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Unions to resist privatisation of Indian Airlines

Syed Firdaus Ashraf in Bombay

Indian Airlines unions have decided to protest against the central government's decision to privatise the national carrier.

C D Soman, general secretary, All India Air Corporation Employees Union, told Rediff On The NeT this morning, "The caretaker government at the Centre has no right to take such a decision. The government has not even bothered to discuss this issue in Parliament."

Irked over the government's unilateral decision, the union has decided to resort to "direct action". Soman did not elaborate what this would mean, only saying, "We are against the decision."

In December, Indian Airlines staffers had gone on a one-day strike against the proposal to privatise the airline.

The union pointed out that the Cabinet Committee on Economic Affairs has overlooked the Kelkar Committee's recommendation to the Government of India to inject a fresh capital of Rs 9.22 billion into Indian Airlines.

"The CCEA has accepted only a part of recommendations of the Kelkar Committee. This was done to appease the business community who want privatisation of the airline," Soman said.

Sources in the unions representing Indian Airlines employees said the government is to blame for the heavy losses incurred by the airline.

One of the two reasons was the grounding of 14 Airbus A-320 aircraft for a period of 14 months beginning February 1990. This cost the airline Rs 2.5 billion. The merger of Vayudoot with Indian Airlines resulted in a Rs 2.5 billion loss for the airline.

"How can the government blame the IA staff for the losses? It should remember that the Kelkar Committee has asked the government to pay Rs 9.22 billion to Indian Airlines," a source said.

Indian Airlines had come into existence in 1953 by a special statute in Parliament entitled Air Corporation Act 1953, after the merger and takeover of eight private airlines. The total capital invested by the government since nationalisation was to the tune of around Rs 47.1 million which was paid back by Indian Airlines in the year 1971-72.

Interestingly, till 1989, Indian Airlines had made profits of around Rs 4.16 billion, apart from its contribution to the national exchequer to the tune of Rs 20 billion by way of duties and taxes on aviation fuel, customs duty, interest on loan capital, sales tax, income tax, etc.

"As on date, Indian Airlines possesses total assets worth Rs 32 billion. This has been achieved without any budgetary support from the central government. Despite several constraints it faced, Indian Airlines always fulfilled the social obligations during the years of its existence," adds Soman.

Things were not smooth, however, for Indian Airlines in the post liberalisation period and the airline suffered a loss of Rs 2.58 billion in 1993-94.

However, it was able to recover after it stepped up flights in profitable corridors and cost-cutting. In 1997-98, the airline shrugged off consistent losses to record a net profit of Rs 500 million.

"We have improved drastically compared to all the new private airlines. There is no need for the government to go in for privatisation," Soman said.

The Kelkar Committee was constituted by the then Narasimha Rao government to look into the operations of Indian Airlines and to make recommendations to turn IA into a profit-making organisation.

Currently, Indian Airlines operates 28 international flights a day touching 17 stations in 14 countries. The airline has 23,000 employees, represented by eight major trade unions.

"We are going to talk to all the unions before taking some major action. The government must realise that mere privatisation is not the solution. We can run the airline successfully if the government has a will. But unfortunately, the government is not interested, it seems," Soman said.

Aviation industry analysts, however, said Indian Airlines has not bought a single new plane since 1990. The fleet augmentation programme is already behind schedule. The Airbus A-300 fleet currently operated by Indian Airlines and the Boeing 737s flown by its subsidiary Alliance Air are due to be phased out in the next five years.

"We went for nationalisation of IA because everyone then agreed that the private parties cannot manage the airline. Almost all the private airlines in India have failed. So, why do we need to privatise the existing airlines?" argued Soman. "We will oppose tooth and nail the government's move."

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