Air India Restructuring

For the past few months,  Air India has been in the limelight for their performance, non-payment of dues, lack of proper service and a lot of other reasons. I think that billions of Dollars are just going to waste. The latest attempt to revive the ailing carrier by injecting $1.7 billion was another set back to the airline. 16 of its aircraft are now grounded, let alone keeping them in the air, the airline is unable to even refurbish them. They are unable to pay the parking fees to AAI (Airports Authority of India) for their aircraft  leading them to just being parked at the hangers.

The grounded planes have added to the already debt ridden airline, which amounts to about $8 billion, with straight 6 years of losses. Air India has also lost the market share as low cost airlines started to lure away the passengers from Air India a decade ago. What was Air India’s response, start Air India Express. Air India Express, which serves mainly from the south Indian states to the gulf and south East Asia. How has that helped the ailing carrier? It already used to serve these markets with its mainline fleet before. To add to the burden, Air India Express offers meals on-board unlike its competitors, Indigo and Spice Jet.

Air India’s fleet utilization is the lowest out of its competition. On average, Indigo operates its A320 aircraft for about 13.5 hours a day, Spice Jet operates at 13 hours a day (B737 aircraft), GoAir uses its A320 for about 12.9 hours a day, whilst Air India has a fleet utilization of just under 7.5 hours a day for its A320s. Bleeding money. Anyone can now point where its losing money. More time spend on the ground, the more these aircraft are losing money. Let’s take a case – the every popular Dubai to Mumbai route, which is well served by several carriers of India and of-course Emirates.

Departure Time	Arrival Time	Route	Airline
3:45 AM	8:10 AM	DXB-BOM	Emirates 504
9:35 AM	2:00 PM	DXB-BOM	Emirates 506
11:25 AM	3:55 PM	DXB-BOM	IndiGo 64
12:00 PM	4:35 PM	DXB-BOM	Jet Airways 541
12:50 PM	5:20 PM	DXB-BOM	SpiceJet 14
1:15 PM	5:35 PM	DXB-BOM	Emirates 502
3:20 PM	7:55 PM	DXB-BOM	Jet Airways 535
4:10 PM	8:35 PM	DXB-BOM	Emirates 508
6:45 PM	11:20 PM	DXB-BOM	Jet Airways 537
8:25 PM	1:00 AM	DXB-BOM	IndiGo 62
9:40 PM	2:15 AM	DXB-BOM	Jet Airways 543
10:30 PM	2:55 AM	DXB-BOM	Emirates 500
11:40 PM	4:05 AM	DXB-BOM	Air India 984

The table above shows that out of the 13 departures daily, Air India has only one flight a day to Mumbai from Dubai. That too at an ungodly hour of 11.40PM arriving into Mumbai at 4.05PM.  Most of the market is covered by Emirates, Jet Airways and Indigo Airlines. The Air India flight is operated on a singe isle A320 aircraft. Air India is the only airline on this route, and many of the other gulf routes that allows its cabin crew to overnight in Dubai before working the next flight back to Mumbai, because the “labor union” requires them the overnight after an international flight. Rest of the airlines use the cabin crew to do both sectors. Even Air India Express (being a low cost carrier) allows its crew to overnight in an international city. This is unheard of in the private carriers.

Emirates, by far, operates the most international flights in to all cities of India. It has 185 flights a week via 10 gateways to India. Emirates use its crew for both legs except for a few cities where they overnight because of the stage length of the flights. Speaking with one of the Jet Airways Purser’s (Senior flight attendant) while flying with them to Mumbai from Kuwait – they mentioned that the Kuwait to Mumbai and back is not the longest return flight that they have to work. FYI – Kuwait to Mumbai is about 3hrs and 45minutes and the return is 4hours 30minutes, plus the layover of 1hour 20minutes in Kuwait, so that makes for a close to 12 hour duty time, and they do it. Why can’t the AI Cabin Crew do it for the ailing national carrier. The job of a cabin crew is very demanding and they have a lot of things to know, but I do understand that most international carriers are squeezing their crew to the limits on short haul international flights. 

The low utilization and mobility of the crew adds to the low utilization of the airline’s aircraft, because without crew the flight isn’t going anywhere. Crew have been time and again blamed for their undesirable looks and attitude but I also blame the management for not having strict standards and training that Air India used to have during its glory days in the 80s. A lot of other things haven’t changed with the changing of the Civil Aviation ministers in India. Most of them don’t have an airline management background, they are just ex-pilots either in the civil aviation field or in the military.

Air India had the worst recorded on time flying performance in the aviation industry for India. According to the Directorate of Civil Aviation, Air India had a on-time performance rating of about 68% versus, Indigo which had 96% and Jet Airways had 86% on-time performance. Believe me when I say “on-time is a wonderful thing” – I mean it. So do the passengers. Traffic is gradually shifting from Air India to the new low cost competitors due to these factors and more.  

The troubles don’t end here. You have a population of over 1 billion people. You can run a very successful airlines, barring the politics involved. India also has one of the highest fees for airport usage in the world. If these were to reduce, the burden on airlines would also reduce. As more competition enters the market, the share of Air-India, Air-India Express and Air-India Regional will decline further.  Air Asia might start an airline with its partnership with an Indian giant. This will further intensify the completion for our ailing state run carrier.  Emirates has a share of 13.24 % of the passengers travelling to India. Which is much higher than Air India.

Air India needs to properly channel all the cash injections it gets from tax payers money to restructuring and refurbishing its aircraft and its routes. A successful hub with a high utilization of its aircraft should be the priority right now. Air India has so much potential and market to grab it is failing on realizing this, moreover the debts keep on adding .