I hope Air India gets its act together

Did the Tatas make a mistake in buying Air India?

Does the steady stream of criticism levelled at the airline, normally from angry passengers who have suffered at its hands, reflect badly on the reputation of the Tata group which has previously seen success in such consumer-facing companies as Titan, Tanishq, Croma and of course, the Taj group?

 

Would JRD Tata be proud of how Air India has fared since it was brought back into the Tata group?

 

   There are short answers to these questions. Yes, the Tatas seem to have bitten off more than they can chew. Yes, the failures of Air India damage the reputation of the whole group. And I am sure that JRD Tata would be apoplectic with rage if he saw how the group was running Air India now. Even Ratan Tata, who pushed the group into bidding for Air India, would not be delighted by how things have turned out.

 

   But there are also longer, less simplistic, answers to the same questions. The Tatas always knew that it would take time to turn Air India around. They just didn’t realise that the management they hired would keep screwing up so badly on the road to recovery, or that their own reputation would take such a beating.

 

   And perhaps the most important answer to all of those questions is that the Air India management, instead of recognising its failures, is misrepresenting the situation and taking the line that once Bombay House spends billions of dollars on new planes, everything will get better. Once the money is spent, we are told, Air India will magically improve.

 

   The most recent and longest interview I have read with Campbell Wilson, the CEO of Air India (given to NDTV’s Vishnu Som), dismissed the problems that Air India passengers complain about. “It’s a mass transportation business and unfortunately, you know, there are occasions when it is not perfect,” he said with massive understatement.

 

   Much of that interview, like everything else the Air India management has said recently, was about the new planes it was going to buy ($70 billion will be spent on 470 new aircraft over the next few years). Apart from the continual chatter about how passengers will have to wait for the new planes to arrive before they can actually enjoy travelling Air India, the airline’s apologists and PR people also suggest that the problem is that the management is stuck with the useless old staff who have a “public sector mindset”. So what can anyone do?

 

   There is something to these positions. Yes, Air India does need new planes. One of its biggest problems is the condition of its fleet, as anyone who has flown Air India to North America over the last few years will tell you. And yes, it is always more difficult to turn around an established company than it is to start a new one.

 

   But a lot of this stuff relies on lies and myth-making. It is true that the old Tata Airlines was nationalised and turned into Air India but this was not unusual in that era. Till the late 20th century, most national carriers – Air France, British Airways (BOAC, as it was then) Lufthansa and others – were all largely government owned. So there was nothing odd about our national carrier being part of the public sector.

 

   Certainly, JRD Tata was content to accept it. He stayed on as chairman and ran it to his high standards. What we consider the glory days of Air India all came when it was government-owned, when the Tatas had no share in it.

 

   It is fair to say though, that after 1977, when Morarji Desai summarily removed JRD Tata from his post, government interference in the running of Air India increased. But it is wrong to suggest that the airline was always an unprofitable white elephant. Rajan Jaitly successfully turned Air India around in the 1980s. And by the early 1990s, when Yogi Deveshwar was its CEO,   Air India’s proud boast was that it was making a profit of Rs 1 crore a day. (Which was a lot of money in those days, and Air India is nowhere near making those kinds of profits these days.)

 

   So all the “public sector mentality” stuff is a bit of a red herring. A good and forceful management could always run Air India well. The problem was never the employees. It was that ministers and joint secretaries felt that they had the right to instruct the MD on how to run the airline. Competent managers risked being ignored, bypassed or humiliated.

 

   The greatest benefit of privatisation is that Wilson and his colleagues don’t have to mollify politicians or be pushed around by bureaucrats. That alone should have liberated the new Air India management – it was, in fact, the main argument for privatisation – but so far there are relatively few areas where you can say that passengers have a much better deal today than they did in the nationalised days.

 

   As for the constant slurs against the employees and the suggestion that they, not the newly brought-in managers, are responsible for Air India‘s problems, Wilson himself destroyed that argument in the NDTV interview.

 

   After approvingly quoting The Economist which described managing Air India as the Everest of corporate turnarounds (which I guess, would make Wilson a latter day Edmund Hillary), he bragged that Air India had hired 9000 new staff and that the average age of employees had come down to 35 from 54. Presumably the new employees he has hired do not have a “public sector mindset” and neither do the department heads, most of whom have been appointed by the new management.

 

   Whatever Air India’s problems are, they are not a consequence of lazy, old employees. They are a consequence of how the new management is running the airline.

 

   As for the promise held out by the arrival of new aircraft well, of course, they will make a huge difference. But let’s not forget that we have been here before.

 

   In 2006, when Praful Patel was Aviation Minister, Air India announced an order for over 60 new jets, 23 of which were different versions of the Boeing 777 and 27 were Boeing Dream Liners (There were also 18 Boeing 737s as part of the deal.)

 

"Many of us have been travelling Air India long before the current management took over and I imagine we will still be travelling long after many of the current managers have gone home."

   That announcement was greeted with the same kind of excitement that Wilson’s new announcements have now conjured up. And indeed when the planes arrived, they were amazing. I remember taking the new non-stop service to New York from Mumbai in 2007 and being gobsmacked by how impressive it was.

