Not just own staff, even independent directors of loss-making Air India got free tickets

Free passages are not just being enjoyed by the employees of ailing Air India. Our sources tell us independent directors and even government nominees on the airline’s board were given four free annual passages in business class on board Air India flights until recently. The sources said each of the five independent directors and two government nominee directors was entitled to four free trips in business class each year from 2013 onward until the department of public enterprises (DPE) put a stop to this practice recently. Independent directors on the board of Air India are: former Procter & Gamble India chief and writer Gurcharan Das; IIM Ahmedabad professor Ravindra H Dholakia, retired Air Marshal K.K. Nohwar (former vice-chief of the Indian Air Force); banker Renuka Ramnath and former director of IIT Roorkee, Prem Vrat. The sources said a proposal to allow free passages for independent directors was approved by the airline’s board of directors and sent to the DPE thereafter. “The DPE has not approved of it. So the free passages for independent directors were withdrawn three months back. These directors were unhappy due to this withdrawal, since there were loud protests during a board meeting,” said sources. [caption id=“attachment_2205606” align=“alignleft” width=“380”] Reuters[/caption] A senior Air India official said free passages are given by most international airlines and in AI, this practice is followed only when there is no paid passenger for a seat. He emphasised that there is no financial loss to the airline because of this practice. There is nothing wrong in offering freebies to directors by any company, as long it is financially viable. As all of us know, Air India is in the throes of a financial crisis despite over Rs 15,000 crore equity support from the government until now. The airline’s debt is in excess of Rs 50,000 crore and it continues to run up losses. Air India’s accumulated losses stood at Rs 5,388 crore, Rs 5,490 crore and Rs 7,559 crore in 2013-14, 2012-13 and 2011-12 respectively. In this scenario, should anyone - employees or independent directors - be getting free passages? Even if these ostensibly do not cause a loss to the airline? We must remember the independent directors, at least, have been pushing for privatisation of the ailing airline. As we have reported earlier, the independent directors have communicated as much to the minister of civil aviation A Gajapathi Raju at a meeting last month. If Air India is to be privatised, should it be run to the ground before some white knight comes forward to take charge and burn mounds of cash in the process? Our sources had earlier indicated that there has been some talk of initiating the process of privatisation, by starting with two businesses which were earlier spun off from the airline - engineering and ground handling. Air India Express could also be considered. At a board meeting of Air India earlier in March, one independent director who is a strong votary of privatisation asked about the financial performance of Air India Air Transport Services Ltd (the ground handling subsidiary) and also about the Air India Engineering Services Ltd (the engineering subsidiary). This director said the process of disinvestment could begin with these two companies even though a third, Air India Express, could also be considered since it has been making operational profits since FY14. Civil Aviation Minister A Gajapathi Raju said in Parliament yesterday that the free passage scheme in Air India is in accordance with industry practice and a resolution of the International Air Transport Association (IATA). Besides, the Board of Directors of the airline has approved “Passage Resolutions for the Company which provides 8 to 24 free/concessional passage per year for its employees and their families, subject to availability of seats and the number of years of service of the employees. The holders of all staff tickets are accepted for travel in the aircraft only after all the revenue paying passengers are accommodated.” The minister went on to say that there is no expenditure incurred/likely to be incurred on the same by the company and that employees have to bear the cost of all applicable Taxes like Passenger Service Fee and User Development Fee, Airport Tax etc. In short, he said there was no plan to do away with free passages. On the one hand, Raju wants to revive the ailing Air India and on the other, freebies are being doled out to all. Already, the ministry of civil aviation has been speaking of forming a panel to chart the future roadmap of Air India and has even sought recommendations for constituting an expert panel for the purpose. More candidates for free passages? Earlier, it was said to be considering stalwarts like Infosys founder Narayana Murthy, Maruti Suzuki India Chairman R C Bhargava and banker Deepak Parekh for this panel.