One-and-a-half years after he took over as Air India CMD, Ashwani Lohani is confident of a turnaround of the airline. In an interview with BusinessLine , Lohani shared his plans and ambitions for the national carrier. Excerpts:
Air India was recently featured as the third worst airline in the world. What do you have to say about that?
There were no details, no analysis given in the report. Several international airlines are not on the list. We’ve asked for the basis of the findings — we don’t agree with the findings. We have scope to improve but we are not that bad. We are fairly good.
The performance has definitely improved. In the past, we were getting abused by the media everyday but now we are getting praise as well. Recently, Amartya Sen tweeted about us, appreciating our service. Yes, issues are there but the main thing is not the presence or absence of issues. The main thing is whether we are doing anything to address them. The fact is the airline is trying its best.
What are your biggest focus areas for Air India’s turnaround?
Our biggest problem is heavy debt. Because debt servicing itself requires so much money that we are unable to find that kind of money. And if we don’t service that debt we become defaulters. On an operational basis we are doing well. Last year we were operationally profitable, this year also we'll have operational profits more than last year.
We have introduced a lot of flights in both domestic and international circuits. We have progressed. We have recruited pilots and crew members. Last year, we used to have strike calls so often — all that has vanished. The airline is stable. There are a lot of internal issues that lead to processes and that’s what we keep discussing with the staff.
What are your growth plans?
On the domestic route we’ve already started over 12 new connections and another dozen connections will be added this year. On on the international routes we’ve started four non-stop flights including direct flights to San Francisco and Madrid from Delhi. We are soon going to connect to Washington as a new port of call in the US. We’ll also connect to Copenhagen to connect with Scandinavia and we’ll have some connections with Africa and Tel Aviv. A lot of expansion plan is there because any company which is in an operational business has to be active. If I stop, I start stagnating.
Despite your increased connections, the load factor remains low. In such a case is it financially prudent to add more connections?
Before we started the Madrid flight, three international flights which we had started used the aircrafts that we had on the ground. We didn’t buy any new aircraft. Most of these flights that we are increasing on the domestic route are using existing aircraft. We are therefore increasing the utilisation of planes. Even though load factor has marginally gone up by 1-1.5%, overall passengers carried has gone up at a higher proportion because we added more flights using the same planes. Our load factor is about 76 per cent totally and it should go to 85 per cent. We are coming out with a lot of new schemes. We are trying to be as aggressive as the private sector. We are becoming competitive in pricing, we are meeting travel agents.
How are you looking to reduce debt?
All I can say is that the airline needs to be financially restructured. Some of it can be turned to equity. There are several options.
What is your fleet induction and fleet retirement plan?
For retirement, we had 15 classic aircraft (Boeing 747s) which are very old. Four of them have already been retired. Eleven more are to be retired. About seven will go in 2017 and the remaining in 2018. At the same time, we would inject 22 new aircraft. We’ve already entered into an agreement for leasing 22 aircraft. Fourteen Airbus 320s will come in this year. Five Boeing 787 are coming; three Boeing 777s will come in next year. We’ve also placed an order for 10 ATRs that’ll come in this year. So, we’ll have at least 29 aircraft coming in this year.
In the next two years, we are looking at inducting about 100 planes in Air India and its subsidiaries.
How are you working towards improving operational efficiency?
We are empowering our staff at the field level. We are authorising them to take decisions, take financial calls. Even though it is termed risky in a government company. We want them to take on-the-spot decisions. For example, we’ve given our cargo managers full power to quote rates that they deem correct without taking permission from the headquarters and wasting valuable time in the process. So far we’ve been losing business because by the time the quote comes from the headquarters, we would’ve lost it to competition. We are similarly empowering our managers in commercial operations to ensure simplicity of operations.
How are you addressing the staff shortage issues?
That is getting resolved now. We have injected a lot of cabin crew. We’ve just inducted 50 cabin crew who are joining the 777 fleet and we are recruiting 300 cabin crew from Chennai. We recruited 300 separately from Delhi. We are now doing regular recruitment for pilots as well. This never happened earlier.
We are an aged airline with staff having an average age of 50 years. It is unthinkable to have 50-years average age in the service sector. Other airlines have average age of staff at about 30 years because you require youngsters. We don’t have youngsters. We just have oldies including me. We haven’t done recruitment in 18 years and this is the result of that. Other than pilots and cabin crew, we would be hiring another 300-400 people.