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In my years as an airline pilot, every armed person boarding our aircraft had to be introduced to the cockpit crew—at least to the captain.The armed person was brought down the jetway by the gate agent ahead of general boarding. We would look at their ID and find out their seat number.At a minimum, the senior flight attendant also knew so that if she somehow spotted the gun on the guy, she wouldn’t freak out.$98 MILLION VERSUS A .38 REVOLVERI mostly flew the Eastern Shuttle between Washington and New York and we carried a lot of famous people who were under Secret Service or State Department protection—so those folks made armed guards common.Armed guards were also common because we carried billions of dollars in cash. You can imagine with fresh cash being printed in D.C. and with NYC being the financial capital of the country, a lot of money moved up there. And with us leaving every hour, on the hour, they knew we could get it to NY while the ink was still wet.These days, with so much of our financial transactions being electronic, probably not nearly as much cash gets moved like that. Besides, with the guaranteed seating of the Eastern Shuttle gone, now they’d have to make a reservation, and money is a wonderful thing but it doesn’t have an internet account.The armed agent had to be introduced to us and we were told how much money was in the hold. It was always at least $50 million. The most common load was $70 million, comprised of 50 standard bags of $1.4 million each. The highest I ever carried was $98 million in cash—70 bags. And this was back in the 1980s when $98 million was a lot of money—it’s just pocket change these days, right?It always struck me as bizarre to watch the unmarked, white canvas sacks going up the luggage conveyer belt and plopping $1.4 million at a time into the baggage hold just like your suitcase—and the only protection was one guy with a .38 revolver under his jacket.When he checked in at the cockpit he’d peel open his jacket so we could see it—it seemed he thought it was in the same category as a German 88 howitzer.I hated to disparage his formidable arsenal, but one day I asked the wiry little guard with the snub-nosed six-shooter about how he thought he could stop someone from taking $98 million and he explained it. The money was perfect, crisp, newly minted large bills, and with sequential and known serial numbers. If anyone had stolen even one bag they couldn’t spend it without being caught fairly soon. So, the organized bad guys were smart enough to not even think about it. And his little .38 was deemed sufficient to stop someone who found out the bags had money but wasn’t smart enough to know the consequences of trying to spend what was in one—or smart enough to know the dude was packin’.He told me they never, ever flew the money in the other direction because that was the used money going back to the Bureau of Engraving and Printing to be destroyed. Those were crumpled and worn bills—with a mix of denominations—and no one had any idea of their serial numbers. Taking a bag of that would have been a cash bonanza—but those old bills were carried by a very secure truck under heavy armed guard—and not a .38 between them all.BOTTOM LINEBottom line, there was a time when it was illegal for any armed person to board a U.S. commercial airline without the captain’s knowledge.I hope that didn’t change recently.PAGE TWOAnd now, a related funny story. Because the captain had to be informed of any weapons on board—and he could demand to carry it in the cockpit if he wanted—we had one really smart ass captain—my kind of guy, I love this story. When they started X-raying pilot and our bags, he started carrying a large knife. He’d show it to them at security and they said they had to take it, tag it, and then give it to the captain, who would give it back at the end of the flight.Seriously! This is your tax money at work.The real shocker was how many agents would come on board a few minutes later and hand the captain his tagged knife and not even F____ing notice what just happened. Only about one in five would do the forehead slap when they saw the captain. They would then sheepishly say, “Oh!”One day he called me before a trip and asked me to bring a big knife, too. And the engineer. For the next three days security would take and tag all three and bring them to the cockpit. The reactions were always entertaining.Just bored airline pilots having some fun. And poking fun at the stupidity of government.

