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In a scathing indictment of the way Air India (AI) is run, the Centre for Asia Pacific Aviation (Capa) on Wednesday said the state-run carrier is virtually in terminal decline. In fact, there is a high likelihood of the airline shutting down grappling as it is with massive internal human resources issues and a management which is not keen on taking responsibility.

Capa believes that the airline, which is in serious strife, is set to enter a defining period as likely management changes loom. The report says, "The flagship carrier, which continues to flounder, operating an unviable business model that is kept alive by the generosity of India’s tax payers, is expected to enter a defining period. The merger between Air India and Indian Airlines is defined by the fact that the most critical issue, namely that of the integration of human resources, has been ineptly handled and almost willfully ignored with nobody within the airline senior management or at the level of the government having taken responsibility."

A failed shotgun merger and integration issues accruing out of that has been a constant source of tension within employee ranks and after years of neglect a committee was established in 2011 under Justice Dharmadhikari to look into staff grievances. The committee submitted its report to the ministry of civil aviation in early 2012. In the absence of any strategy of its own to deal with the issues at hand, the government is left with virtually no option but to implement the report’s recommendations.

Air India veteran Jitender Bhargava is in consonance with the report saying, "Air India in its current avatar cannot survive. There are harsh realities which need to be addressed immediately. HR issues have been mishandled, crisis is sitting on the horizon and the people who are handling it are inept. The Rubicon has been crossed."

Although the proposed actions have not yet been made public, Capa expects that the outcomes will be met with a mixed response from the unions and industrial action is likely.

The government appears to be preparing to adopt a firm stance limiting discussions with the unions and it may not shy away from a watershed moment in the next two to three months after the report is accepted by the government which could include a temporary shutdown of the national airline.

Pointing to yet another management churn, the report says, "A key concern is the fact that at this critical juncture, the management at Air India could be set for change at the most senior levels, including the position of chairman and managing director. The new team could be faced with a highly charged and complex situation. Similarly, the Board has not been strengthened following a couple of high profile non-executive departures last year while there will be new appointments in a number of senior government roles as well."

Finally, the report says all of this further compounds the fact that there is nobody taking ownership of the turnaround of AI, which in itself is unrealistic. For the last two years, Capa has strongly advocated that Air I should be placed in special administration similar to that adopted for Satyam if any meaningful progress is to be achieved.