Air India is sinking and long gone is the golden era of J.R.D Tata, no doubt. But the Indian government does not want it to sink, so what can be done to keep it afloat ? That’s what we’re going to discuss now.
Bjoern Schmitt – World of Aviation
The Indian government had stated about turning Air India into a low-cost airline and while this would not be a complete solution, something along the lines of what Shashank Nigam suggested would be worth looking at.
Whatever it takes, Air India needs to do a boatload of cost cutting and needs some serious business discipline. To make this a reality, they need a good CEO and a sound management team. I would not suggest that they must appoint a foreign national, but I personally wonder whether they’ll be able to find such a capable and experienced airline executive from India. Someone with talents similar to Temel Kotil, Robert Fyfe or Tony Fernandes would be a good fit for the ailing national carrier.
M. Azizul Islam
Rationalization
Air India currently has four divisions – Air India Express, Indian, Air India Regional and Air India itself. While diversifying the business is good, there is a clear overlapping in the missions of these airlines. To avoid this, Air India needs to rationalize its units.
Three units could be enough
1. International arm
2. Domestic arm
3. Low cost arm
A favorable approach would be making Air India international only, Indian domestic only and Air India Express the low cost carrier.
Branding
It is pretty evident that Air India is not a strong brand. While there is a lot to be done to make a strong and resembling brand, Air India needs to simplify and unify its brand, do some good marketing and live up to the expectations. That would be, delivering what it promises and promising only what it can.
Service levels
Again, Air India needs to simplifly its service levels and promise the customer what it can deliver. But to compete, Air India also needs a strong product – but this should not be hurting the bottomline. So, the current product onboard its 777 could be accepted, but they need to unify it throughout all of its long-haul fleet. Fare structures should also be more simple and the low-cost domestic service could be a good solution.
Fleet
Air India’s fleet rationalization is a must, but securing financing for its huge backlog will also not be an easy task. Hence Air India needs to increase utilization and in the same time, phase out older aircraft. Deferrings and cancellations must not come at the cost of cutting the service.
A fleet similar to the following would be nice.
Airbus A320 family – to be operated by Indian on domestic and regional routes
Boeing 737-800 – to be operated by Air India Express
Both of the above fleets should be replaced by a single fleet type when their synchronization occurs when Airbus and Boeing will have developed their next generation narrowbody
Airbus A330-200 – to be operated by Air India and medium and long-haul routes.
To be replaced by 787-8
Boeing 787-8 – to be operated by Air India
Boeing 777-200ER/200LR/300ER to be operated by Air India
The Boeing 747-300s should be immediately phased out. A310-300s should also be phased out soon since this aircraft does not perform a special mission and could be easily replaced by the A330s but could also be converted into freighters. The Boeing 747-400s can stay in the fleet for a few more years.
The cargo fleet should consist of the A310 freighters and if possible, 777-200LRFs.
New Air India Economy class. Lasse Kaila
Expansion
16 international destinations never help Air India to compete with the likes of Emirates and Etihad who continue to steal Air India’s traffic and Air India should rapidly expand. This investment would be worth it when the market returns to normal.
For the moment, new A330-200 flights should be launched to
Sydney, Australia (SYD)
Manchester, United Kingdom (MAN)
and,
Milan, Italy (MXP).
The Singapore and Bangkok services currently operated by Indian should be transferred to Air India . Air India should use its 777-300ER equipment in both of these routes ( for use on a daily BOM-SIN and DEL-BKK ) and compete effectively and somehow regain its lost market share.
More new destinations should be added when 787-8 begin to arrive.
If Air India is able to complete the above steps successfully, it could enter a good path to success. But the government should also keep in mind that profits do not come overnight and should make sure not to spoil the carrier and also to keep it free of politics.
What do you think of the above plan ? Please leave a comment. I may have made some mistakes, so make sure to point out them too.
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HI Miyuru,
That was a nice read with truth embedded! I am more of a technical writer, with operations being addressed from a techno-economical perspective, so yours adds a facet to costs I had never bothered to look into, before.
I like your analysis, and hence I would ask you this question: If a domestic, and an international arm exists (which makes perfect sense, Miyuru), then won’t the low cost arm dilute the market that the full service arms provide? Your logic of having a low cost arm to loop in a part of the low cost carrier market is good, but I am unable to understand the conflict in service: low cost vs full within an airline. Yes, many airlines do have this dual service; an explanation will help me out.
It will be a long time before a new narrow body will be developed by either of the major manufacturers. Some of the Airbuses Indian flies are nearly as old as you; selling them off for Boeing 737NGs (with winglets) might result in a fleet commonality. But I contradict my own thoughts by suggesting the sale of the 737NGs that Air India Express has, as the resale value might be higher due to their low age, as compared to the sale of the old 320s. Or would you stick to what you have mentioned: waiting for the next narrowbody?
Vasuki, India is a vast country, and even in a small country, there are many routes with different yields. And there are certain routes the customers might prefer comfort against the lower fare and the vice versa. For example, a TRZ-MAA sector and a TRV-DEL sector will have a vastly different customer base due to the length of the flight. And because of the competition from other low cost carriers, having a powerful low cost carrier is a must too. Hence the two subsidiaries ( full fare and low fare ) can co-exist without hurting each others’ profits .
Re fleet commonality, it would have been better if they could have one fleet type, but given the large number of aircraft in their respective fleets, it is not easy and cost effective to do a complete replacement. It would also incur a lot of technical costs, which you may know better than I do.
Selling the newer aircraft is not a good idea as they are more fuel efficent.
Hence, waiting for some more time with continual fleet replacement is better. However, if they really want to replace, I suggest using 737s over A320s since they already have newer 737s.
Nice mag you’ve got there.
Hello…
Hats of to you.
You’ve thought A LOT about India’s national flag carrier.
I would like to add one more point to this.
Like GoAir and IndiGo, Air India should also sell tickets at a very low price,
if the passenger books a ticket well in advance. I’m a student.I’m eager to fly
by Air India but the air fares are always too high as compared to GoAir,
IndiGo or Kingfisher Red. The very first thing I do ,while booking tickets, is to check the fare.And I’m sure many of us do the same. People would definitely go in for Air India if they reduce the fares.I don’t know if Air India operates Air India Express flights on domestic routes, but if they start services as a No Frill Service in at least the metro cities of India AT COMPETITIVE FARES, Air India would surely do better than they are doing now.
They had such an idea for sometime. But I am not sure if it will be financially viable with such a huge staff.
Gentlemen,
thanks for the interesting article.
I myself worked as an expat-captain for 19 months on B744 with Air India after 39 years of successful service with a major European Company.
My personal experience:
a lot of nice and friendly people to work with,
but a hell of an organization.
The management should definitely be changed as soon as possible and ripped of political guidelines.
The company should be run according economical rules only and thus be privatized. By the way: it did run excellently when MR. Tata owned it as his private company..
For the management: experts should be hired with experience on successful foreign companies.
Definitely the safety-division should be changed as they try to create an atmosphere of fear and subordinance to the crews, who in consequence do not dare to notify the company of unsafe events and procedures. That is definitely dangerous.
There is no union, or other representative organization for the personel existing, so pilots don’t feel well in the company and rather quit for other companies than stay. That costs a hell of a money to train new ones, and it never leads to an homgenic staff.
I myself did quit Air India before the end of my contract due to these reasons.
Anyhow:
I really wish all the best to my former collegues there,
but i doubt that AI management will be willing to learn…
Horst Gehlen
Certainly. I agree with you hands down. But the sad news is that this seems to be the future fate of now government controlled SriLankan as well.