Promotion Without Discretion

One might wonder what is so special about the Air India scheme. Most airlines have such promotional schemes and such facilities are given to special categories of passengers as a reward as well as an incentive for patronising them.

But then there are two crucial differences between what Air India did and most other airlines do for their patrons. One, such promotional schemes are always introduced in the lean season so that the occupancy rate can be improved at a time when the business is down.

Two, the schemes are meant mostly for passengers who are frequent flyers with the airlines. In other words, passengers loyal to the airline are rewarded with a free ticket.

 

What did Air India do? First, it introduced the promotional scheme in June, which is the peak season for the national carrier. There was no compulsion on the part of the Air India management to introduce such a scheme at a time when its seats are over-booked on almost on the sectors. The introduction of the scheme in June did not have any logic from the point of view of promoting its business. So, why introduce such a scheme now? There are no satisfactory answers to such questions.

Second, Air Indias scheme this month does not cover its passengers under the frequent flyer programme. It is only for the Maharaja Club members. And, pray, what is this Maharaja Club? Well, this is an exclusive club. The beauty of the club is that you can be its member only by an invitation from the Air India management.

The current members of this exclusive club constitute the Indian elite, irrespective of whether they fly Air India or not. Senior bureaucrats and eminent personalities from different disciplines have been invited by the Air India management to be a member of the Maharaja Club. Thus, it is pure discretion, not any objective and transparent guideline, that determines membership of this club. The obvious question that arises is if indeed such is the composition of the Maharaja Club, why was such a facility granted to them during the peak season? Didnt it go against Air Indias own business interests?

Or, was this done to curry favour with influential bureaucrats in the Union government, who continue to wield enough power to decide the fate of the countrys national carrier? No wonder, there are talks about a very senior bureaucrat (needless to say, a Maharaja Club member) going on an official visit to the US and his wife taking advantage of the special scheme for a free ticket as the companion of a Maharaja Club member. Can this be sheer coincidence that the senior bureaucrats visit took place at the same time that Air India decided to introduce the scheme for the Maharaja Club?

What actually happened may be very difficult to unravel. But that such speculation is rife in the government as also within the Air India headquarters proves a point: the countrys national carrier continues to be run by a management that is too eager to please the government. It will perhaps be a little unfair to blame only the management for dancing to the tune of the bureaucrats. After all, right from the appointment of the Air India brass to major decisions that the national carrier has to take for staying afloat have to be endorsed, first by the civil aviation ministry and in some cases by the Union cabinet.

It might be argued that Air Indias case is no different from other public sector undertakings, which too have to function under the administrative control of central ministries. But there is a difference. Air India suffers from two additional handicaps.

One, unlike other public sector undertakings, Air India has no functional directors on its board. Barring its managing director, Air Indias entire board consists of non-official directors, hand-picked again by the government. Senior directors of Air India are not represented on the companys board. As a result, they do not always feel involved in the decision-making process that gets ratified by the board. On the other hand, non-official directors show little understanding of the companys operational problems and, therefore, contribute very little to providing the necessary leadership. A couple of months ago the government did get an opportunity to revamp the Air India board. But that opportunity was simply squandered away, as once again non-official directors were appointed on the companys board.

Two, the chief executive of Air India is a bureaucrat. Why should the countrys national carrier be headed by an IAS officer? Arent there competent professionals in the country who can be given the full-fledged responsibility of heading Air India? Not that IAS officers are incapable of running an airlines. But the simple point is that all public sector companies, not just Air India, should be headed by committed professionals, who should be given a clear tenure of, say, five years. If you have an IAS officer at the helm, the company can never expect total commitment from the chief executive, unless of course the officer decides to quit the service.

If Air Indias chief executive were a professional, it is almost certain that he would not have run the special promotional scheme for its Maharaja Club members during the peak season on the simple ground that it would not have made business sense. In fact, he may well have wound up the Maharaja Club.