Over the last few days, Air Sahara has been badly hit by pilot exits, forcing it to cancel flights with increasing regularity. In the last couple of days, several important flights from Delhi and Kolkata have been cancelled. A couple of weeks ago, a flight to Hyderabad, its hub, was cancelled and passengers were accommodated on an Indian Airlines flight. Airline sources say that over a score of pilots want to switch over to Air India Express. We also learn that Air Sahara’s high-profile CEO Rono Datta has been working round to clock to keep the pilots back. The airline has also complained to the Civil Aviation Ministry against the poaching of pilots by other airlines, especially government owned-ones.
The irony here is that the flight of pilots is not from once-beleaguered public sector airlines to private ones, but the other way around. With frequent cancellations, Sahara is also going slow on the launch of a super-saver scheme that was to challenge Indian Airlines’ tremendously popular 12-coupon scheme for Rs 65,000. But the problem is not limited to pilots. With flights becoming uncertain, other services are also flying into troubled weather. A passenger flying Kolkata-Mumbai noticed that cost cutting had been drastically applied to the food tray and the catering was in disarray.
Even the tele check-in calls were manned by a complete novice who asked for luggage dimensions before checking the passenger in. Are these signals of a financial crunch rather than a pilot exit? But very little is known about Sahara’s finances and nobody that we know has ever seen a balance sheet even though the civil aviation ministry would have scrutinised its finances before allowing it to start operations to fly abroad.
Last week, this column pointed out how Mahanagar Telephone Nigam Ltd. (MTNL) has been announcing new schemes (Triband scheme) and advertising freebies that it has failed to deliver months later. While MTNL did not respond to the comment, nor has it implemented the schemes, an insider tells us that the organization is ‘‘under tremendous pressure from DOT and the Ministry of communications to commission new services and give connections. The Broadband connections are monitored at the highest level of Secretary. However the vendor in charge of implementation is not able to commission the services fast enough’’. Moreover the Triband scheme is apparently ‘‘not yet stable’’. The delay could well be because the order went to the lowest bidder rather than the most competent one. If this is the state of affairs when implementation is “monitored” at the highest level, it is hardly a wonder that the there is no correlation between promise and performance and nobody is penalized either.
On Friday, Oriental Bank of Commerce (OBC) was one of the biggest gainers on the market. Angry investors pointed out that we again have a public sector bank stock that is soaring during the run up to its issue and the pricing of its equity offering. Last time around, the capital market regulator and the Finance Ministry chose to ignore the outrage caused by the sharp spike in Punjab National Bank (PNB) shares before its issue. PNB has already slipped below its offer price and the aggressive pricing of many IPOs and rights issues is causing the primary market to wobble. OBC Chairman Narang announced that Global Trust Bank employees, absorbed during the bailout, might have to give up their fancy salaries and accept lower pay scales earlier than the promised three years. While the announcement is based on an integration strategy suggested by NIBM, OBC sources have a different version. Head offices control all credit decisions at private banks and branch operations are merely expected to garner deposits and peddle other services. Consequently most private bank officials, including branch heads have very poor knowledge about core banking functions.
The same was true of GTB. Its employees are all at sea while handling the simplest credit decisions, yet they earn significantly higher salaries. If OBC wants to grow and maintain its proud record of extremely low bad loans, it has no option but to level the pay-scales and douse the anger of its officers which runs high even after 367 GTB employees have quit. They also wonder why all the effort at bad loan recovery is not more widespread and more of those responsible for the losses are not prosecuted. So far, Ramesh Gelli and his cohorts, whose actions have now become OBC’s biggest risk factor, have got away almost scot-free.
Tailpiece: While the MAPIN (Market participants information network) committee meets to decide the fate of the Unique Identification Numbers (UIN) a police source has another angle on biometric identification. He says that biometric identification can only be mandated by the police and under the Indian Penal Code, and people can actually object to parting with biometic data to any other agency. So far no market intermediary has challenged the SEBI move, but maybe individuals will.