New Air India chief faces tough turnaround task

Mumbai: The morning after an Air India plane flying in from Varanasi made an emergency landing at Delhi’s airport due to a hydraulic leak, the aircraft had a surprise visitor: Ashwani Lohani, who joined as the state-run airline’s new chairman and managing director just a week ago.

Ever since he took charge of the country’s ailing flag carrier, the 1980 batch Indian Railways Service officer has been on his feet, meeting everyone from baggage loaders to board directors as he tries to feel the pulse of the airline, multiple Air India executives who regularly interact with him said. They did not want to be identified.

On 31 August, after he took charge, Lohani went to the Delhi airport to inspect the cleanliness of Air India aircraft. Since then, he has attended nearly a dozen presentations on Air India’s turnaround, and has expressed his intention to advance the targets. He also wants to review routes so that they cover operating costs.

Lohani declined to be interviewed for this story.

Air India executives narrate stories of how the new chief comes across as a hands-on man. Of how he went to the terrace of Air India’s Nariman Point headquarters to personally supervise the installation of a new logo. Or how he asked for 30 point-of-sale (PoS) machines for passenger convenience when he visited the airline’s Hyderabad counter. Or his visit to the airline’s repair and training facility. Or how he works all days of the week, and has fixed a meeting with directors and sales managers this Sunday.

If only good intentions alone could fix Air India.

Lohani is up against the very same issues his predecessor Rohit Nandan—and others before him—faced: a bloated and unionized workforce, loss-making operations and political interference. While the new chief was catching up with his employees, members of the Indian Commercial Pilots Association were voting to decide if they should strike work after the management issued an order excluding them from the workman category, which would deprive them of striking rights.

Inder Sethi, a former deputy managing director, is depressed by the state of things. “After reading about the latest pilots’ unrest, I personally believe that there is no future in this airline. The only recourse is to shut it down and the government get out of the commercial airline business,” said Sethi, who served as the airline’s commercial director during 1957-80.

Lohani has a tough task ahead in terms of financial re-engineering as he tries to advance turnaround targets, said an airline consultant who requested anonymity.

Air India is flying on a Rs.30,000 crore taxpayer bailout. The airline, which had a total debt of Rs.40,000 crore as on 31 March, is expected to turn around only by 2018-19. In June, the aviation ministry asked merchant banker SBI Capital Markets Ltd to review its turnaround plan. It posted a loss of Rs.5,100 crore in 2012-13 and Rs.7,100 crore in the preceding fiscal year. Figures for the 2013-14 period are not out, but Air India is expected to post a loss of Rs.3,900 crore.

According to the original plan, Air India was expected to make an operating profit by the current fiscal year, turn cash-positive in 2018-19 and clock a profit after tax in 2021-22.

“Now, Air India has more competitors including Vistara and AirAsia. It has challenges in terms of international operations too,” the consultant said.

The new chief will have to see and act on the global and Indian contexts, according to Craig Jenks, president at New York-based consultancy Airline/Aircraft Projects Inc. “This will involve looking at global debates, issues, trends, pitfalls and opportunities, with the emphasis on global. He will have to convince the government that Air India should act as a global business, competing with other global and Indian business-minded airlines,” Jenks said.

Lohani is certainly aware of the issues.

“Air India continues to lose—inexcusable. A bureaucratic disaster on expected lines. Obliging masters at helm—what else would happen,” Lohani tweeted 30 May 2014 after he was named the airline’s boss.

A second Air India executive, one of the executives quoted above, said Lohani is keen to restore the airline’s past glory. He said Lohani has asked the management to review the profitability of every route.

The consultant said visiting facilities and meeting staff are good practices, but the real challenge is to reduce political interference and withstand the pressure from the unions of pilots and engineers while competing with nimble rivals.

“The sheen has been lost but not the inner strength is my firm belief and this alone gives me the hope that the skies can be ruled once again. And it shall happen,” Lohani wrote on 21 August on his blog. “Like always before, I shall not fail this time also, perhaps my last innings in the service of the nation, is a promise that I have made to myself. May God give me the strength,” Lohani wrote.

Fixing Air India could surely do with some divine help.