Air India! Can We See You in Air?

The news is quite big. Air India has successfully managed PR and media this time by creating a fuss about its order of Boeing 787s! And what it claims, it could bring the Maharaja days of Air India back!

Seriusly, Air India has been a premier service provider; still has one of the best aircraft with business class amenities. Even flying on economy gives a feel of business class with its navigation information system right in front of you on certain aircraft. But, the fact is, Air India’s maharaja days existed only when there were the only player in the market!! After the onset of Naresh Goel’s Jet Airways, Air India had some competition. It tasted water and had its feet on ground only when the competitive low cost players like Deccan, IndiGo and now, GoAir and Spicejet taking their market away.

From a market share of 100% in the days of License Raj, they have come down to a market share of approximately 16%. The market leaders are IndiGo at 1^st position (recently at the first position by a whisker), Jet Airways at 2nd spot (with almost the same as IndiGo at 26%, only a few points lesser) and SpiceJet at 3^rd spot with 18%.

Image Courtesy: WittySparks

No doubt, Air India and Kingfisher’s tumultuous times, the tatkal scam in Indian Railways, the growing influence of touts in railway bookings and the inefficient not so sophisticated bus operators have made it compulsory for many a people to travel by air for peace and mind and convenience. No wonder, biggest beneficiaries are Jet and IndiGo with their fleet. GoAir has only 11 aircraft and SpiceJet also with not a very significant number.

No matter how great the Boeing aircraft might be, the point is, it needs to be in the hands of competent organization, or competent management, to be precise. Hand over this same aircraft to Southwest in USA, Jet Airways or IndiGo, you would see some very different results. The babudom , the bureaucracy of being into government control is what keeps Air India in problems, just nothing else.

It is agreed that Air India needs to ply to some unprofitable destinations which private airlines are not willing to go as they are not so lucrative. Routes like say, Porbandar – Mumbai, Jamnagar – Mumbai or Nanded – Mumbai are understood. But, what about all other gifts that it enjoys which could easily balance these problems? 

The aircraft fleet, the scale of operations, the international reach finds no parallel in the industry. In fact, in the international arena, they could easily make money if they wished to. The problem remains, ‘if’. It is a matter of willingness than anything else.

Why this company is so oblivious to some commonly followed best practices in the industry? Are the people at the top deaf and dumb? The organizational culture is the very root cause of all problems, to put it in McKinsey style!

Aren’t the private airlines not earning profit by plying into tier – 2 cities? How many brain cells does it take to understand that a Jamnagar Mumbai flight can also travel further to Bangalore, Trivandrum and Goa and come back the same day to Jamnagar, saving airport parking, keeping the aircraft in air for maximum time and optimum utilisation of million dollar aircraft?

There have been just problems and problems around. Air India's website offers fares lower than what are displayed on MakeMyTrip and other such online travel agents (OTA). Why can't they display the same on all OTAs? Same is the case with Jet. But, look at IndiGo, GoAir and SpiceJet, the smarter ones now. Their fare on the airline website is the same shown on all OTAs. Half of AI's potential customers do not book because their fares as displayed on OTAs are higher and most will look to book the airline with lowest cost.

And wonder what is youth, military, senior citizens, VIP, politicians and what not quotas are present in their booking system! How can it go profitable if it keeps up with these kind of reservations even in case of bookings?

The biggest beneficiary behind government funding Air India despite the operational inefficiency has to be the great American aircraft maker, Boeing!! Sure, they are smiling!

What is Wrong with Indian Aviation?

Looking at the content found relevant to aviation on mediawebsites these days, it really remains a question, what is so wrong with all these companies suffering loss. Come on, 2 of them earn profit, 2 are in near break-even points and 2 of them have almost vanished in air (oh, not in air!)

Primarily, there are 6 major airlines in India carrying passenger traffic. Viz., Air India, Jet Airways, IndiGo, SpiceJet, Kingfisher and Go Air.

Air India, being a government owned entity is no doubt in loss and would continue to be as long as it is with government. Kingfisher has not witnessed a single quarter of profit but has dare to touch new heights by introducing international flights and aplenty of in-flight entertainment. On the contrary, the more quarters people have, United Spirits and United Breweries experience a great quarter! :D

IndiGo, GoAir are not publicly listed entities and thus, all their profit reports are to be taken with a pinch of salt.

SpiceJet and Jet Airways, are on and off with profits and loss like heads and tails every quarter. However, I do not understand with all of them hiring IIM grads, what really goes wrong? Aviation is oft discussed industry in B-Schools across the globe. SouthWest Airlines and RyanAir case studies are something that every MBA grad has gone through.

Image Credit: The 2010 Photography Project 

Just to answer a simple question, what are the critical success factors for an airline? It would boil down to following things: 

Low turnaround time: i.e. The airlines should be in air for maximum time possible which brings in revenue. Minimum time parked in hangars at airports means lesser charge to be paid to airport.

Higher Occupancy: Yes, the aircraft needs to be in air for maximum time possible, but of course, with maximum passengers in it. If it starts flying with lesser number of passengers, imagine the kind of boomerang it would be in terms of revenue!

Sure, there are many other best practices that these airlines could follow learning from there western counterparts. But, it is more of a will than anything else!

Howsoever good practices these airlines would follow, there are problems in the external environment that they face. We must discount all Indian airlines for this. Their costs are definitely one of the highest in the world (jet fuel is costliest in India) and they are in pursuit of offering one of the lowest costs in the world.

Some best practices followed globally in the airline industry would be followed in a different article. However, having the same kind of aircraft, smart employee management, no complication of classes, minimum weight on aircraft, using smaller airports for saving cost (not applicable in India though), collecting waste from customers, one flight going to multiple destinations, low turnaround time, timeliness, high occupancy with help of codesharing, lease of aircraft, total productive maintenance, etc. would be helpful for any airline. I would love to elaborate on this in a different article.

BTW, based on any random parameters of your choice, who is your favourite airliner? I personally love Jet Airways. Be it JetKonnect, JetLite or the usual Jet Airways flight, I do not differentiate much. IndiGo is a public favourite but I find it the best one among all the low cost ones. Indigo and SpiceJet give a feel of travelling in a government state transport bus, Jet, Air India and Kingfisher give a very good feel and GoAir does not make you feel that you are travelling in a low cost carrier. But, Jet Airways gets the vote for service, convenience and one of the most aesthetically appealing (the image does some justice probably) air hostesses! :D