Recently the gov allowed 49% FDI in Air India, not allowing the government stake in Air India falling below 51%, i.e. major decision taker in its operation. Are we really thinking ahead of the curve, when decisions should be taken and not wait for the future, until strong signals will appear: we will then repent, that we could have taken a wise decision to privatise the air carrier.
Why we are fearing the privatisation of Air India? Multiple viewpoints and reasons appear, historical, geographical, economcial, political and cultural. Lest focus on the last: culture. The government still thinks that Air India represents a long glorious past of the aviation sector, since 1960s, when aviation sector did a great job, ranging from domestic and internation travel. Comeptitiors like Indigo, Sahara, Jet airways might have evolved in due course of time, but they have been caught in various debates and criticism. Indigo is criticised for quality. Shara was criticised for excessive debt, not concerned with tax payers money. Jet Airways, was cricised for not so cheap air tickets, also this flight penetration in the rural sector was not upto mark. ( we have had not seen nationalisation of aviation sector similar to the nationalisation of banks observed during Indira Gandhi gov).
But does that mean we always need to look for best practices in the country, before taking a leapbound decision? This is box 1 thinking, where you only rely on strong and most obvious signals. We have to go for box3 thinking, where we have to rely on weak signals: they speak that Air India should now be privatised.
What are the weak signals? Air India has a sharp fall in the traffic, consumers now opt for other domestic carriers even if we need to compromise the quality. Reasons are cheap flight tickets and ready availability of tickets because of the number of fleets operating. The competition is growing and in that case, public sector, in my belief has little to offer. Public sector can facilitate but can not massive efficiency generator. Ports sector offer a very important case study: the entire port sector is now benefiting due PPP model. Since, the time TAMP was set up, to set up tarriffs for the major ports, there have been rapid rise in the cargo handles by the major ports and also non major ports that are under the jursidiction of the state government. Could it be possible solely on the goverment based agendas? Many private container handling ports came after TAMP was set up (Jawahar Lal Nehru port trust was the first terminal set up under PPP model)
So, ports model, can be replicated in the aviation sector. Other weak signals that speak why it should be privatised are:
1. Now, no stamp tickets are available showing Air India, gone are the days when we used to take pride by showing the last hull of air India in a stamp sieze of 1 inch X 1 inch
2. Government is now focussing on Regional connectivity scheme, that will connect major airports to underserved ports. This is a signal that shows that there is a shift in focus. The focus of the government is not on pulling more consumers but it is welfare and area based approach, where it faclitates the operators to connect to places like Shimla, Bilaspur, Kanpur etc. It would be difficult to go for high efficiency of the aviation sector through this model.
Hooking the decision to abeyance, will only generate data points. More data points on the efficiency and the outcome, will lead to more confusion. However, it will help in one thing for sure: delay the decision; few years year later we will again come up with cabinet approved decision to increase the FDI in aviation sector to 51%. So, this will mean that much years of loss and loss in the faith of consumers on the government.
I am not looking for box 1 thinking. Let us go for Box 3 thinking. Only out of box thinking will save.
Let us be ethical and out of box. Everything will be fine.
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