1. El Al airlines of Israel is considered one of the most secure airlines in the world. They equip their planes with anti-missile defense systems and there is an undercover air marshal on every international flight.2. North Korea has its own airline, Air Koryo, which happens to be the only 1 star rated airline according to Skytrax.3. Some airlines will not let an adult male passenger sit next to an unaccompanied child.4. In 1987, a guy bought a lifetime unlimited first class American Airlines ticket for $250,000. He flew over 10,000 flights costing the company $21,000,000. They terminated his ticket in 2008.5. The pressurization of an airplane cabin alters the function of taste buds, causing a decrease of up to 30% in the ability to taste saltiness or sweetness. This is one of the reasons so many people dislike airline food.6. Sir Richard Branson once lost a bet with Air Asia CEO Tony Fernandes on the winner of the 2010 F1 Grand Prix in Abu Dhabi. The loser had to work as a female flight attendant on the winner’s airline.7. In 1992, instead of engaging in a messy legal battle over the use of a slogan, the CEOs of Southwest Airlines and Stevens Aviation simply arm-wrestled for whose company would own it.8. Unlike most airlines after 9/11, who collectively lost over $50 billion and shed 160,000 jobs, Southwest Airlines didn’t lay off one employee or ground one flight to save money. Also, when it opened at BWI Airport, fares dropped 70% and the number of passengers increased sevenfold.9. In 1985, a 21-year old Sacramento college student boarded the wrong plane in Los Angeles and found himself en route to Auckland, New Zealand instead of Oakland, CA. The accents of the airline staff resulted in the word “Auckland” being pronounced as “Oakland” which confused the flyer.10. Airlines don’t pay tax on fuel.11. As millions of North Koreans go hungry, the country’s rulers have taken up the habit of having McDonald’s hamburgers flown in daily from China on North Korea’s national airline Air Koryo.12. An investment bank which lost 75% of its employees in 9/11 sued American Airlines for negligence in allowing terrorists on board, and won $135 million.13. In 2013, an American Airlines flight from LA to NYC made an unscheduled stop in Kansas City to offload a passenger who wouldn’t stop singing “I Will Always Love You.”14. On 18 May 1990, Jim Swire, whose daughter died in the Lockerbie bombing, took a fake bomb on board a British Airways from London Heathrow to New York JFK and then on a flight from New York JFK to Boston to show that airline security had not improved.15. In 1934 United Airlines was forced to split up into three companies by Federal antitrust actions. The three companies that came out of the split were Boeing, Pratt and Whitney, and United Airlines.16. In 2012, an Air Canada passenger flight took a detour and dropped from 37,000 feet to 4,000 feet to help find a stranded yacht off the Australian coast. It took the passengers 25 minutes after the emergency beacon was activated to locate the yacht.17. On July 23, 1983, Air Canada’s Flight 143, with 69 people onboard, ran out of fuel at an altitude of 41,000 ft. The pilot managed to glide the plane down safely as he was a very experienced glider pilot. 22,300 pounds of jet fuel had been put in instead of 22,300 kg.18. Delta Airlines contract has a specific line allowing each passenger from Hawaii to carry one box or bag of pineapples.19. In 2013, a blind man was kicked off a US Airways flight after his service dog repositioned itself several times during a 2-hour delay. The passengers demanded that he be let back on and the flight attendant responsible be kicked off instead. The flight was eventually canceled.20. In 1974, there was a “Not-For-Profit” airline named Freelandia that served organic food and had waterbeds. The airline went bankrupt in under a year.21. In 1990 British Airways pilot Tim Lancaster was sucked out of a window when it broke off and was pinned to the aircraft for 20 minutes while crew clung to his legs before landing. He suffered only minor injuries and was flying within 5 months.22. In 2009, two Northwest Airlines pilots lost their licenses when they overshot their planned destination by 150 miles, only realizing their mistake when a flight attendant asked about landing. The pilots were both on their personal laptops and ignored inquiries from flight control for 90 minutes.23. In 1994 a passenger was killed by a bomb on a Philippine Airlines flight. This led Philippine police to discover a plot to blow up 11 airplanes in 48 hours over the Pacific, and another plot, which they shared with the FBI in 1995, to fly airplanes into the World Trade Center and Pentagon.24. In 2001, the heavily-indebted airline AirAsia was bought by Tony Fernandes’ company for One Malaysian ringgit (US$0.26) with (40 million MYR) US$11 million worth of debt. He turned the company around and produced profit in a year.

Let’s start with a related story. I witnessed an interesting incident long back in Delhi when private buses were introduced and Delhi Transport Corporation (DTC) started making even more losses.I observed an interesting pattern wherein the DTC buses were almost running empty & the private buses were over-crowded. Were the private operators running luxury or AC buses that time? Not at all. In-fact their buses were worse in quality. So why were private buses running full & DTC ones always empty?A little probing with the “industry folks” revealed the reason. A very interesting private enterprise innovation when their services were not even at par. On every route, the private operators used to pay the DTC driver every day for one job. The DTC bus should always be behind the private bus on the same route by about 5 minutes or more. The outcome, people waiting at bus stand are likely to get on the first bus that comes along. The private guy gets all the passengers and the DTC bus follows 5 minutes later when there is hardly anyone at the bus stand. The driver earns his salary as a govt servant and also earns “incentives” to run late. As a govt employee, his job is safe. He doesn’t have to earn profits or worry about running on time or customer complaints. He didn’t join DTC on those terms. Accountability is not on the job description in government jobs.This story will help us understand the Air India situation much better as we shall see. Where should we start?Well, to understand money, we’ll need to see where the money comes from and what it is spent on. Let’s see the balance sheet, profit & loss account of Air India.Notice the highlighted sections. It adds to Rs 52,000 crores ($ 7.3 Billion). What is it?It is the debt, the money Air India borrowed to buy planes. In a business where all efficient carriers lease the planes and pay the lease every year, Air India chooses to have its own planes. Why? This is a lesson in economics on why socialism looks like a beautiful