Air India has been on the block, its sell-off process cheered along by votaries of economic liberalization for so long now that it came to be seen as an acid test of the government’s resolve to privatize public sector enterprises. In recent days, the state-owned carrier has been in the news for entirely different reasons. Even as it played a heroic role in national interest, airlifting Indian citizens stranded in countries stricken by Covid-19, members of its cabin crew found themselves shunned by housing societies in India that see them as carriers of not just the country’s flag, but potentially also of the dreaded coronavirus. This attitude of residents is a shame. Nobody deserves such callous treatment, least of all Air India employees who are trained to follow health protocols and have worked selflessly to do what their duty has called upon them to, and that too, under especially trying circumstances. Our national airline has done us proud. In a cloud of gloom, it has emerged as India’s global ambassador, winning admiration even in distant lands for its dedication to the task of flying home those who only have their own country to turn to.
Ironically, Air India’s rescue flights are a reminder of the airline’s 1990 evacuation of citizens stuck in Kuwait on the eve of the first Gulf war, which sent oil prices soaring, drained our foreign exchange coffers and pushed us within a year to adopt a broad set of free market reforms. Back then, the privatization of state-run firms found itself on the country’s agenda for a dynamic economy, which was to be reformed for efficiency in resource allocation, a process that called for the Centre to give up its commanding heights of economic control. Today, as a rampaging virus scares entire populations and lays economies low, the idea of a powerful state seems to have returned with a bang, and with it, the sense that governments need to be equipped with stuff like aircraft and ventilators to deploy in an emergency. Perhaps it’s time to rethink which of the state’s businesses should be privatized, and which not.
The government has no business being in business, some argue. This represents an extreme view and is easily dismissed for its failure to acknowledge that the profit motive is not always supreme. A specific argument, that Air India costs the exchequer too much and that it needs infusion of public money to stay airborne, did seem to have some merit. Subsidies for one player tend to distort the playing field for the rest. But the answer to the public carrier’s endless losses could also lie in the government doing a better job of its management. As we can see, a national airline with global operations can serve an important role in moments of crisis. A less obvious rationale for the Centre to retain its ownership of Air India has to do with a need to ensure high levels of competition in a commercial sector that has high entry barriers and occasional exits. Civil aviation is a sector that has few operators. Airport infrastructure and air corridors are scarce, and so licences have to be issued. But this also makes it susceptible to low rivalry. This, in turn, means that market forces cannot be relied upon to play a self-regulatory role in keeping fares low and service quality high. With a state-run carrier in the air, however, no cartel can take shape. Right now, Air India is unlikely to find buyers, given how badly carriers are hit by the Covid crunch. But then, that’s also why we should salute the Maharaja.