Indian Aviation | Air India: How Indian aviation’s biggest turnaround story is taking shape

First, they encountered the watermelon problem. The Tata team saw three people and one watermelon at Air India’s catering office near the Mumbai airport in the middle of 2021 when the group was in the process of doing due diligence before bidding for the airline. The trio were packing the watermelon to be served on a flight: one person was cutting it, another was packing it and the third was carrying the packed slices to the next room.

When the team enquired what was happening, they were told that since there were fewer flights due to the pandemic there was less work those days. Otherwise, there would be enough work for three people.

The team saw up close Air India’s inefficiency. “Such processes should be automated in a way that brings in efficiency. Three people were clearly a lot for a job as simple as that,” says a source on condition of anonymity.

Soon the Tata team came across another characteristic of Air India — the privileges it enjoyed as a government-owned airline. They found that a customs officer would sit in the Air India area to clear the alcohol served on flights. “It makes getting clearances easier. It is a privilege no other airline can ever have,” says another source.

It is against this background that the Tata Group devised a 100-day plan late last year to bring in efficiencies in Air India’s operations even as it renounces its perks. The airline was transferred to the Tatas on January 27.

“The group is fully aware that they do not have the requisite aviation expertise to run an airline as big as Air India. Hence, a major overhaul in the running of the airline can only come after a CEO takes over,” says one of the sources quoted above. “But there are low-hanging fruits like service standards, on-time performance (OTP), food quality, etc, that can be showcased as achievements during the first hundred days and will be obvious to everyone to see,” the source adds.

The group has also gained in confidence because Air India employees were looking forward to the Tata takeover. “Half of the job becomes easier if the employees are in favour,” says a third official.

THE PLAN
As a government entity, Air India had preferred seniority to efficiency, but that is gradually changing. For instance, earlier, premium class cabins were allocated to the most senior cabin crew members. Not anymore. “Now cabin crew members for premium cabins are decided on the basis of demeanour, skills, etc. Seniority is not a criterion anymore,” says the third official. This means the airline has started deputing younger cabin crew members in its premium class cabins, thus taking away the privileges of the senior lot, which has caused some heartburn.

Soft skills training will also be imparted to the crew to improve standards across cabins. “A soft skill training for cabin crew is being planned, which will help improve service standards,” says a source quoted above.

A big concern for passengers used to be Air India’s flight delays. This had led to frequent complaints and a situation where many business travellers were reluctant to book the national carrier since they were not sure of reaching their meetings on time. In March, though, Air India operated 91.2% of its flights on time at the four key airports of Delhi, Mumbai, Bengaluru and Hyderabad, up from 71.7% in December 2021.

“The order is clear. No crew member reports late to the airport, and the first flight out of every airport leaves 10 minutes before scheduled time,” says a source, who did not want to be identified. This ensures that flights throughout the day are on time.

The source quoted above adds that another welcome change is that the new management religiously monitors the Integrated Operations Control Centre (IOCC) to find ways for improvement. “IOCC was always there… meant to be taken seriously, but it never was. Now, it is closely monitored and, clearly, there are benefits,” says the source.

Despite some improvements, everything is not all right with Air India. Last month, bookings were made for a flight that was not supposed to operate. After passengers turned up at the airport, the airline had to hastily arrange an aircraft for them. The report on the issue mentions miscommunication between the scheduling and reservations departments.

“This is inefficiency of the highest order and would not happen at any efficiently run airline. Such incidents do not give us confidence,” says a travel industry insider, who does not want to be identified.

As part of the 100-day plan, another focus area is Air India Express, a low-cost subsidiary of Air India that operates internationally to West Asia and Southeast Asia.

As part of the 100-day plan, a focus area is Air India Express, a low-cost subsidiary of Air India The changes at AI Express are meant to improve efficiency and increase ancillary revenues.

The changes at AI Express are meant to improve efficiency and increase ancillary revenues. AI Express, for instance, earlier gave passengers the option to pre-book meals but not to buy them on board. Now, the airline has introduced buy-onboard service, which other low-cost carriers have always had. “Buy-onboard has been received well,” says one of the sources quoted above.

The carrier is also working on improving the utilisation of aircraft and is preparing to hire more cabin crew members as it plans to increase flights. According to the plan by the Tatas, AirAsia India will be merged with AI Express — the two airlines operate in the lowcost space and best practices from both the companies will be implemented to bring efficiency to the system.

(Questions mailed by ET to Air India, Air India Express and Tata Sons did not elicit any response.)

THE NEU AIR INDIA
More changes are in the air as the airline lets go of its sarkari courtesies and kowtowing.

In 2014, a top official of Air India suspended three airline officers posted at the Kolkata airport for “dereliction of duty”. They had been deputed to welcome members of a parliamentary committee, but did not turn up at the airport. Suspension of officials is the first step in this kind of a case in a government setup; any further action will be based on inquiry.

Says the top official on condition of anonymity: “I started receiving calls from some very senior politicians asking me to reconsider my decision to suspend them. There was a lot of pressure from many quarters which I had never expected.” He claims these officers were friends with some powerful politicians whom they had met at airports and helped out. “You need to understand that these senior politicians would not mind a helpful airport employee,” the official says.

These kinds of political interventions meant Air India became an organisation that rarely, if ever, took harsh decisions.

Cut to March 2022. Air India took one of the most stringent decisions when it banned all Indian agents from booking flights in the India-Canada sector after they had been found to be allegedly profiteering by blocking seats at cheaper rates and reselling them at higher prices. This was unheard of at Air India. “These people created a mess. Hence, a harsh decision had to be taken,” says a senior Air India official, who did not want to be identified. Agents, however, complain that a blanket ban for the mistake, if any, committed by a few is not fair. “There is no communication from the airline on this. We are clueless as to what is going to happen since the ban continues,” says Ajay Prakash, president of the Travel Agents Federation of India.

The decision was taken by a management committee, headed by Nipun Aggarwal, and supported by four directors — commercial, finance, operations and human resources.

The top order of the airline, except for the CEO, is now in place. Tata Group Chairperson N Chandrasekharan is the airline chairman, RS Sandhu has been redesignated as chief of operations and Vinod Hejmadi as CFO. Amrita Sharan and Meenakshi Malik are advisors to CEO. They will advise the chairman till a CEO takes over. While Aggarwal has been appointed as the chief commercial officer, three others have been appointed as head of HR, digital and customer services.

The big setback for the Tatas came when Mehmet Ilker Ayci, former chief of the Turkish Airlines, declined to join Air India as CEO, following reports of his proximity to Turkish President Recep Tayyip Erdogan whose views on Kashmir and Islamist terrorism have been unacceptable to the Indian establishment. The group is again on the quest for a CEO.

Employees whom ET spoke to do not anticipate any significant change in the work culture before a CEO takes over. They also feel reassured about their future at the airline.

The beauty of any transition is in changing for the better without ruffling too many feathers. The Tata Group is known for its employee-friendly policies. If it can transform Air India, that too by taking employees along, it can become one of the biggest turnaround stories, a case study in global management schools.