Tatas get down to work at Air India, AirAsia

Ilker Ayci, former head of Turkish Airlines and the man credited with its turnaround has already had his first taste of India. Even before he got going, the ministry of home affairs has promised to "scrupulously'' probe his antecedents after reports on his alleged links with Al-Qaeda. That should give him some idea of what he might come to expect as the CEO of the erstwhile national carrier.

As Tatas take full charge of their new acquisition, some details of what one might expect in the immediate future are now beginning to emerge. More widely known, a decision has been taken to begin with to merge AirAsia India (AAI) after AirAsia Berhad fully exits the venture. A 32.7% stake has already been bought by the Tata group for $37.7 million. Soon, the group will buy the remaining 16.3% stake for $18.83 million. With this, Tata group holding in the company will go up to 100% and the airline will be merged into the existing Air India. This merger is likely to take around nine to 12 months from now, according to sources close to the developments. AirAsia Berhad chief Tony Fernandes, who in 2013 brought in half the $30 million for his 49% stake, will walk away with $56-odd million post the buy-out. Since funds were infused by both partners through this nine year period, it is difficult to assess whether the investment financially paid off for Fernandes. In terms of the controversies the airline courted in the initial years, many would argue it wasn't. As things stand, AirAsia India has a fleet of 28 A320s and has a market share of 4.6% as per DGCA's January 2022 data.

What is lesser known is that a decision has also been taken to let Vistara function independently for now. Post pandemic, the Tata joint venture partner Singapore Airlines (SIA) is neither in a position nor in the frame of mind to take any financial calls on something as big as this. If and when SIA is ready to consider this matter in its entirety, it is possible Vistara may enter the new entity with SIA holding a diluted stake in the new Tata airline, the merged Air India and Air Asia India. Since this would not happen right away, it would give Tata Sons some breathing time before it takes a shot at merging different airline cultures, schedules, staff and operations.

Meanwhile, at the carrier, a small team led by Tata Sons senior vice president Nipul Aggarwal is entrusted with the unenviable task of fixing many issues. No major feathers have been ruffled as yet with the four Air India directors still on board and whatever changes have been made are largely cosmetic. Departmental heads remain the same. The new owners have emphasised the importance of on time performance and made changes to try and improve this, although it is still early days. Changes were also being made to menus and food on offer. Directives had been issued urging crew to refrain from shopping indiscriminately at duty free. Airline insiders add that the non-essential staff and non performers are beginning to get jittery as days go by.

Senior sources in the airline and outside maintain that the group needs the depth of knowledge of airline economics and dynamics. Especially, since both AirAsia India and Vistara had so far only proved to be a drain on Tata resources and no visible signs of a turnaround was in sight, many remain unconvinced of Tata's ability to pull off any major surprises with Air India in the immediate future. This is a long term gamble and not one that can be counted upon to pay off.

As this went to press, there is speculation that the Tatas would infuse their first tranche of funds on March 1, 2022, post a board meeting scheduled for Monday February 28. An SBI-led consortium is expected to help with raising loans for the airline. Sources say Nipun was slated to hold the position of chief financial officer (CFO) for Air India since he has a finance background and is an external hire of Tata Sons CFO Saurabh Aggarwal. Many were of the view that Tata veteran Sunil Bhasakarn took charge of AirAsia India as CEO in 2018 may join the new entity as chief operating officer (COO) post the merger. However, an email sent to Tata Sons on these matters remained unanswered till this piece went to press.

Three passengers this writer spoke to said that the flights were on time and the staff seemed like they had been injected with a syringe of "professionalism". Passengers who took Air India flights in the last few days however say that the food on board remained "nothing to write home about". A former Air India director who happened to fly as a paid passenger between Delhi and Mumbai last week said that he felt there was some change in staff attitude and bearing. "I could visibly see the 'Tata' effect. Years of complacence seems to have been shed quite rapidly as ground staff and crew seemed more alert and awake!," he said only partly in jest. That sounds like a blessing for hapless passengers long used to apathy at the hands of the staff of a government-owned entity.