The merger of the erstwhile Indian Airlines and Air India is to blame for the downfall of Air India, says the man at the helm of the government-owned national Airlines. In an exclusive interaction with Mihir Mishra, Air India managing director Ashwani Lohani said that his company’s average employee age is 52 and he needs young blood and that he plans to expand and induct 100 aircraft in four years. Edited excerpts:
What is your assessment of the reasons behind Air India’s downfall? The biggest reason for the downfall of this airline was the merger between erstwhile Air India and Indian Airlines, which was done despite the fact that both carriers are totally opposite of each other. There were many differences between the two companies in terms of work culture, areas of operation, compensation, working conditions, entitlements etc. The merger resulted in massive discontent and frustration amongst the staff. The subsequent demerger of ground handling and engineering companies added to the problems. In hindsight, it appears that a no-merger scenario may have been preferable. Or else, if the issues (related to a merger) had not lingered on for so long, it would have been better. Air India is, however, committed to resolving all pending issues at the earliest and bringing about continuous improvement in the services provided to passengers. On the top of it, the airline was also asked to purchase aircraft leading to a huge debt on its books.
Are you saying that the aircraft acquisition should not have been done? Not exactly. Aircraft were required and are still required. But the government should have funded the aircraft acquisition and not put the airline into a huge bank loan for the acquisition. A debt of this size is huge for the company and something needs to be done.
But a part of the bailout package is to be used to clear loans for aircraft. So the government did pay for it, eventually? Yes. They paid it only so many years later and the airline had been struggling with it for all these years. A debt of this size adds to any company’s financial performance. Air India today has to annually pay .`4,000 crores to banks to service debt. It is a huge amount of money and profitability would be much easier if you remove that. I am committed to making the airline profitable on a year-on-year basis, but some debt restructuring needs to be done.
Going ahead, what kind of expansion plans do you have for the airline? We plan to induct 100 planes in the next four years. We will expand globally with Air India and in the domestic sector by connecting smaller cities with Alliance Air (which operates 70-seater planes). These smaller cities have no connectivity as of now and we would want to get the first movers advantage by launching flights first. We launched new flights to Vienna, San Francisco, plan to launch flights to Madrid and a flight between Ahmedabad and Newark via London from August. We have big expansion plans, but we may hit an HR roadblock, where we may not have people to carry out the expansion plans due to the current ban on recruitment, a serious issue.
You have been CMD for nine months now. What constraints have you faced? Would you like the government to give some kind of freedom in decision making? We will turn AI profitable, but whether that profitability will be sustainable or not is the question. Look at the example of MP tourism, which I was heading before this, the company will run on its own for the next ten years.
To make the company sustainable, we need to recruit young blood so that the company has a bunch of people who can become the backbone of the airline in the future. We need to recruit people to ensure that the airline operations remain smooth. The average age of my employee is 52 years. Aviation is an industry where you require young minds.
Second thing is vigilance cases. The airline has a lot of vigilance cases and not all of them are due to wrongs committed. A lot of them are also because of problems in processes, which is due to ignorance on account of our employees not being trained. I am not saying that take us off the purview of the vigilance department because that cannot happen but we need to develop processes. This is a critical situation.
Another issue is that of fear of taking commercial decisions due to the past history of a lot of vigilance cases. Most of these cases are not apparently due to mala fide but due to defective processes that would need to be corrected.
Do you see an increase in competition in the international sector with the government allowing airlines to fly international with the abolition of 5 years in 5 years and 20 aircraft norm?
The only strategy to defeat the competition, whether international or domestic, is to improve services. We will have to improve services at any cost. We are talking to corporate clients signing agreements and working to improve our revenues.
Competition is an external factor, which is not under my control and my plan is to improve on the internal factors, which includes improving services.
Source: Economic Times