India - Turbulent Flight

Anirban Chowdhury

Aviation czars Naresh Goyal and Vijay Mallya couldn’t have asked for a better minister than Praful Patel. Patel has lobbied hard, and continues to do so, for concessions to the beleaguered industry and, to balance things out a bit, has even forced Jet Airways to bow to public opinion and withdraw its decision to sack 1,900 people.

At a time when the oil PSUs are bleeding, Patel’s attempt to get them to bail out the aviation firms was more than a bit of a PR disaster, more so given the flamboyant image of promoters like Mallya. Yet, Patel managed to prevail upon fellow ministers and the airlines, which have unpaid bills of over Rs 2,500 crore, were allowed to pay up the bill in equal instalments over a period of time. Speaking to the press after the decision was taken, Patel appeared fully in charge. “Airlines,” he said, as if it were good enough, “have always been good customers to oil companies, the defaulting only started in 2008.”

Patel has been so closely associated with the industry that, unfairly, he had to bear the brunt of Jet’s decision to sack 1,900 people the day after it entered into what most considered was a collusive arrangement with rival Kingfisher. At that point, Patel had defended the arrangement saying, “There is monopoly even now in some of the routes which have only some flights operated by only one airline.” As the questions became a bit hostile, Patel was quick to add that his ministry would look into the matter if either the Competition Commission or the Monopolies and Restrictive Trade Practices Commission raised any issues.

Given that Jet said it would sack 1,900 employees a day after Patel had defended its alliance with Kingfisher, the minister was under pressure. He then used his personal equation with Naresh Goyal to right the PR nightmare. Goyal said his conscience was bothering him and agreed not to sack the staffers. Patel first called the decision to sack the employees ‘inexcusable’, then said it was a ‘labour ministry affair’ and, when Goyal agreed to play ball, took credit for his role. “I called the (Jet) chairman on Thursday morning and asked him to meet me in Hyderabad ... I had also told him that in 24 hours, we must find a solution to this problem, otherwise we in the ministry would certainly not be very happy with the approach of Jet Airways,” Patel said.

While Patel claims the unprecedented boom in the airline industry under his watch has been a big plus, other credits he can legitimately claim are the privatisation of the Delhi and Mumbai airports and the construction of greenfield airports at Hyderabad and Bangalore. However, several issues remain unresolved. How the Delhi International Airport Limited will share revenues from real estate with the Airports Authority of India is still not clear. The Mumbai and Bangalore airports have capacity issues, though the current global conditions are unlikely to cause that to be a problem, at least for a couple of years. The new ground-handling policy, supposed to come into effect in 2009, is expected to increase costs dramatically and the modernisation of non-metro airports has slowed considerably. Around 16 smaller airports were supposed to be ready by the end of this year, but almost all are behind schedule.

Besides, the merger of the national carriers Air India and Indian hasn’t taken off as planned. More than a year after the announced merger and the formation of NACIL, CMD Raghu Menon still expects the integration to be only 75 per cent complete by March 2009, while the HR integration would not be completed even by then. Ministry sources say that NACIL, which is estimated to account for 26 per cent of the industry losses of

Rs 8,000 crore for 2008-09, still has more than 5,000 excess employees and an employee to aircraft ratio of around 200:1.

For his part, Patel retains his high-flying ways. A story, probably apocryphal, doing the rounds in the ministry is how, while flying from a southern city to Mumbai in a chartered flight, he suggested they ‘drop by’ at Gondia, his native town, and have a bite before moving on.