Maha Bharat: Episode 43

The Downfall of India’s Greatest Airline

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In the last hundred years, there has hardly been a saga as long, grand and topsy-turvy as what we’re going to talk about on today’s episode. A story that started with a magnificent achievement by one of India’s most successful industrialists, and ended in thousands of crores of debt. But it hasn’t ended yet!

Air India, our government owned airline has gone through everything. From starting a travel revolution in a fledgling country to being on the brink of collapse for the last few years, the maharaja has seen it all. What is next for this iconic company that quite literally put India on the map?

Show Notes

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Full Transcript of Episode 43 –

In the last hundred years, there has hardly been a saga (shayad hi koi kahani rahi hogi) as long, grand and topsy-turvy (uljhi hui) as what we’re going to talk about today. It might even be bizarre to know that this story started with a magnificent achievement by one of India’s most successful industrialists, and ends in thousands of crores of debt. 

If you haven’t already guessed by now – I’m talking about Air India, our country’s flagship carrier.

Lately, this is all we’ve heard on the news–

youtube.com/watch?v=8KAzAHqJ5JY – 00:21 – 00:29 – The Maharajah is bleeding. With losses over 7000 crores, India’s national carrier is in deep financial trouble.

Almost makes us forget about the grand history of the Airlines, right? All we seem to wonder is: arre, when will this privatization mess (jhanjhat) end?

We’ll try to answer that very question today — through stories of the airline’s successes and failures…mixed with, of course, things we never knew about India’s oldest airline!

Let us catch up with the news, first and foremost. The one thing we know is this: Air India, a government-owned airline, is in tremendous debt. In the financial year of 2018-19, it reported a loss of 8,400 crore rupees. In 2019, they reported a debt of 58,282 crore rupees! And even this number increased by 2000 crore rupees in 2020. 

The government, which is not able to bear this debt, has been trying to sell Air India for two years now. In 2018, it offered private owners a 76% stake in the company. Aur toh aur, they would also have to take the burden of the debt. So, it’s not so surprising that not a single company bid for Air India in 2018. Since then, the government has revised a few rules (naye niyam). The government is now selling 100% of the Airlines, and has also reduced the burden of debt to around 23,000 crore rupees. The date of bidding was on December 14th. Now, bids toh close ho gaye — and the government hasn’t released who all bid on the airlines. So, what do we know?

[We hear a news report about the Tata Sons putting in a bid for Air India]

In simple words, Tata Sons might bid for Air India. We don’t know whether the other airlines that Tata has partnered with, like Vistara or Air Asia, will be involved yet. But the strangest thing is that what a full cycle this is! The government bought Air India from Tata, and now Tata might buy it back.

Apart from Tata, it is known that two other groups may have bid on the airlines, but we will only know this with time. 

Mote-mote taur pe, what we understand from this is that Air India has not been in good shape. By trying to sell it, the government has been doing something called privatization — yaani, the transfer of a government-owned company into the hands of a private owner. The saga of this privatization — and the downfall of Air India, has been going on for a few years now. But one of the reasons that it is so interesting to talk about is not the massive debt or the privatization itself — it’s the history of Air India! 

The first Air India flight was flown as Tata airlines in 1932. Since then, Air India has been one of India’s most successful commercial airlines, with a grand reputation all over the world. So, what happened? Why has the government been trying to sell it off?

This story isn’t just the history of Air India, but the history of civil aviation in our country. Civil Aviation se mera matlab hai, the practice of aviation (viman-chaalan) for the general public — and not the airforce. 

So, would you believe me if i told you that the first flight that would mark the beginning of civil aviation in India was used for…carrying mail — during the Maha Kumbh Mela?

I’m not talking about Air India yet. This was in 1911, when a French pilot, Henri Piquet flew thousands of letters from Allahabad to Naini, on a fifteen-minute flight. And nearly 20 years later, J.R.D. Tata did the same.

It was October 15th, in 1932, that J.R.D. Tata flew the first Air India plane from Karachi to Mumbai. It was called Tata Airlines at that time. But the journey (yatra) that led to this historic moment was not smooth.

Three years before this, J.R.D. Tata — the great Jamshedji Tata’s nephew — had been the first person in India to acquire a flying licence. This licence was given to him by Sir Victor Sassoon (विक्टर सस्सून), of the famous Sassoon family of Bombay!

He flew around the country, often landing at one of his favourite spots, Jamshedpur. He even participated in a contest and flew all the way from India to England! Flying airplanes was his passion, zaroor, but he had one more dream: to bring civil aviation to India. 

Iske liye, he needed the help of the government. But in the 1930s, the British government in India was not quite helpful. You can imagine — they didn’t see any merit in lending money or giving any subsidy to a pilot who wanted to fly domestic planes around the country. Sir Dorab Tata, jo ki ek bahot bade shaks the un dino mein, had agreed to invest in J.R.D.’s dream — but this delay was making him impatient too.

The government rejected several offers from the Tatas, until J.R.D. turned the offer around. He told the British government: thik hai, we don’t need your help in terms of money. We will donate our services to you. We just need your aircrafts and permission to fly. 

