire report, not just its classy jacket that was waved at you on TV screens over a fortnight ago. True to the spirit of Narayana Murthy’s advice, let us start with a key para that features in the summary as well as key conclusion:
“MoCA and Government must recognise that AI is the National Carrier (capital letters auditor’s). In very many ways, it is a symbol of the State. Even if Minister and officials in MoCA prefer not to be Minister/ officials of AI alone, the fact remains that it has to be given more than (emphasis mine) a level playing field now which it has not been given. All decision to allot routes, alter timings, provide first of refusal rights on domestic and international routes must be made taking into account the interests of AI. This should be done in a transparent and demonstrable manner, placing it in public domain.” Further, the CAG adds firm, sage advice, “A total hands-off approach with regard to the management of the airline is required.”
Now there is much in these conclusions this newspaper, as most of the media, would agree with. A hands-off government for one. And there is more. For example, the assertion that Air India is a symbol of the “State”. A more incontestable truth has not been spoken. Because it is in so many essential ways just like the Indian state. Slow, unwieldy, chronically delayed and unreliable, rude, arrogant, good for nothing and due for a total overhaul and reinvention. But note that among all the negatives we have listed, the word “corrupt” is not there. This is not to say that our state is not corrupt. It is amongst the most rottenly corrupt in the world. It is just that there is nothing in this CAG report of 122 pages that calls anybody corrupt, discovers any money loss, or even hints at any. It does talk about inefficiency, callousness, disastrous management, delays and how an airline that makes a near loss on every single route it flies rewards its own (employees, not customers, silly!) with generous “performance-linked” incentives, converting itself into a taxpayer-funded gravy train, the like of which is unlikely to be matched even if our country were to lapse into old-style public-sector socialism.
Again, see the remedy the auditors suggest. First of all, they remind the government that Air India is our National Carrier (as if it was the Indian Air Force). Then they ask for a “more than” level playing field, and tell the government exactly how to do it: just mess with all routes, schedules, even timings, in such a way as to benefit Air India and screw the rest, particularly the fare-paying passenger. A “more than level playing field”? Are you listening to a clinical auditor, or an Air India union leader who wakes up between two strikes to pen this silly piece of anti-reform, anti-consumer, statist, self-serving rubbish?
You may accuse me of selectively picking one paragraph of an unthinking bureaucratic homily, and damning 122 pages of blood, sweat and tears. And you may indeed be right. Because there is much, much else in the report that is revealing, startling and factual. Since we said we will stick to data, here are some examples.
1. The more Air India flies, the more money it loses, even on routes where it has a state-mandated monopoly. For example, the India-US non-stop routes, the fanciest addition to its schedule. The loss on just this route increased from Rs 552 crore in 2005-06 to Rs 1,522 crore in 2009-10, as frequencies increased. This route has until now been denied to Jet and Kingfisher, thereby creating a monopoly of six years already.
2. Plane-load factor (PLF) of Air India/ Indian Airlines in this period remained stagnant at 68.8 per cent, while all private carriers registered an increase. And perhaps by “oversight”, the CAG has forgotten to even take notice of the fastest growing domestic carrier, Indigo.
3. Even market share in cargo operators saw a decline from 36.8 to 26.5 per cent, even as private carriers increased theirs. This, when the “national carrier” had already given itself a “more than” level playing field by converting two old, fully depreciated Boeing 737s into freighters. You want to see a scandalous fact, turn to page xvi of the executive summary.
Rs 168.3 crore was spent in this conversion. And what did the two planes achieve? A loss of 270.62 crore. Who is to blame for this? The accountant wouldn’t say.
4. As the state carrier lost its market share across the board, see how premium passengers dumped it. Even by 2004-05, it had lost most of its business-first traffic and filled only 14.4 per cent of first-class seats, each of which, the auditor sagely tells us, can make up for several empty seats in Tharoor’s cattle class. That number, now, has reached 12 per cent. For business, the number has declined from 31 to 27.7 per cent, and from 74.6 to 67.7 even in economy. You want to know why, read on from the CAG.
5. The on-time performance of the state carrier is lower than any other airline’s except Kalanidhi Maran’s Spicejet. Its 74.6 per cent for domestic and just under 60 per cent for international competes with private airlines that range between 85 and 91.
6. No wonder a passenger survey quoted by the CAG tells you the state carrier is “apathetic, grudging, dirty, unpleasant, unresponsive” and so on compared to Kingfisher, Jet, Singapore, Lufthansa and BA which are “friendly, obliging, well-dressed, classy, polished, hospitable” and so on. And who does the auditor blame all this on?
7. Since the blame is put on “competition” and non-availability of a “more than level playing field”, see what happens when Air India is given state-mandated monopoly, for example, the route to Riyadh which was barred to Indian private carriers. CAG tells you the airline had 372 serious delays/ misconnections/rescheduling on this route in 2006-09, and PLF fell from 81.4 to 63.6. And what happened when it increased its flights to 1,621 in 2009-10? There were similar delays, misconnections, etc on 232 occasions!
So, who do you blame for all this? If you just read these examples, and indeed, most of the rest of the report, you’d say the consumer. It is the paying customer who, given the choice now, has voted with her feet. And what does the auditor say?
The auditor consumes page upon page looking for faults in the buying of planes for Air India, but all he comes up with is that the process was completed too fast, as in four months. Indian Airlines, meanwhile, suffered, the CAG says, because the government took too long to buy it planes. Then it rues the loss of Rs 200 crore because the government took 117 days granting sovereign guarantees the airline needed for loans to buy its planes. If this had come in a fortnight, would it have been “too fast”? What kind of delays does the auditor consider “normal” in government processes to avoid suspicion? Heads or tails, the auditor always wins.
You have to say the auditor has done a decent job of ferreting out the facts on what ails the state carrier. Except, he has gone on to state his preconceived conclusions even if facts point to the contrary. He blames reforms for everything. Oh, reform is fine, he says, but it was “untimely”. So what should have been done? Delay it all, not even until the state carrier acquired its new planes and modern new airport hubs were built in Mumbai and Delhi, but not until the carrier had got a headstart of “two to three years” to settle its operations. That means all reform and opening up should have been delayed by a decade. And all of it to save a PSU that is “rude, apathetic, callous” and so on.
Read also their prescription now. Effectively, stop all reform and opening up. Not only that, “roll-backs” where foreign carriers have been given “too liberal” rights to fly out of India. So burn up your Emirates, Gulf Air and Singapore frequent-flier miles. Because Stalinists are coming. This CAG report is not about corruption. It tells you what happens when the sarkari empire strikes back to protect its own at the cost of you and me, the paying passenger and tax-payer.
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