By Gautam Joshi

If Air India's Maharaja is in the red today, one man - Praful Patel - is largely to blame for it. (A. Raja, Kalmadi, Kanimozi.. .and now Praful Patel ! )

On August 2, 2004, four months after he took over as Civil Aviation Minister the plan to make money for himself started. Patel, now the Minister for Heavy Industries, chaired a meeting that decided to inflate Air India's purchase order from the original proposal of 28 aircraft to 68 at a stupendous cost of Rs 50,000 crore.

Of the 50 aircraft on Patel's shopping list for Air India, 27 were Boeing 787 Dreamliners (Which were only in the Drawing stage at that time.)

Worse, the inflated purchase order was not backed by either a viable revenue plan or expansion of routes. (Who has time for all this...only make more money!). The erstwhile Indian Airlines too was asked to revisit its proposal to buy 43 aircraft but it refused. (Indian Airlines understood Patel's intentions.)

The Ministry, through a letter dated August 5, 2004, forwarded minutes of the meeting to then CMD Air India, V. Thulasidas. The letter written by an Under-secretary in the Ministry, K. K. Padmanabhan said: "I am directed to forward herewith a copy of the minutes of the meeting taken by Shri Praful Patel, Minister of Civil Aviation on August 2, 2004, to discuss the proposal of Air India for acquisition of aircraft by Air India."
The minutes of the meeting tasked that "Air India should revisit the proposal of aircraft and submit a fresh project proposal to the government at the earliest (earlies!Why?Before the expiry of Patel's term?),which could include the revised requirements."

Thulasidas agreed to revise the proposal despite strong opposition from the Ministry's Additional Secretary-cum-Financial Adviser V. Subramaniam.

Patel's controversial decision proved to be the proverbial millstone for the airline which is still straddled with a debt burden of more than Rs 40,000 crore and an estimated loss of around Rs 7,000 crore. Till the 2003-2004 fiscal, AI was making a profit of around Rs 105 crore. (That's true...AIR INDIA Was making a profit till the time Praful Patel took over.)

Between January and August 2004, there wasn't much change in the aviation scenario - either by way of load factor or growth in traffic. Yet, the meeting presented a bizarre justification for the purchase of new long-range aircraft.

The minutes say: "There had been some developments (some developments? Where? When?) of late that needed consideration vis-a-vis the project proposal. First the competition for AI on the US route had assumed a different dimension, particularly with the introduction of non-stop flights through ultra long range aircraft by competing airlines in South East Asia and the gulf region."

"Unless AI was able to match this product and connectivity by adding suitable aircraft to its fleet (which was not a part of the present proposal), AI's competitiveness, load factors and revenues were likely to be severely affected," the minutes added.

Then Air India CMD Thulasidas agreed that the "present proposal did not fully cater to the requirement of the AI's fleet, the additional requirement could be projected separately through a supplementary proposal (which included Patel's 'cut') after due evaluation."

The evaluation was done and final order inflated to buy 68 flying machines was okayed. There was, however, no change in the original plan of buying 18 Boeing 737-800s. Additions were made in the Boeing order. That included Boeing 777 LR (long range), Boeing 777 ER (extra range), and Boeing 787 Dreamliner. The final order included 50 wide bodied aircraft for Air India and 18 narrow bodied aircraft for Air India Express.

Shockingly, the 787 Dreamliner, which did not meet the delivery schedule was selected, for which Air India is now seeking compensation from Boeing. The national carrier has already received a delivery of 40 aircraft.

AI was consistently making losses on the USA route and was the single biggest sector impacting its revenue. (Since Mumbai-New York route planned without any study...Aircraft were lying idle in US for up to 14 hours before starting the return journey). The report said that the Jet Airways was wise enough to withdraw from non-remunerative flights to San Francisco during the same period.

The original plan to purchase 28 aircraft incidentally was approved by the AI board during the NDA government. (Vajpayee sahab... you too!) At its meeting on November 8, 2003, the board had approved a project report for acquisition of 10 A- 340- 300 long range aircraft, plus 18 B 737-800 short range aircraft. This report was sent to the government in January 2004.

So, Patel's Ministry overturned the earlier decision.

The Indian Commercial Pilots Association (ICPA), which called off its 10-day strike recently, has demanded a CBI inquiry into the aircraft acquisition during Patel's tenure, which, they said, defied logic. How an organization, whose annual turnover was around Rs 7,000 crore, could place orders worth Rs 50,000 crore. (Revenue half a rupee, expenses eight rupees). Everyone is making such comments.)

The current Civil Aviation Minister Vayalar Ravi refused to comment. "Let us wait for the CAG report," he said. (Typical Indian politician's response !).

Before the merger in 2007, Indian Airlines had a net loss of 280 crores and was on the verge of coming out into full profitability, having already stabilized operational profits on over 90% of its route network.

The other airline, Air India, had a loss of around 400 crores: this meant a combined loss of around 680 crores, with the situation rapidly improving for both.

Within three years of the merger however, the losses of the combined carrier have ZOOMED to 16000 crores, mainly on account of debt servicing of loans taken to pay for a fleet that they didn't ask for: which is another can of worms altogether.

Air India's PR Problems: Air India has clearly been losing the media battle. PRs of private airlines ensure that journalists get their share of goodies: free upgrades at the check-in counters, invites to mad parties with no shortage of liquor (not too difficult when the airline is owned by a liquor manufacturer?), gifts at all major festivals etc etc. In return all they have to do is ensure favorable coverage for the airline and the competition is dissed.

All that Air India has in the form of PROs are executives who will read out press releases, parcel out chai-nashta and tata-bye bye!

The media has been loyal indeed!

Sabotage by GoIndigo (The Air India Call Center Scam !): Until 2009, the call center for Indian Airlines was being run by a firm called Omnia International. In 2009 however, a decision was taken, at the Ministers behest, to award the contract to run the call center to, hold your breath, Interglobe Technologies, a company that later went on to setup Indigo airlines: the main competitor to Indian Airlines! In 2011 Indigo Airlines overtook Air India for the number three spot.

Imagine this: outsourcing your call center operations to be run by a competitor? In the light of the Radia tapes, where Niira Radia talks of Patel having a stake in Indigo, this raises some disturbing questions indeed!

This is by no means the only instance where the door was thrown open to the wolves.

And finally....a management consultancy was hired at a price of 90 crores to advise Air India on how they should restructure their operations. The contract was awarded to, hold your breath, Accenture Consulting, a company with close links to the UB and USL Groups which own Kingfisher, and which had previously worked on the acquisition of Air Deccan by KingFisher!

[This report was printed in India Today magazine.]