The government finally agreed, and Tata Airlines was born! The airline was given a contract to fly the mail of Imperial Airlines, a British company, into India.

J.R.D. Tata himself flew the very first Tata Airlines flight, from Karachi to Bombay — carrying 25 kgs of mail.  In the same year, Tata Airlines also began domestic flights for passengers. A return ticket from Bombay to Madras cost Rs. 256.

Today, domestic flights are as normal to many of us as any other mode of transport. But in 1932, to fly through the air and reach your destination in a fraction of the time a train would take…it certainly created history. 

Doston, the story of Air India’s privatization is often a funny one to hear — because there was a time when the Indian government was eager to buy all domestic airlines of the country, including Air India. And today, it is equally eager…even desperate …to sell it off! 

Let’s start at the beginning — at a time when J.R.D. Tata had to give his company away to the government. Two things that happened early in the history of Air India, that changed the company. 

First — in 1946, Tata Airlines was renamed to Air India. Tata made Air India a public limited company — matlab, a company where people like you and me could buy its shares. In 1948, the government bought 49% of these shares. At this same time, J.R.D. started Air India International — for International flights to and from India.

And then the next big step in 1953, which came as a great disappointment to J.R.D. Tata: the airline sector of India was nationalised. Matlab? Yahi, ke all the airline companies which existed in the country would now be owned by the government. Government ne kiya yeh, ki it merged 8 domestic airlines into one and created – Indian Airlines. The domestic wing of Air India was one of these companies. The government also nationalised Air India International.

It was now a Public Sector Unit — a company owned by the government. 

Nationalization of bade-bade industries was an active step being taken by the Nehru government in the 1950s. The government’s objective was to support more industries and make progress. But this meant that private businessmen or investors lost opportunities. So, as you can imagine, the industrialists of our country were not happy. 

Including J.R.D. Tata!

The story here is that J.R.D Tata and Pandit Jawaharlal Nehru were actually quite close friends. Nehru, who always encouraged scientific progress in the country, was very happy with how Air India had transformed civil aviation in the country. And J.R.D. Tata admired Pandit Nehru. But when the Government passed the Air Corporations Act in 1953, because of which Air India was nationalized, it came as a betrayal to J.R.D Tata — as he had clearly disagreed with Pandit Nehru’s decision when he was informed. In fact, J.R.D had his doubts about the nationalization of industries since the very beginning….

[We hear JRD Tata talk about nationalization]

That was JRD Tata himself, talking to the journalist Rajiv Mehrotra.

As much as he opposed Nehru’s policy, J.R.D Tata could never talk to his friend Nehru about it. Why? 

[We hear JRD Tata narrate a story about Pandit Nehru.]

Pandit ji didn’t talk to J.R.D. about this move too much, but he wrote him a letter, talking about why this decision was being discussed in 1952. He said that the Congress party had been wishing to do this for twenty years…but had not been able to. The government had nothing against Air India — this move was for the good of the country!

But, J.R.D was still not happy. Well, it didn’t really matter — because the government went ahead with the decision anyway. Air India was nationalized, whether its founder liked it or not. Haan, lekin J.R.D was still very much a part of it. He was made the Chairman of Air India International and the director of Indian Airlines.

Caviar on ice. The finest steaks. Champagne. A menu prepared by the chefs of the Taj Hotel. Grand lounges designed by the artists of Shantiniketan. I’m not talking about a weekend getaway — this is a description of your journey if you flew by Air India in the 1950s and 1960s. 

[We hear about the Air Hostesses of Air India]

“A Palace in the Sky” — this is what Air India was called. The luxurious travel, world-class food and drinks, and beautiful decor of the planes was so well-known, that international airlines like Singapore Airlines were inspired by Air India! It was often called the best Airlines of its time.

To a great extent (kaafi hudd tak), the credit for this goes to J.R.D Tata himself. Aisa bola jaata hai, that he would fly on many Air India flights and make sure, himself, that the services were proper and the planes were clean. And if something was amiss…if something was dirty, for instance, he would clean it himself. 

Let me ask you a question — this entire time that we have been talking about Air India, did the image of a short man taking a bow, in a red turban come to your mind? It certainly did to mine. Air India ka naam comes with its mascot, who is called the “Maharajah”. He can be seen on Air India postcards, stationery, advertisements, even in bade-bade blown up balloons in air ports. The Maharajah was conceptualized in 1946 by Bobby Kooka, who was the commercial director of the airlines. Over the years, the Maharajah was drawn into different cultures and countries, showing that Air India takes its travellers all around the world. 

I’m telling you all this, doston, to give you an idea of not only how majestic Air India once was, but also how it was basically a representative of India on the international stage. Air India was not just an airline — it was associated with hospitality, culture, food, and art. 

Speaking of art — did you know that Air India has an art collection of over 8,000 works, collected over 60 years? This includes paintings, textiles, sculptures, glass paintings, etc. Yeh bhi ek calculated move tha! There were only a few international airlines at that time, and Air India had stiff competition. They needed to stand out. That’s why, the advertising department of Air India decided: the identity of Air India would be displaying Indian art and artefacts in their airplanes and lounges! And these artworks were no plain ones — Air India commissioned some of the world’s most famous artists to make artwork for their collection.

