It has been more than a year since Air India returned to be under the Tata Sons wing. Over this timeline, the airline set itself on a five-year transformative plan called ‘Vihaan.AI’ and made the second largest order in the history of commercial aviation of 470 aircraft.
It also recently received a nod from the Competition Commission of India (CCI) for the Air India-Vistara merger. Similarly, earlier this year Air India received the competition watchdog’s nod to merge the low cost airlines Air Asia India with Air India Express. While the first phase of its transformative journey ‘taxi’ is done and dusted, the airline is now in its second phase, the ‘take-off’.
“The first six months were spent focusing on addressing accumulated issues of the past and the team has done a good job, so far. We are in the midst of deploying systems and getting the necessary people and talent for growth. It’s a long way to go, but it’s a good start,” Air India CEO Campbell Wilson told CNBC TV18’s Managing Editor Shereen Bhan in an exclusive interview.
Air India is halfway through the second phase of its transformative journey ‘take-off’. On the commercial side, revenue management, distribution, website, back office and IT, new systems are being deployed. The new rostering, fatigue management, human resource, financial and engineering systems are being deployed in a phased manner. The VRS phase in the airline is over and many employees have also been adjusted in the business with new skills. Wilson said, “In aviation terms we are still on the runway but we are getting close to V1.”
Air India is also re-negotiating contracts with vendors with a special focus on spare part suppliers. Offices of all four airlines — Air India, Vistara, Air Asia India and Air India Express — have been shifted to the Vatika One On One Complex in Gurugram. “While CCI has given approval for Air India-Vistara merger, we’re awaiting more regulatory approvals in other countries. Similarly, the merger of LCCs is also following its regulatory process,” Wilson said.
A few months ago, Air India made global headlines by placing an order of 470 aircraft with Boeing and Airbus and those deliveries are expected to begin soon. “We are in the process of getting India’s first A350 very soon. We are also in the process of taking ownership of our first Boeing 737. In the next few months we will receive 25 Airbus A320, five Boeing 777 and six Airbus A350,” he said.
At present, six wide body aircraft are in service from Delhi to London, San Francisco to Bengaluru, Mumbai to New York and the new aircraft will be added to these routes to increase their frequency. In the last 12 months, Air India’s capacity has gone up by 26 percent and many new routes and destinations are set to be added in the network. “People are going to see an acceleration in our efforts. Clearly there’s a lot more we need to do, don’t consider ourselves anywhere close to the finished product yet, but there is progress happening,” Wilson said.
While some airlines are facing issues due to shortage of pilots, things are very different at Air India, which has recruited more than 650 pilots till now. “A lot of people want to work for Air India. We are offering one of the fastest paths in the industry to employees. From induction to command, from narrow body to wide body if you’re an aviation professional, where else would you want to work?,” Wilson said.
Air India has also invested $200 million in its training academy. Wilson added that the airline is adding people as it is adding aircraft, and the recruitment is underway much ahead of the aircraft induction. “Currently, we are incurring a cost as employees are in the training process. The company as a whole is building a capacity bigger than the current fleet. We want our employees to be productive and want to give our pilots ample flying hours for their own career progression.”
Air India’s existing wide body fleet is all set to get a refreshed look as the airline has marked some money to refurbish the aircraft, following which they will get a new inflight entertainment system, galley and lavatory. As much as $400 million will be spent on new seats. The first aircraft is expected to be rolled out by July or August 2024.
When asked about what are the targets for capturing the market share, Wilson said, “Air India is generating higher revenues and cash flows. The market share is not the objective, running a good business is. We want to achieve a 30 percent domestic market share and achieve 30 percent international market share. We’re on track to achieve market share goals. Focusing on delivering a good product and good revenues.”
In a surprising revelation the Air India CEO said that most of the inflight entertainment systems are quite old. “The current in-flight system dates from around the time as the first iPhone. Trying to procure spares from the secondary market for the retrofit process. The inflight systems in the existing business class is 99.5 percent reliable. By the middle of next year we should be able to get 100 percent retrofitting done,” he said.
On being asked about what the status of the AI-Vistara merger is and what will happen to the brand Vistara, Wilson said he is awaiting the clearances of competition authorities from other parts of the world. “We are trying to align operating processes and systems across the four airlines. Vistara has a very good business model because it’s a newer airline. Certain Vistara elements don’t complement Air India. Eighteen months worth of work is left for the Air India-Vistara merger. Vistara will continue to operate as Vistara, there is no timeline to completely merge both airlines. There is no rush to do it, we want to learn what we can from each other,” he said.
On the type of reception of the new brand identity Campbell said a new brand identity carries forward traditional patterns of Air India. ” Public opinion on new brand identity is subjective, and received really positive feedback from people. We are happy with the new brand launch and feedback we’ve received, and hopeful that people will support the new Air India brand,” he said.
Air India has ambitions of catering to a wide range of passengers from India and outside. “Not just Indians, but people of the world wanting to travel on a high class, high quality, reliable, well regarded, affordable airline. Air India’s aspiration is to be a world class global carrier with an Indian heart,” he said.