concept in theory, except that it doesn’t work. The story is quite telling in the ways how every stakeholder in a PSU tries to maximize the wealth, personal wealth that is, not for the country.2005:The year Air India became a cash cow like never before.I quote from “the statesman” article by Devendra Saksena ( IRS officer):But why such a hurry to buy planes when nobody buys them ? Prafull Patel was the aviation minister from 2004 to 2011. He was from the “Nationalist Congress Party”. Hmm…some nationalism this was !! May be nationalism meant different things those days.2012:Ajit Singh takes over in 2011 & stayed till 2014. The shoe started to pinch, but who cares. Restructure at the tax payers’ expense. Here is a snapshot of what he did in the drivers seat.So firstly, government gives away the profitable international routes to private players outside India under bi-lateral arrangements (Recall the bus driver who got paid to run late on the routes!!) and then goes ahead to order 90 new planes when it could easily have leased the planes like everyone does. With a liberal agreement that had no penalties for delayed deliveries. You think such big plane orders are signed just like that, that too in government?Looks like the “drivers of Air India” got a fairly good deal. And the press freedom was on leave, I guess. This was 2012 by the way. A policy decision that should have got a hard beating was applauded.Look at the headlines in the papers in 2012? Turnaround ?Does the above plan looks even close to restructuing ? Govt making the PSU banks pay for the accummulated losses & then converting working capital to debentures at 11% to be used to pay the banks !! Restructuring of a kind.So why is the debt such an issue ? After all it was used to buy the planes ?Not really. First of all, the planes were bought at much “favourable prices”. Favourable to the sellers that is. But that is another debate. More importantly, what does this debt of Rs 52,000 crore do to Air India every year? See the Income statement :Look at the section in red. Rs 4500 crores of interest cost every year. EVERY YEAR!Interest payment is more than the entire employee cost of Air India. Try making a profit with that kind of interest. So here is a “national interest” quite literally, which is not in national interest !Now for those of you who argue that Air India is doing fine operationally, see the losses. At 55,000 crores, losses are more than the interest payments. Which means that even of there was zero debt, AI would still be making losses. Have you seen a business run where expenses are 103 % of revenue? And all this when you own the planes !! Examine the Indigo P&L & see how it manages all expenses within 85% of revenue.So the expenses have to be 85% range of the revenues to make profits. This includes employee costs of 10% & finance costs as well. Air India expenses are 103% of revenue even before any interest payments. So they own the planes,no lease payments & still can’t run operations under budget. Beat that !!Want to compare how the debts look like for other airlines?As you must be wondering, if Jet Airways can go down with the same aircraft strength but much lower debt, the Maharajah should have been dead long back. Yes, but for the “restructuring packages” by the government. We shall address this later.This debt is like a guillotine around the neck for Air India. It is not going away and the airline can’t make a profit with such interest payments, unless everything else becomes world class. As you can imagine, the airlines is not world class even on other metrics. Let’s see one by one.Employee strength & related costs: With 122 aircraft in its fleet (including Air India Express), the national carrier has 221 employees per aircraft compared to 127 per plane at Lufthansa (38,000 employees : 299 aircrafts) and 140 at Singapore Airlines (14,000 employees : 100 aircrafts). This is the worst employee per aircraft ratio in the world.It is a fact that they are overstaffed. Positions were created to please political bosses. Staff was not hired according to operational requirements. People were hired not for competence but for connections," said captain Mohan Ranganathan, an aviation safety consultant.Not only overstaffed but at much higher wages than necessary. Consider this: Air India's average employee cost in 2017 was Rs 21 lakh per annum. The average cabin attendants’ cost was even higher at Rs 24 lakh per annum. IndiGo's average staff cost was Rs 14 lakh and average cabin attendant cost was just Rs 6.1 lakh per annum. So an Air India Air Hostess gets paid 4 times compared to the Indigo crew. Wow! Now with that high staff costs, you would expect the services of a “Maharajah” on air India. No sir, it actually means that the employees are the Maharajahs.Service levels: Is it really necessary to talk about it? Well if you insist, I’ll quote from the statesman article again as I have nothing more to add.2019: The brazenness continuesThe airline, with total debt of around Rs 58,000 crore, has sought the government's approval to borrow Rs 2,400 crore from the NSSF account to meet its working capital requirements. Explaining the justification for fresh demand, a senior Air India official told the news agency that the government is yet to give Air India financial support of Rs 2,484 crore, the balance of the bailout package extended to it by the UPA II regime in 2012. Under the package, a part of a financial restructuring plan for the national carrier, the airline was to receive budgetary support of Rs 30,231 crore over a 10-year period ending March 2021. The ailing Maharajah has thus far managed to stay afloat thanks to this bailout package but it has already devoured over Rs 27,000 crore of the allocated amount by end 2018.So the airline would have eaten away Rs 30,000 crores in “restructuring package” from the govt in last 10 years. This is aside of the Rs 58,000 crore debt that is already looking difficult to recollect. Want to know who gave this debt in the first place? Look at the list of banks below:Do you see any private sector bank in the list ? It is all PSU banks with tax payers money again. Still wondering why Govt run organizations always run in losses? Well, because nobody cares. Just like our DTC driver above as well as people right at the top who have distorted nationalism benchmarks. Until it is time to shut down. And the time is now.Meanwhile there are small mercies that we should be thankful to. In view of the upcoming divestment, the Maharajah has put its “expansion plans” on hold. Thank Air India for this. Let this be their last favour to the nation.Feel free to mail or write to me on twitter.Honest - Unbiased - Simplified, as always.References:Air India turnaround plan, Dreamliner induction gets govt nodAir India seeks nod for Rs 2,400 crore loan from National Small Savings FundLoss-making, over-staffed Air India to hire moreAir India unplugged