Who Crippled Air India?

DURING THE INITIAL YEARS OF UPA 1, India’s GDP growth soared. Between 2004 and 2008, the economy grew at an average annual rate of over 7.5 percent.

- Minhaz Merchant

The aviation sector was a collateral beneficiary. Airlines like Jet Airways made full use of a booming economy. One airline though was about to face headwinds: Air India.

Praful Patel of the Nationalist Congress Party (NCP) was the minister of state (MoS) for civil aviation between 2004 and 2011. There was no Union minister of civil aviation. Patel was the boss. In 2006, I interviewed Patel at his residence in Mumbai which he would visit frequently though he was based in Delhi. Patel is an affable man. He spoke enthusiastically about Indian aviation and the great plans he had to make it world class.

It was around this time that privatization of India’s shambolic metropolitan airports began. Mumbai, Delhi, Hyderabad, and other cities soon had gleaming new modern airports run by private sector infrastructure companies like GVK and GMR with the Airports Authority of India (AAI) retaining a minority stake in a private-public-partnership (PPP) model.

Plans were also drawn up to merge Air India with domestic carrier Indian Airlines. The logic was superficially seductive: economies of scale, higher profitability, integration of engineering and pilot resources, and route rationalization. Not everyone was convinced that the AI-IA merger, approved by an empowered group of ministers in February 2007, was a good idea. But with India fast becoming a large aviation market, “route rationalization” took on a new meaning. Gulf-based carriers like Emirates and Qatar Airways were keen to increase flying rights from India to the Gulf. Over three million Indians live and work in the UAE alone. The India-UAE, India-Qatar and other Gulf routes were Air India’s bread and butter. Indian Airlines too had profitable flying rights on several Gulf routes.