FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1962
1962 - 0204.PDF
206 FLIGHT International, 8 February 1962 INDIAN AIRLINES CORPORATION.. the classic consequences of over-competition—followed one another with unrelenting unavoidability. The emergency in Assam and Bengal in 1949 provided a tempor ary respite for most of the airlines, bringing a sudden welcome surge of traffic. But, once the airlift ended, the grim financial condi tion of the industry became obvious to all. A government committee of inquiry was hurriedly appointed early in 1950 and within the short space of six months produced an excellent report, its main recommendation being a rationalization of carriers to four or perhaps five and a re-allocation of routes to allow, as far as possible, "one route, one operator." During the year that followed publica tion of this report the government took various steps to encourage mergers between the companies, but no successful formula could be found. Under these uncertain conditions it was hardly surprising that private capital failed to come forward to finance the industry's growing losses, and the government realized that it must choose between nationalization or extensive subsidy. As a British Govern ment had found 15 years earlier, the inherent risk of the subsidy system was that public money would be used to finance wasteful competition rather than to promote purposeful development. With this very real danger in mind the government decided in 1952 to follow the British example of 1939 of nationalizing the industry. The following spring saw the passing of the Air Corporations Act, which led to the formation in June 1953 of two wholly State- owned airline corporations. For Air-India International this meant little more than relatively minor changes in overall control. But for the eight remaining domestic airlines it meant a complete reorganization and—from August 1953—integration into a single new unit, Indian Airlines Corporation. This unit embraced a total workforce of over 7,000 employees, and a mixed assortment of 99 aircraft scattered over the four corners of the Indian sub-continent. To allow air services to continue uninterrupted, one of the IAC board's first decisions was to permit seven of the eight operators to continue temporarily as "lines," each under a resident representa tive, and each operating to a large extent as before. Meanwhile the board appointed a number of departmental committees to investi gate the problems raised by integration and rationalization. As a result of the evidence brought forward by these committees it became obvious that it would be many years before a complete centralization of the airline became practicable, and for this reason the board decided to split the corporation into three main areas, based on Delhi, Bombay and Calcutta. Each would come under an area manager who would be responsible to a compact headquarters organization to be set up in Delhi. This nerve-centre, consisting of the full-time executive chairman, six departmental heads and a small supporting staff, was established in May 1954, and by December of that year the physical process of integration into the three areas had been largely completed. Undoubtedly the most difficult problem facing IAC top manage ment at that time was the rationalization of wage structures and the related categorization of staff. Indeed, after a series of disputes between management and staff, the Minister of Communications finally had to intervene and was responsible for negotiating a new agreement which involved, in particular, more generous terms of employment and conditions of service. Primarily as a result of this agreement the workforce rose sharply to over 9,000, at which level the decision was taken to freeze the number of personnel. Graphic history of post-war Indian domestic air transport As might have been expected, the airline was throughout this early period subjected to what the late John Foster Dulles would have termed "an agonizing re-appraisal." But three factors were already at work transforming the corporation into the healthy and profitable institution that it is today. The first of these was the progressive transfer of IAC's trunk routes to Viscount operation from October 1957. These aircraft not only proved very much more economical than the Viking, but also sparked off a sharp increase in trunk traffic. Like most airlines, 1AC makes profits on its trunk routes and loses money on feeder services. This expansion of profitable long-haul traffic therefore had an effect on IAC's finances which was as profound as the superior operating economics of the Viscount. Yet another invaluable, if indirect, consequence of the re-equipment was the much-needed fillip it gave to staff morale. The second of the three factors which contributed to IAC's recovery was the appointment of a general manager. Between 1953 and 1957 the full-time chairman had acted as the airline's chief executive. But with the appointment of a general manager in November 1957 these two key positions were separated. The value of this new arrangement has flowed partly from the more sensible division of top-level responsibility into policy-making on the one hand and management on the other. But inevitably a large measure of success is due not merely to the system but also to the individuals who filled the two key positions: Shri V. Shankar, chairman, and AVM P. C. Lai, general manager. The third factor which has been fundamental to IAC's trans formation has been a steady improvement in revenue rates. This is due largely to the higher fares which were introduced in 1958 and. more recently, in late 1960. But also of prime importance is the steady increase in the relative importance of high-rated traffic: on the one hand, passenger traffic has been expanding faster than low- rated freight traffic; on the other, high-rated trunk traffic has grown more rapidly than the low-rated local traffic. These three factors—the economics and appeal of the Viscount; the separation of the posts of chairman and general manager, with a wise choice of men to fill them; and the improvement in revenue rates—these three factors had the remarkable effect of transforming IAC into a profitable undertaking. (To be concluded) These IAC Vikings at Delhi are in course of being sold in part exchange for additional Viscounts
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
