NEW DELHI, July 8 — The Indian government has approached industry captain Ratan Tata to head an international advisory panel being set up to rescue ailing national carrier Air India, which has been having trouble paying its staff.
“Mr Tata has agreed in principle. The government hopes he will succeed in bringing in a top Singapore Airlines official, now retired, to be part of the panel,” a person familiar with the development told The Straits Times.
An announcement is likely to take place later this month after Prime Minister Manmohan Singh's government formally invites Tata to take up the responsibility, a senior official in New Delhi confirmed.
New Delhi's move of turning to the nephew and heir of the man who founded the airline underscores the desperate circumstances in which the national carrier has been placed after years of poor management, the hiring of too many employees and a steep erosion of its market share.
A merger with government-owned Indian Airlines, the domestic-focused carrier, has raised further complications for the airline, which ended up with a combined fleet of 168 aircraft.
Last month, Air India delayed paying June salaries by 15 days and asked its senior management to forgo a month's pay. It also approached the government with a 150 billion rupee (RM10.8 billion) bailout plea.
The airline is also in the process of cancelling orders for several Boeing 777 aircraft. The planes were meant for what was to be a significant fleet expansion programme.
It may also claim damages from Boeing for delivery delays to the 787 Dreamliner jets it had ordered.
“We expect Mr Tata to suggest some hard solutions,” the senior Indian official said.
“Air India has 230 employees per aircraft, which is more than a third of the industry norm. Canteen staff number over a thousand. How do we run an airline like this?”
The government is also likely to issue orders to its employees and those in state-owned companies to use only Air India for domestic travel, and where possible, on international routes.
India's external affairs ministry is also being asked to see if Air India offices can be accommodated near consular offices abroad and if visa benefits can be offered to those who choose to use the national airline.
However, the latter proposal may not be easy to implement, people with knowledge of government thinking said.
Air India was founded in 1932 by the late industrialist J.R.D. Tata, who was awarded India's first private pilot's licence in 1929. Founded as Tata Airlines, it was renamed Air India in 1946 when it became a public limited company.
Former Prime Minister Pandit Jawaharlal Nehru nationalised the airline in 1953, but to this day, every chief executive of the airline has started his tenure by garlanding Tata's statue.
Tata's nephew Ratan now heads the sprawling Tata group, which has interests in everything from salt to hotels, vehicles and software.
India's best-regarded industrial family, the Tatas had considered entering the aviation business all over again.
However, Ratan Tata's efforts to set up a domestic airline in partnership with Singapore Airlines was thwarted by powerful lobbies in India a decade ago, and since then he has shown little interest in revisiting the idea. — Straits Times
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