New Delhi: When Colin Marsh Marshall arrived at British Airways Plc (BA) in 1983, he saw a bloated airline with a demoralized crew, flown for its bosses and sinking in its losses.
Those were the heydays of privatization in Margaret Thatcher’s Britain. The sale of British Petroleum was under way, and British Telecom would be privatized in 1984. John King, chairman of BA, had hired Marshall as chief executive, and the brief was clear.
King fired around 22,000 BA workers, setting the path for Marshall. Over the next four years, Marshall overhauled the airline, changing its focus from staff to customers, raising productivity, cutting costs and checking losses. In 1987, the year it was privatized, BA made $284 million in profit. It remains one of the crown jewels of the success of privatization.
Thirty years hence and halfway across the globe flies Air India, another state-run airline deep in debt, backed by bailouts and beholden to bureaucrats, awaiting its Marshall Plan. After shovelling thousands of crores of rupees into the Air India black hole, the government seems to have finally made up its mind. It doesn’t want to run the airline any more.
For India’s flag carrier, this is the BA moment.
This won’t be the first time, though. An attempt to privatize Air India was made in 2001. That was when Atal Behari Vajpayee was prime minister. But a wave of privatizations in the early 2000s failed to touch the airline. Since then, Air India has been through a messy merger with Indian Airlines, racked up debt and seen aggressive challengers emerge. Even though there is political backing for the sale of Air India now, there is scepticism over whether it would make economic sense for a buyer.
“I can see a political deal being done, but the economic case has limited merit without significant restructuring and leeway for an investor to radically transform the company,” said Vikram Krishnan, associate partner at Oliver Wyman, a San Francisco-based consulting firm, “It will be interesting to see if they can find an investor.”