Arvind Jadhav: "The question is how much can the government stomach?"

Is it possible to turnaround Air India?
Any assistance to the company by way of subsidies won’t help. We will only have to go back again and again unless our cost is below yield. The airline has very large infrastructure that can be leveraged to turnaround. But are we market savvy enough to be able to do that? This is in the form of hangars, equipment, trained manpower, slots, routes and the brand. The second part is attending to the fault lines. In many ways the warts have been hidden for many years. The Gulf routes were subsidising many of the losses in the past, this could have been addressed, but wasn’t. There has been no hiring for the past 10 years [except in a few categories]. Two years down we are heading for a severe manpower problem.

How will you tackle the problem of cutting cost?
One way is to shrink services. This has been tried before. Our strategy is to identify the optimal fleet size; our network should be sized such that we can break even. We will retain only the low cost machines that allow higher productivity. Currently, there is an overhang of both aircraft and people. The second step is to determine what is core and non-core. In the next six months, we hope that most of the staff will be employed by our subsidiary companies.

Today most of the costs are hidden under one, big balance sheet. For instance, we do the ground handling for Singapore Airlines, but do we even recover our costs?
We don’t know for sure. In engineering, we have 9,000 employees and about 10 to 15 hangars. To start with, we can guarantee them 50 percent of the business and ask them to find the rest from the market. We hope to generate Rs. 1,500 crore as extra revenues through these measures over the next two years. The staff that currently services a 100 aircraft can service 200. The employees in these SBU’s [strategic business units] have to get their salary from there. It cannot be from NACIL or passengers.

How do you plan to deal with the government while taking the tough calls?
The question is how much can the government stomach? If there are repercussions beyond what they expect, it gets tough. At the end of the day, my job is like an advisor, I can only take the government up to a certain level. The options then rest with them, how much they are willing to take on. As a CEO I have to take up the cashloss position with the primary shareholder. We are in the process now.

What about issues with the workforce?
We need business savvy people, who can go out and get business. Today, most of our people are busy collecting information. There is no ERP system in place and without it they are busy doing IT, when they should be meeting people. Ours is a relationship business. It is a convergence of hospitality and connectivity actually. The employee-customer interface will give value. Airlines should quickly move to the airports, that is the only way to survive. You tell me; did you fly Air India to come to Delhi?

The other problem is getting everyone to align. We have to go to the market not the other way around. Now getting pilots from Delhi to relocate to south India, or those from Mumbai to go to Kolkata or Hyderabad is difficult. We are identifying areas to match the men and machines. If we want to operate B777s direct from Kolkata to Europe, without stopping at Delhi, our pilots, cabin-crew and maintenance people will have to based there. Every touch down we do is a cost to the network. People would rather go there on postings and stay in five-star hotels. There are fundamental fault-lines that need to be addressed. Everything in the organisation is agreement controlled.

Any operational improvements in the last six months?
On-time performance has been a big focus area. We have improved and are at 76 percent system-wide. If someone helps recover lost time, they get a bonus. We have to create reliability, our turnaround won’t start if we don’t fly on-time. Revenues have improved about 25 percent on a daily basis. Our revenues have improved about 25 percent on a daily basis. Load factors too have gone up from about 60 percent system wide to 69 percent. This is significant because we are also seeing improved yields on these loads.