Five months into what is one of India’s most visible mergers among state-owned units, trouble is brewing at National Aviation Co. of India Ltd, (Nacil) created by merging Air India and Indian Airlines, with employee unions alleging that the management was backtracking on promises to protect workers’ interests.
Though broad changes in the managerial structure are yet to be ushered in as the airlines integrate operations, so-me recent decisions by the top management have shaken employee confidence, claim some insiders, leading to threats from worker groups that they will strike work if their concerns are not addressed.
Trouble in the air : Nacil managing director V. Thulasidas. (Madhu Kapparath / Mint)
Strong unions at the state-run airline, especially at the erstwhile Indian Airlines, have in the past had their demands met with industrial action. A two-day strike by the airline’s largest worker union last year opposing the merger cost the airline about Rs3 crore. If hotel accommodation for passengers and overheads were included, insiders said, the cost would be much higher. Pending wage arrears of Rs267 crore were immediately released to end that impasse.
“We were told after merger the best of both (the airlines) will prevail,” said J.B. Kadian, convenor of a joint action committee coordinating eight worker groups of Indian, referring to a promised post-merger adoption of better salaries, perks and policies at the two airlines.
“But, now, they are doing just the opposite.”
The scrapping of compassionate appointment—a practice of reserving a job for a family member of an Indian Airlines employee who dies on the job—he said, has caused widespread resentment at Nacil, as the aviation firm is now called, on top of uncertainty ahead of plans to integrate staff at Air India and Indian Airlines.
One of the top issues on the minds of the airlines’ staff is parity of seniority when the two workforces—a combined 33,000—are merged. Promotions are time-bound at the state-owned firms but don’t follow the same base year.
“It could quite well be that I will report to someone younger than me in the organization when the integration happens and that is not acceptable; not just for me but for almost everyone,” said one senior executive, asking not to be identified.
The airline has started integrating its employees in a cautious top-down approach, creating director positions in charge of six so-called strategic business units spanning passenger airline, cargo, low-cost carrier, maintenance and repair, ground handling and other businesses. A level below, executive director officials, too, have been integrated into new roles.
But executives at these two layers number just about 50. Next, the integration is moving to the general manager level, involving about 130 executives, Air India’s spokesperson Jitender Bhargava said.
But below that level, there has been no announcement yet on which way executives will be organized, leading to fears of redundancy and a seniority mismatch. Air India’s pilots and engineers, represented by strong unions, are going to be the last group of people to be merged so as to avoid any “unrest”, admitted a senior human resource executive involved in the integration process, who did not wish to be named.
Labour pangs: A file picture of an Air India aircraft. Below the general manager level, there has been no announcement yet on which way executives will be organized after the merger, leading to fears of redundancy and a seniority mismatch. (Bloomberg)
Reduced allowances of Air India executives, while travelling abroad; undermanned teams in high-stress departments such as airport handling, sales, reservations and cabin catering; and delays in rationalizing routes and fares between the two erstwhile airlines are other issues high on employees’ minds, the Air India senior executive said, adding that some executives at Air India’s New Delhi offices had even collected money to pay lawyers to take their opposition to the merger to court in November, but rescinded the plan after the top management counselled them against it.
Kadian said 16 planes were grounded at New Delhi, Kolkata and Mumbai for lack of spares and hesitancy to deploy them. “Flights from some of the packed sectors are being taken off. Kolkata-Ahmedabad-Jaipur and back has always been a busy route. But from 10 December, they scrapped operations,” he said, adding that rival Jet Airways (India) Ltd was beginning operations on that route. A Jet Airways spokesperson confirmed a Kolkata-Ahmedabad, thrice-a-week flight from Wednesday.
These issues, the union leader said, have led to the unions holding meetings with Nacil chairman and managing director V. Thulasidas and letters written in protest to civil aviation minister Praful Patel in the past month.
Last week, the strongest worker group of Indian Airlines, the Indian Commercial Pilots Association or ICPA, held meetings with Thulasidas at his Mumbai office to protest a lack of coordination with Nacil’s pilots at Air India. One of the senior pilots present at the meeting, preferring anonymity, said he and his peers were opposed to hiring foreign pilots at some $20,000, or Rs786,000, a month when there was a surplus pool to choose from after the merger if the pilots were trained for 10 weeks to fly planes made by both Airbus SAS and Boeing Co.
Thulasidas, who confirmed meetings with union representatives, said the merger could have been faster if company executives would have been stationed in one place. “There are people in (two different places) Mumbai and Delhi not fully integrated, that is perhaps something. Once people are all in one place it becomes easier to communicate,” he said. “Otherwise there is no issue at all.”
A merger of this size, he added, could not be concluded overnight, declining comments on specifics. An email with questions to Air India remained unanswered.
On the ground, the two erstwhile airlines continue to operate as separate entities with little visibility on when common functions will be merged. Passengers cannot yet buy tickets on a common booking system. There are sales and reservation teams doing the same work at the two airlines and two sets of airport managers at major airports.
Though the government has repeatedly assured employee unions that there will be no layoffs, workers like those at Nacil subsidiary, Alliance Air, feel they could be made scapegoats if losses mount. (Nacil losses are likely to double from about Rs700 crore in fiscal 2007, partly due to high jet fuel costs and increased interest and depreciation charges as the airline acquires planes to replace old aircraft in its fleet.) Most of 750 Alliance Air workers are on three-year contracts, which at least one Alliance Air executive, who wanted to remain anonymous, worried would not be renewed after the merger.
The domestic market share of the airline has seen the sharpest dip in the past two years since the merger began. In January last year, it had a 21% share (compared with 25% in January of 2006) and that skidded to 14.8% in December 2007 (17.9% in the previous December), according to data from the regulator Directorate General of Civil Aviation. For the whole of 2007, the airline flew 19% of the country’s scheduled passenger, down from 21.5% in 2006.
An analyst said it doesn’t help Air India that the Nacil chairman is retiring at the end of March. The government has set up a committee to hunt for a replacement and is short-listed 16 candidates including joint managing director Vishwapati Trivedi for the post.
“The big question is,” said Centre of Asia Pacific Aviation’s Kapil Kaul, “if a new management team will be in place soon, will they take ownership of the new business case of the merged entity?”
Early December, when asked if he was satisfied with the way the merger was progressing, civil aviation minister Patel appeared vexed.
“I am not supposed to direct them to do it, isn’t it their duty to do it? If they don’t do their duty, I can’t help it, right,” he said.
The uncertainty among Air India staff comes at a time when the government has decided to monitor it closely. The airline will now be monitored on five parameters, including load factors, revenue earned, on-time performance, network schedule and maintenance and engineering. Some of these, for the first time, will be monitored every fortnight, the remaining every month.
Civil aviation secretary Ashok Chawla, who will be reviewing these milestones, said it will take another two-and-a-half years for the country to have a single national airline in all respects.
“It’s a long haul,” he said, “it was never a haul expected to be completed in a year.”