A look at why Dr. Swamy filed the petition
There is a big cheer by the Twitterati on the news of the dismissal of Dr. Subramanian Swamy’s writ petition in front of the Delhi High Court CJI seeking the cancellation and CBI inquiry into the disinvestment of Air India and sale to the Tatas. It is important to go beyond the facts argued for and against the PIL and get a bit more context on why this petition was filed and will it stand in the Supreme Court which Dr. Swamy will surely appeal in, as he did in the 2G scam and successfully got the 2G licenses cancelled even though the PIL was dismissed by the High Court.
Dr. Swamy mainly argued on four grounds in front of the court. Will detail below each of the four arguments, the response by the solicitor general Tushar Mehta for the Government of India and Harish Salve for Tata Sons.
“There is an ongoing investigation against AirAsia Ltd., where one of the shareholders is AirAsia Investment Ltd., Malaysia, and they have direct and indirect controls over Tatas and thus the Tata group should have been disqualified from the Air India & Air India express bidding process. More specifically the Tatas should have been disqualified even on account of the allegations made by Dr. Swamy in W.P.(C) 5909/2013, claiming breach of Foreign Direct Investment Policy.”
Second, the bidding process favoured the Tatas as adding Ajay Singh to AirAsia’s consortium to build up its financial health was just to avoid a single bidder situation that would not hold water in the courts.
“The methodology of valuation was arbitrary, corrupt, illegal and against the public interest.” The courts did not sufficiently address this point. The Tatas and specifically Ratan Tata have been involved in various previous corrupt practices ranging from being involved indirectly in the 2G scam as part of TATA-DOCOMO or being personally caught red-handed in the Niira Radia phone tapping controversy. The Tata group media machinery has ensured, like the Chinese internet censors, to erase these almost completely from the virtual world and hence from people’s short-term memory. The large advertising budget of the Tata group makes this relatively easy.
Air India is the national airline of India. It has participated in various missions of immense national significance. These include the Vande Bharat missions to return stranded travelling Indians due to the COVID pandemic travel restrictions, or evacuations from countries seeing a sudden eruption of civil unrest or even war. The Indian Air Force does play a major role in such missions but they are closely supported by Air India’s fleet of passenger planes. Selling 100% stake in Air India and Air India express is definitely against the public interest.
Dr. Swamy finally argued that Air India was a profitable enterprise until 2004 and should not have been privatized. The credit for this goes to the UPA government who in the first steps towards the descent of Air India decided to merge Air India and Indian Airlines. Civil Aviation Minister Mr. Praful Patel’s ministry proposed this and it was approved by the government. This again was a policy decision and could not be challenged in the courts. This merger was a disaster predicted by many aviation experts plus publicly by the airline’s unions and ex-employees as the culture of a domestic versus an international airline is difficult to reconcile. The subsequent split into Air India and the low-cost Air India express did little to curb the bleeding which currently costs the Indian government approximately Rs.20 crores per day. Yes, per day.
In summary, the Delhi High Court conceded to the government and Tata’s argument that the disinvestment and terms of the bidding process was a policy decision and not open to judicial review. Looking forward to Dr. Swamy’s appeal in the Supreme Court. Stay tuned…
Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.
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Dr. Swamy has always been a person of great repute in not just India but in this part of the world. But in going to courts trying to stop divestment specially where it was TATA who took the Air India ownership was not in keeping with his image.
Country India at present is the 3rd biggest airline market in the world after China and USA. Also Indonesia is also close by. So in essence, some 5 of the 6 biggest aviation markets are in Asia. Yet in the last 10 plus years (I knew Air India since 1990 when working in India for another airline) the airline has never made any profits, why?
Today the heart of airline business is Revenue Management where instead of segment based selling you focus on Origin & Destination business and that means banking on your hubs. Unfortunately Air India management did not pursue making hubs in southern India, the market with fastest growth plus huge potential to to hub& spoke operation.
Other foreign airlines mostly from gulf region creamed the business out from India with their hubs. However, it was heartening that since PM Mr. Modi came from 2014, the government stopped giving increases in weekly seat quotas to Gulf airlines.
Despite all being well and in right place to make huge profits, Air India went from one loss to next loss.
I do presume TATA with correct the situation in RM and look beyond the SWOT and into the Blue Ocean strategy and Air India can easily make 600 to 700 million dollar profits each year. Of course there is acute need to train commercial people in developing marketing plans and strategies.