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October 24, 2000
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Interview / Capt SP Varma & Capt KR Singh

'It's absolutely easy to turn around Air-India'

The Indian Pilots' Guild, comprising 425 executive and non-executive members, in alliance with an as yet unidentified major Indian business house, is bidding for a 40 per cent stake in Air-India. If it succeeds, it will create history: never has a major Indian public sector company been taken over by its employees.

The guild's attempt at turning around Air-India is being masterminded by its president Captain S P Varma, 56, and general secretary Captain K R Singh, 54. In an interview with Y Siva Sankar, they explained what ails India's international carrier and outlined their plans to restore the Maharajah's lost glory.

Captain S P Varma How do you plan to acquire the 40 per cent stake in Air-India?

Captain S P Varma: There are a few things that are yet to be tied up. We will announce our plans in detail at an appropriate time. All the details will be out by November 10.

Captain K R Singh: Other bidders have not yet revealed their plans in detail. So why should we? Till you get into a formal business understanding with somebody, there's no point in announcing any details.

There aren't too many precedents to what you are trying to do. How confident are you?

Capt Singh: There were employee takeovers at Aer Lingus, British Telecom, Irish Telecom. All over the world, there are a fair number of companies whose employees have taken over and turned around the companies.

Capt Varma: Within the airline industry, there are precedents other than United Airlines. Eastern was also taken over by its employees. Aer Lingus, as he said.

Click for a bigger image. An Air-India aircraft (Boeing 747)What ails Air-India?

Capt Singh: Poor management. Tremendous amount of government interference that has throttled the company. If you throttle the growth of the fleet, you are throttling the airline. In this business, unless you expand and keep up with the competitors, in terms of number of aeroplanes, in terms of product quality, it's very difficult to survive.

It's not only the size of the fleet and its quality that is affecting Air-India's performance. We have given up first class except on the 747-400s. That is a high-yield area which we have given up because of lack of funds, because the aeroplanes have gone down, we can't maintain the onboard systems. So we have degraded our quality.

We feel, if these decisions had an impact on their wallets, the CEOs would have never taken them. But here, such bad decisions are inflicted on the airline, and then the CEO goes away, another one comes in. There is nobody to question him.

The fleet has reduced. With the reduced, old fleet, you can't really utilise their presence effectively. So if you don't fly, why are you in this industry?

The government is fully aware of these problems. In fact, the current managing director has been saying over the years that we need to expand our fleet, we need money, but we don't know why nobody is paying any heed to him.

Media reports indicate the level of governmental interference in Air-India's operations has come down in the last five years.

Capt Singh: I don't think so. The last week's transfer of directors is a clear-cut example of what kind of interference there is from the government.

Three directors were changed on the orders of the ministry of civil aviation. They have been shifted around. That's supposed to be the MD's job. Not the government's job.

I don't know if this has affected Air-India adversely. But the point is that the managing director knows who is suitable for which post, not the ministry. The ministry's people keep changing all the time. They really have no knowledge of what this business is all about. Let this power be with the managing director.

What does it take to turn around an airline like Air-India?

Capt Singh: Basically, there is very little that is required to turn around this airline. It is just getting the government off the back and getting a professional managerial team -- that's it.

It is absolutely easy indeed. Basically, you require to motivate the employees. We have a large number of fully trained employees sitting on the bench waiting to do something. Unfortunately, the aeroplanes have been pulled back, fleet strength has been reduced, employees are demotivated completely....

Once that is done, if you see the kind of passenger traffic and the growth that is happening in this country, the potential is phenomenal.

It is just that we need to get our act together. The market is there, the brand name already exists, which is tarnished at the moment, but you just need to build it up. Do all these, and the airline will be back on track.

In the last 2-3 years, Air-India's fortunes have been on the rise. So it's possible.

Business-wise, can Indian pilots be as successful as their counterparts elsewhere in running an airline?

Capt Singh: Easily. I think we can do that and this will be a totally new benchmark in the history of Indian and Southeast Asian industry, including the government-run companies where the employees take over and do something really well without government interference.

So what basically we are talking about is not a divestment plan but a turnaround plan. So when you can turn around this organisation which is in this pathetic state, whatever value is there today is because we are so low down monetarily, image-wise and otherwise.

So, if you turn it around, the whole value of this product will go up, I don't know how many times, I really don't know what the valuation is. The government at this point in time wants to get a lot more money.

The guild may be confident and enthusiastic about taking over Air-India. But do you have the expertise to manage an airline?

Capt Singh: We have not said we want to run the company. We want to oversee. We want to get a professional managerial team to turn around the company. We can advise the team properly because we understand the company inside out, and know which is the fastest way of going about it.

Why can't you advise the government and rejuvenate Air-India?

Capt Singh: Oh. We've got a full file, telling the government, 'Look, this is where things are going wrong. Stop it. Stop it, please.' Nobody seems to have even bothered to reply to our letters. You can't run an organisation with five or six different heads.

In the last one week, you must have read that the government has transferred directors of the company. That is the MD's job. The MD is sitting in Bombay, and the directors are being changed by the government in Delhi. It's all a holy mess. Nobody really knows who is running the organisation.

If given an opportunity, how do you plan to put your managerial team in place?

Capt Singh: It's not going to be decided entirely by us. It's going to be decided in conjunction with our strategic partner. The partner will have a major say in it definitely, because they will have more managerial skills than us.

Who will be your business partner?

At this point in time, all I can reveal is that our strategic partner will be a major Indian business house.

How much money can the pilots themselves bring to the table at the moment of reckoning?

Capt Singh: It is not a takeover by pilots per se we are talking about. It is going to be a pilot-led employees' bid for a stake in the company. Every single employee is going to make a contribution -- a voluntary contribution, it's not going to be forced down somebody's throat.

That depends on how much money we need to raise. But having spoken to most of the people, I feel they are willing to put in their money. Whatever contributions we have looked at, they are more than willing to invest this money.

The employees are very serious that the company should make a turnaround for the better. So they have been extremely responsive to our plans.

At this point in time, it would be inappropriate for me to put a figure on the money that is likely to be raised from the employees. All I would say is, it would be substantial.

Part II: 'Every country has to have a national flag carrier'



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