A Sad Day for Indian Commercial Aviation

Yesterday was indeed a sad day for India and Indian Commercial Aviation. As Flying with Fish has been predicting on his blog for a few days and finally confirmed yesterday, Air India has been booted from Star Alliance before they could even formally join. The dropping of Air India was done three and a half years after Air India was invited and was still unable to fulfill the basic requirements required by Star Alliance to be a member of the worlds largest Airline Alliance. Fish does a great job documenting the challenges Air India faced and continues to face.

A Glorious Past:

For those who may not know, Air India’s origins come from a rich history of Entrepreneurship that unfortunately did not survive in its DNA. It is eventually dying because it is a government run bureaucracy and not an entrepreneurial venture it started out as. Air India or at least it ancestral company was founded in 1932! It was founded by a member of India’s greatest entrepreneurial families – Jehangir R. D. Tata. No, not the same Tata who started the Tata Conglomerate. That was his uncle Jamshedji Tata. But Jehangir did become the Chairman of Tata Group later on in his life. The same Tata Group, which today boasts to own world renowned brands such as TCS (Tata Consultancy Services), Tata Motors, Tetley Tea and Jaguar (yup, Ford sold Jaguar to Tata Motors)! Jahenangir Tata started the airline in 1932 as Tata Airlines. It went public in 1946 as Air India. In 1953, the government of India nationalized the airline. It operated as two separate airlines – Air India with International operations and Indian Airlines for domestic. The two were merged earlier this year to facilitate Air India’s joining Star Alliance. After all, Star’s major interest in the alliance was to access the Indian domestic market.

Killed by the Government:

Air India had a glorious and historical past. Not too many modern airlines have been around for so long. India was not even an independent nation in 1932! They were a part of the British Raj. But the airline thrived and grew. It however was never too profitable once the government took over. It was a public sector undertaking – an agency run by government employees. They did not have a profit or a customer service motive. The government of India and especially it’s ministers and senior bureaucrats treated it like their own private airline. People routinely got bumped from flight because a minister wanted to fly. Flights could be held and delayed if some government VIP was running late. I personally have been on a domestic flight that was held for one hour and 45 minutes because a state government official was running late for the flight. Today, Air India cannot even pay its daily fuel bill. It is indeed a sad state of affairs.

The Solution:

Kill it! And then resuscitate it. Declare it bankrupt and use the left over assets (aircraft, facilities, airport slots, routes) to start afresh. But start afresh as a private airline, run as a free enterprise venture. For Profit. It can happen – India has two great private airlines that operate international – Jet Airways and Kingfisher and also several domestic operators that are excellent – SpiceJet and IndiGo, for example. Air India has more assets and routes then any of those and can be brought to profitability with proper management. Air India would have been good for Star Alliance, as I have said before. But they need to reinvent themselves to survive the financial mess they are in.

The Alliance situation:

As Fish mentioned, the Indian Government will probably give Star Alliance a tough time for dumping their child at the altar. They will most certainly prevent them from going after Jet Airways. (Kingfisher is already committed to join OneWorld.) The only two options are – Jet Airways is eventually allowed to join Star Alliance (I will write an analysis to see how that would help Star) or someone in the Ministry of Civil Aviation reads this post and reboots Air India. High hopes…

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