Air India-Road Map for Revival & Growth

Air India-Road Map for Revival & Growth

Current situation @ Air India can’t be less than a surprise military strike and that deserve a response equally or more with military precision. A lot has been already said about why and how Air India has come to this state in many reputed columns. However, you can’t do justice to readers with your strategy unless you inform them about your diagnosis; therefore, need to briefly sound out what ails the national carrier to seek a bailout package from the central Government.

Broadly speaking, Air India faced two challenges at the same time i.e. Internal and External. Internal challenges of Air India are well known and too many to cover in this column; the ones that top the list is Leadership, Morale of Staffs, Too many hands for too less work, High cost of operation, A non business like mindset across the organization- Sarakari style and many others. Unluckily, the external environment has also not been very kind either. The global recession and previously very high cost of aviation turbine fuel have taken wind out of the sails of many a carrier including Air India.

Can Air India survive this tough time? Certainly, Air India would be able to revive and grow to become one of the best money making Airline. What is needed is both the Owner (Govt.) and Management(Air India Board) plus the people behind the machine & processes(employees) should be willing and should have intention to offer the country with a robust domestic and international carrier with global standards in larger interest of the economy.

Where to start? Is the biggest stumbling block in human mind and same is equally applicable when you write strategy. In this case, you can’t start your exercise else where but at Leadership which would put the other jigsaw to the puzzle. The Current leadership does not have a vision for an organization of Air India’s stature; nor do they have the knowledge of the market or the business of running an airline. Therefore, obviously the new Leadership must be put in place keeping the above criteria in mind. In our opinion Air India could have a team of five top executives (Chairman, Vice-Chairman, Managing Director [ceo] and two Dy Managing Directors) with complementary skill set. Chairman could be from Piloting profession with exposure or interest in the business side of the airline, Vice-Chairman can be from aviation engineering stream with business background or appreciation of the business for a consultative role to keep their respective flocks motivated and offer inputs to the board in their respective domain knowledge for decision making. While Managing Director must be hired from outside and from services industry from pool of successful CEO in private sector, preferably woman with a caring attitude and investment banking back ground to keep the cost of the organisation in tight lease and leverage her investment banking background to go for a Financial Reengineering to bring back the Airline into pink of health with unstinted co-operation of other senior colleagues in the board. Her role should be that of

“Jubin Mehta of Philharmonic orchestra” the Conductor in Air India. My preference would be for Ms. Falguni Nayar of Kotak. And out of two deputy managing director, one should be from hospitality industry and the other must be an expatriate airline veteran. The board should also contain a few wise men from diverse businesses to mentor the board with their knowledge and perspective. My preference for the independent external directors are: Ratan Tata( being a pilot himself and business man with repute, Anil Ambani( A pioneer in large scale operation and erudite huge fund manager , Sunil Mittal ( An entrepreneur with a difference and again pioneer in outsourcing),

Ms.Hema Ravichandran (With domain knowledge in HRD and an adept practiceioner of retention strategy in large organisation) and Ms.Rama Bijapurkar (from Marketing domain).The morale of the story is to mobilise a set of competent unlike mind with a common task (turn around of Air India) to bring about path breaking innovation in the systems and processes to kick start the revival of Air India and little later the consolidation of the airline.

Other most important strategy, currently for Air India is how to increase the sale/revenue? The value proposition should sit around “Money’s value in Air travel” to attract and appeal to more and more customers from other airlines and other mode of transport. Suitably backed by increase in Operational Efficiency: Flights in Time, Pleasant Traveling Experience, Quality of ambiance in the aircraft, healthy food & drinks, caring interface at check-in at airport and yes, of course, efficiently managed pickup and drop of travelers by outsourced dedicated cab service.

One unpleasant decision for new management would be to replace 250 out of 500 middle management personnel with new lateral hires from private sector across Industries and show the door to the top 25 people of Air India with due niceties and protocol to make the quantum jump in operational efficiency.

Further, Air India could tap sales through long term contract with advance payment with discounts and interest propositions for bulk users. Again, arrangement with hotels and travel agencies could be revisited with suitable package to attract more customers. More over, identification of new niche market like sports, movie production and creation of new niche products like Chartered flights to important business, tourist destinations and also all season products like Chartered flights for World tour could bring higher sale and revenue in short term. Sponsorship opportunity could be tapped to increase the other income for the airline.

An exclusive Cargo Division could be created as new profit centre with all old Aircrafts if it is economically viable to tap the growing cargo business both domestic as well as abroad.

Reducing cost in an airline and that to Babu Run Air India could be the worst nightmare for the new management of Air India. However, to save the airline from sinking further; the new management would have to adopt an innovative strategy to reduce the employee strength meeting international standard for employee to aircraft ratio; at the same time earning their co-operation in the interest of all stakeholders.

• Employees can be offered, Leave without pay for two years along with company (Aggressive HR) help for relocation in Govt. & private sector and understanding to hire them back in good times after two years.
• Unproductive and unbillable employees can be offered separation with a commitment to outsource all non core services of the organisation to the company/co-operative floated by such employees.
• Cut your coat according to your cloth otherwise you would look necked; therefore, salary of all employees and management could be rationalised progressively with 30% cut in top, 20% cut in middle and 10% cut for rest of employees who retains their job on the basis of merit and efficiency.
• Freeze of all allowances & perks of all staffs which do not have co-relation with productivity/bottom line.
• 50% cut on all administrative expenses not linked to operational efficiency.
• Restructuring of Bulk Cost Centre: New management need to examine the cost-benefit analysis of outsourcing Aircraft Maintenance. Otherwise, Aircraft maintenance division could be restructured into an independent profit centre.(just like MRO with joint ownership of Govt., Air India, Air India employees and Aircraft Manufacturer)
• New management also necessarily need to revisit the purchase contract of new aircrafts to renegotiate; if feasible to arrange a short term system for payment as per flying miles/hours or else to reduce the EMI by half for two years to be suitably adjusted later in order to arrest the fund out flow.

Last but not the least; new management has to create infectious enthusiasm in the organisation by aiming at an unassailable goal to be just “The Worlds Best Airline” followed by hiring five hundreds of fresh graduates from the campus (Boys and Girls with good personality and communication skills) as interns to man all such customer interfacing/cabin crew jobs to spread only Joy & Happiness. By the end of implementation of such a strategy I guess, Air India would have climbed the chart buster of global aviation Industry. Hope, Praful Patel is listening.

Author: Bikash Choudhury, Chief Executive of Strategy Consulting Firm based at Bhubaneswar, Orissa, India. Contact: Mobile: 00 9853426657 Tel: 91-674-2720271

Email: streben.market@gmail.com & bikashchoudhury@sify.com