 

   But the reality is that new planes are not enough. You must have a management that knows how to use the fleet well and how to manage it. Ironically, it is the Boeing 777s which are now Air India’s biggest problem and the subject of the most complaints from passengers who fly them to North America.

 

   Is there much evidence that an influx of new aircraft will change things very much now? We forget that Air India has just had many new aircraft added as Vistara’s fleet was merged with Air India’s. And frankly things have not got better because of the new additions to the fleet. In many ways, they’ve got worse.

 

   Most full-service airlines, the world over, including Air India’s current godfather, Singapore Airlines, make their profits from high yield passengers – in first and business class. When Jet Airways operated domestically one if its claims to fame was the exceptional quality of its business class service. Vistara could not compete effectively in that category and soon reduced the number of business class seats to just two rows, or eight seats in total. Air India, on the other hand, always had more business class seats on most aircraft and was competition to Jet in that category.

 

   Now that both Vistara and Jet are gone, Air India has a monopoly in business class.

 

   So it could make profits by selling lots of high yield, profit making business class seats on metro sectors. Instead, it has chosen to abandon its old aircraft and use Vistara planes, with their tiny business class on Metro routes.

 

   One argument in favour of this that it allows Air India to offer premium economy which the Vistara planes have and most Air India planes do not. This may or may not be a valid argument, but the problem is that Air India’s fleet-integration with the Vistara aircraft has been somewhat disastrous.

 

   For instance, on many sectors where Air India has sold premium economy seats, it has not been able to use Vistara aircraft and is suddenly switching to planes that have no premium economy. As a result passengers who have paid for Premium Economy are downgraded at the last moment to economy.

 

   I know because when it happened to a member of my family last month I tweeted about it. I was startled to discover how many people responded to that tweet with their own examples of exactly the same thing. And the downgrading stories keep coming.

 

   When an airline downgrades a premium passenger, it pays a price in terms of reputation and loyalty. Air India does not bother about this. No attempt is made to placate the downgraded passenger. There seem to be no SOPs or policies to handle such situations. The concept of service recovery, essential in the hospitality sector, is unknown to Air India’s top management.

 

   Take the example of my family member. He was downgraded on his way to Bangkok and then shortly before he was due to return a few days later, they messaged to tell him he had been downgraded again. One downgrading is understandable especially when you are dealing with an airline with poor fleet management. But two in the space of a few days is unusual.

 

   It was only after I tweeted about it that somebody from Air India finally called.  My relative asked how much it would cost to upgrade to Business. The Air India person said he did not know. It was not part of his system. He would have to manually calculate the amount. An hour later they called back and said he would have to pay an extra Rs 55,000 for an upgrade on the Bangkok to Bombay sector. This was more than the return Premium Economy fare he had paid so naturally he declined.

 

   When it was time to check in at Bangkok airport, he asked at the counter whether it was possible to upgrade. Sure, they told him, it would cost just 4100 baht (around Rs.10,000) to upgrade to business. He paid and took the upgrade but was left with no goodwill for Air India, an airline that had downgraded him twice and whose staff did not even know how much an upgrade would cost.

 

   I mention the incident in detail because, though it is a relatively small issue compared to people who have been left stranded because of flight cancellations, who have spent 12 hours on the tarmac on delayed aircraft without food or air conditioning or whose elderly parents have been mistreated (just check social media for the innumerable complaints about such incidents), it offers an insight into Air India’s poor management style and lack of respect for passengers.

 

   Each week I wonder about the calibre of people who now manage the airline. This week, for instance, I had bad experiences with the Maharaja Club Frequent Flier program, where I have been a member of the top tier for decades. Again, it was only after I tweeted about it that Air India conceded it was its fault. (“The issue you experienced was due to a staff error…”) Until you make a fuss, the new Air India does not care. (Though, to be fair, in the end, they were gracious and candid about the screw up)

 

   So, I wish Campbell Wilson well. I am told that he’s a nice guy who’s doing his best and I hope Air India gets its act together. Many of us have been travelling Air India long before the current management took over and I imagine we will still be travelling long after many of the current managers have gone home.

 

   And, let’s give the new management credit for the good things. Both ground handling and inflight service have improved under the new management. (Air India ground handling is now better than Vistara’s ever was.) But let’s stop all this nonsense about “just wait for the new planes“and “public sector mindset”.

 

   Air India has a problem. It should be much better run now that the political interference has gone. That was the point of privatisation. But in fact, there is very little evidence that Air India is better managed now. And certainly, there have been many phases when Air India, pre-privatisation, was far, far better run than it is today.

 

   One of those phases was when JRD Tata ran it. Another was when Ratan Tata was chairman in the late 1980s. Ratan once told me that if the Tatas ever took over Air India, he would complete the job he was unable to do as chairman in the nationalised days.

 

   The Tatas need to make good on those promises. They need to live up to the standards of JRD and Ratan and not besmirch their memory.

 

   The billions they will spend on Air India will be wasted unless they learn how to manage it better and to treat passengers with more efficiency and more respect. Yes, it is a mass transportation business. But it doesn’t have to be a crap airline.