Air India: Two years after!

In October 2021, when Tatas bought the erstwhile national carrier Air India lock, stock and barrel with the promise of turning it around, national hopes were riding high. On January 27, 2022 - almost four months after the actual sale announcement - Tatas took charge of the airline formally. The date therefore is the official anniversary of Air India moving into private hands and a good moment to assess the move.

Had Air India been any private airline, this analysis may not have been necessary but as the country’s national carrier Air India has been more like a jewel in India’s crown with a special place in many citizens’ hearts and minds. It is hard for Indians to shake off the “this is my country’s airline” feeling attached to it although it is technically no longer true. Moreover, a substantial amount of taxpayer money has gone into keeping the entity afloat over years and therefore everyone has a stake in it, even if it is not always financial, but emotional at times.

So at its two year rebirth, one could ask where are we from a passenger, employees and business point of view in this journey ? Do Indians feel elated and proud of where Air India has reached in these years or is there a feeling of disappointment ? Or, is two years too short a time to effect a real turnaround in a business that was subject to decades of public sector mismanagement ? Have the Tatas bitten off more than they can chew ? Or are they delighted to have a new, promising enterprise in their stable? These are the questions that occupy many minds and discussions, not just of those vested in India’s aviation sector but even several outside of it, including India’s forever burgeoning flying public.

Here we examine the progress from all points of view : passengers, employees and from a business point of view.

So are there any signs of a real turnaround in business two years after Tatas took over the reins?

Many airline insiders and defenders argue that it is far too early for a business turnaround.

Though there is evidence of growth on several parameters. Over the last two years, many of the aircraft that had been grounded for one reason or the other are now back in the air, the credit of which goes solely to the new Tata team. The total number of operational aircraft is 117 for Air India, a 50% addition and 63 aircraft in Air India Express. This has resulted in many new routes with Air India now flying to a total of 84 destinations, 45 domestic and 39 international.

As a result, the airline has seen a spurt in passengers carried: a 33% growth year on year growth for Air India and 30% for AIX. This has reflected in a higher revenue for the airline: 249% over 2 years for Air India and 148% over 2 years for Air India Express. Load factors too have improved to 85% for Air India and 83% for AIX. To cater to this growth, there have been more hands on board: employee strength in Air India is now 18,400, an increase of 65% in the present fiscal alone. Air India Express has just over 6,200 employees. Another direct and positive fallout of the takeover has been that many employees who were previously taking their jobs and performance for granted are no longer doing so.

In an email response, the company says a lot more is on the cards for this year. 68 new aircraft are arriving at the average rate of one every six days throughout 2024. These will include 5 more A350 widebody aircraft (by June 2024), 17 A320 and 46 B737 through the year. Four more leased B777 will also be arriving. In addition, from July the airline will start the much needed process of upgrading 40 of its legacy Boeing 787 and 777 aircraft to the same standard, completely replacing the seats and entertainment systems. Concurrently, upgrading the interiors of 41 Airbus A320 narrow body aircraft will also commence in 2024.

In the absence of hard data - the company expressed its inability to provide details of operating parameters airlines work with - it is not known whether all the incremental changes made in the last two years have delivered concrete results as far as the bottom line goes.

On the second parameter—the consumer front—passengers across the board report unhappiness while experiencing international operations of the airline, in particular the ultra long haul flights, the worst of which fliers experienced during the months of December 2022 and January 2024, when the fog that enveloped parts of the country was at its peak. The period was beset with delays and there was a sense of deja vu accompanying the ugly scenes and videos across platforms: nightmarish experiences recorded by angry fliers across airports. In an irregular operation or crisis time, Air India’s operations appeared to have fallen apart. The volley of statements it issued claiming improvements and achievements were hard to comprehend as they ran contrary to consumer experiences on the ground.

Anecdotally, in normal times consumers have reported improvements on domestic flights and on international routes with leased, non Air India aircraft but these are few and far between. Through 2023, safety and its training practices have been a matter of concern with DGCA coming down heavily during the year. On an overall rating of 1 to 10, it would be fair to say the airline would score a poor 3 or 4 in the last two years despite presumably the management’s best efforts.

On the third front—employees—if fliers are less than happy, employees argue that there has been a lack of planning and foresight on the part of the new management in handling staff. To cite just one instance, a year after taking charge, the management attempted a weeding out or shed-the-old-baggage exercise. Contracts for experienced commanders and trainers (read : those over 50) were either not renewed or were based out of cities they knew would be unacceptable to them, leading to several opting to quit the airline, creating a fair amount of bad blood. More recently, the airline sent an email asking these commanders and highly experienced trainers to consider rejoining on “post retirement basis for a period of five years or till you attain an age of 65 whichever is earlier”.

Although a senior Tata official argued that most of those who were offered this have in fact rejoined and that the “airline was not facing any shortage of commanders”, few buy his argument, arguing that the damage done on account of their poor handling and planning cannot be undone. Why had the airline failed to assess its actual requirements well in advance when it knew it had dramatic growth plans ? The allegation is that this could have been handled sensitively: why not think before you leap! Overall, employees and especially commanders and crew remain a problem area for the airline, with several old timers stubbornly arguing that the airline was better off during public sector days.

A third but critical aspect is to look at the sale from a business point of view. Legions have been written on this and anyone vaguely familiar with Air India - once profitable and the gold standard in terms of product and service - would be aware of how gigantic a hole it was burning in the government’s pocket while setting a less than enviable record on most airline operating parameters.

So will this growth and push to corner a larger pie of the market translate into an improved bottom line and eventually add to the Tata stable of profitable enterprises ? Will the passengers and the airline employees begin to endorse the turnaround and support it wholeheartedly ? Two years after Tatas took over the reins of the airline, those still remain an unanswered questions.