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BUSINESS: AIR-INDIA
Yadav Against Privatisation
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AIR STRIKE: Yadav's opposition
to privatisation adds a twist to the episode
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Yadav has also not
been the most vocal supporter of the ongoing privatisation of Air- India
and had expressed his reservation about it just last week in Patna, whereas
Mascarenhas has been an aggressive proponent of freeing the airline from
the clutches of government control. The timing of the assault on Mascarenhas
is also worth pondering over. The first advertisement for Air-India's
disinvestment appeared on August 28, 2000 just around the time the CVO
inquiry was launched. The due diligence for privatisation was completed
only on May 11, 2001, only 12 days before the suspension order. Y. Easwara
Reddy, secretary of the 12,000-member Air-India Employees' Guild, doesn't
mince words: "The main purpose of suspending Mascarenhas is to prevent
the privatisation of Air-India. The minister is clearly against it and
we have complained about this to Disinvestment Minister Arun Shourie and
to the Prime Minister's Office."
Yadav scoffs at the fears. "Why should this
affect the disinvestment process? There is a separate ministry and a separate
set of people looking into that. Disinvestment is on schedule," he
says. The minister also claims that grant of favours to the GSA was a
"solid case of corruption". And once the CAG report came out,
he was bound by law to act. Disinvestment Secretary Pradip Baijal also
claims that suspension would not make much of a difference, and Air-India's
privatisation should happen in the next three months.
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THE ACCUSATIONS
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# Mascarenhas caused AI a loss of Rs 2.79
crore through special favours to sales agent Welcome Travels in
collusion with P.K. Sinha.
# Claimed passenger capacity was down
by 42 per cent on UK-India route when it was only 3.5 per cent lower.
# Held crucial posts both in 1992-93 and
1997-98 when the sales agent benefited.
# Satya Rao, then UK regional director,
was prematurely transferred to Mumbai in 1997 and Sinha was posted
in his place.
# Indicted by Air-India's chief vigilance
officer in October 2000 and then again by the CAG in March 2001.
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THE DEFENCE
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# Incentives to sales agents were offered
to reverse reduction in seat capacity.
# Suspension was irregular and mala fide.
# MD is being victimised for his support to
privatisation.
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But it is not just Mascarenhas' suspension that
is causing concern. A senior Air-India official wonders why nobody is
concerned about the loss of market share in ground handling. "Air
India has 85 per cent share for ground handling and that earns it close
to Rs 300 crore every year. This share is being frittered away by selling
rights to private parties. Also, if corruption is the issue, why isn't
anyone looking at the sale of Air-India bilaterals (destinations an airlines
can fly to negotiated through bilateral agreement between countries) being
sold to various airlines?" The sale of bilaterals is justified as
it improves connectivity with India and makes it more competitive. The
truth is that bilaterals form a critical part of the airline's worth.
When Qantas, Air France and British Airways were to be privatised, the
governments had frozen the bilaterals.
In 2000 alone, bilaterals worth three million
seats have been given to competing international airlines. Mascarenhas
is believed to have been opposing the sale of bilaterals till the privatisation
of the airline is completed. But the ministry has been pushing for sale
of bilaterals. Reddy sees this as a move to scuttle the process of privatisation.
Ironically, the turbulence in Air- India management
has come at a time when the airline was showing some signs of turning
around. In the financial year 2000-01, it has cut its net losses to Rs
28.5 crore from Rs 38 crore a year before. That's despite a spurt in its
fuel bill from Rs 702 crore to Rs 999 crore. Its annual sales have also
crossed the Rs 5,000-crore mark for the first time, clocking a growth
of 11 per cent last year. The suspension of its MD may disrupt some of
that recovery. But then Air-India has been through many such air pockets.
-With Malini Goyal
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