Isse judi ek dilchasp kahani hai. In 1967, Air India commissioned the world-renowned artist Salvador Dali to create a special ashtray for its customers. Dali designed an ashtray made out of porcelain jise cheeni mitti kehte hain, with a serpent ya saamp painted on it. But he wasn’t paid for his art in money. Rumour has it that Dali asked for a baby elephant in return, and Air India flew an elephant for him from Bangalore to Geneva!

It is these kinds of stories that tell us that Air India was quite special in its times. Indian flyers were often loyal to Air India, collecting their postcards and other such memorabilia (chhoti-moti cheeze). If you travelled in Air India in the 70s or 80s, you would never guess what would happen in the next few decades. And you might even be surprised to hear about it today!

[We hear about the losses being made by Air India]

Doston, now we come to our main argument. At the beginning of the episode, I told you about how the Government has been trying to sell Air India off. But how did Air India land up in this mess? 

In 2007, Air India and Indian Airlines posted a loss of 541 crores and 230 crores each. Now, if you remember – Air India was an International airline, and Indian Airlines was a domestic Airline, that the government had set up by merging other domestic airlines in 1953. But mudde ki baat hai, that both were Public Sector Units…so the losses of both these airlines were a burden (bhaari pad rahi thi) to the government. 

Hoping to come out of this loss, the government merged both Airlines in 2007. But the combined company, jiska naam tha National Aviation Co. India Limited, also made losses. But why? 

There are some straightforward, fact-based reasons for this. First of all, the merger did not help. It only led to more losses for the company. Before this merger, the government acquired a large fleet — matlab, many new airplanes of different sizes and specifications. And the cost of this? Around Rs. 44,000 crores! In addition to this, their expenses on salaries increased. Aur toh aur, at this time, pilots went on strike to demand fair salaries, leading to losses in revenues for the company. 

And this is just 2007 — in the coming years, up to 2017, Air India suffered even bigger problems. For instance, its revenue from passengers decreased, since there were many other options for flying around in the country. It opened new international routes, hoping to attract new passengers…but made losses. It hired way more crew than it needed. The list goes on. 

At this point, are you wondering: what’s happening? Is this just a long stroke of bad luck? Why does Air India keep making mistakes?

Perhaps, it’s not simply bad luck. While the losses kept increasing after 2007, Air India had problems for many years before that. 

Jitendar Bhargava, the company’s former executive director, talks about the management problems that were there in the company since the 1970s itself. In these years, the top management changed. Bhargava ji noticed one difference after this change: before the change, the cabin crew was trained rigorously. In-flight service was Air India’s priority — it is what they were known and loved for. But after this change, the cabin crew wasn’t trained anymore and recruitment, too, wasn’t very strict. The company started hiring more and more people — matlab, more expenses — but without any screening. The standards of Air India’s in-flight services fell, and eventually passengers too, chose to fly with other airlines. 

Over the next few decades, there were disagreements between the government and the Air India management, too. But since Air India was a Public Sector Unit — in the end, the government’s directions had to be followed. For instance, in 2007, the government spent crores out of Air India’s pocket (Air India ki jeb se) for advertising, even though the management wasn’t in favour of it. 

Doston, the involvement of the government — this is perhaps a part of the answer to our question today. Many other Public Sector Units, like Bharat Petroleum Corporation Limited and the Shipping Corporation of India, are now being sold by the government. If you remember a previous episode of Maha Bharat on PSUs, you would recall that many of these PSUs, including Air India, are unable to recover from their losses because of lack of capital, improper management and the involvement of bureaucrats in the working of the company. 

For many years, experts, economists and of course, opposition leaders had a similar opinion: the only way to save PSUs like Air India, is to sell it off. 

And in 2017, the Government finally decided it will sell Air India off. 2017 — that was three years ago. And since then, like we heard, the Government has changed offers, reduced the debt, desperate to wash its hands off of Air India. It was a long three years, with rumours about who would buy Air India and take on this massive debt. Some unusual incidents happened too…for instance, only recently, the commercial director of Air India Meenakshi Mallik, sent all its employees a letter. This letter asked the employees to submit documents, along with Rs. 1 lakh to acquire 51% of the company!

But the two Air India Pilots Unions advised the pilots not to contribute any such amount — eventually, this tactic of the company, too failed. The saga continued.

88 years ago, a young J.R.D. Tata flew a small airplane full of letters across the country. He created a company that made India a pioneer of civil aviation. The company went from Tatas to the Government. And now, the saga of Air India might finally end with the company going back to the Tatas. 

We’ll find out about who has bid how much — and most importantly, about the future of Air India, soon enough. But the journey of this airline has definitely been very interesting.

That’s it from me for this week! I hope you enjoyed today’s episode. I’ll be back next week with a brand new question, that we’ll answer together, on Maha Bharat. 

Credits

Narrated by – Dhruv Rathee
Producer – Gaurav Vaz
Written by – Anushka Mukherjee and Gaurav Vaz
Edited by – Medha V
Title Track Design – Abhijith Nath
Audio Production – Madhav Ayachit