NEW DELHI/SINGAPORE, Oct 14 (Reuters) - Air India’s new chief is betting an ‘open door’ policy will help defuse years of soured relations with the flag carrier’s more than 20,000 staff, paving the way for potentially painful change at the loss-making airline.
Ashwani Lohani, a 56-year-old engineer and tourism bureaucrat with no experience running an airline, describes his job as “the ultimate challenge”.
The 85-year-old state-owned airline is unprofitable, overstaffed and losing market share. India’s aviation market may be the world’s fastest growing, but it’s dominated by younger, nimbler, low-cost rivals such as IndiGo and SpiceJet.
Returning Air India to profit after almost a decade in the red would be a coup for a government that has vowed to cut losses, and whose prime minister built a track record of turning around state firms while running the state of Gujarat. But it will require unpalatable decisions from both a state apparatus reluctant to cede control and from Lohani.
Speaking in his New Delhi office, Lohani says he is starting from the ground up, with Air India’s staff, as he grapples with a record of poor staff discipline, grumpy service and frequent delays.
“People in top leadership positions have a tremendous motivating power which they don’t use,” he said. “If I pat someone on the back and say ‘do good work,’ he will do it.”
Earlier this month, Lohani launched a regular hour-long ‘open door’ session, when any of Air India’s employees, from pilots to flight mechanics and baggage handlers, can drop in.
But company insiders say that has to be the precursor for tougher decisions, including a reassessment of a heterogenous, and costly, inherited fleet, as well as cuts to unprofitable routes and staff, something the government will need to support.
“What does he need to do? The first thing is to tackle the staff issues. There are too many people working in Air India and morale is low,” said one high-level company executive. “There are some talented people in the airline, but also a lot of deadweight.”
Air India spends roughly a fifth of its revenue on employee pay and benefits. Rival Jet Airways spends around a tenth.
Union members have criticised some of Lohani’s predecessors for failing to sufficiently engage with employees.
Lohani appears to be a man in a hurry, with a reported target of turning a net profit by the year to March 2019 - three years ahead of the current schedule.
“The service and the on-time performance have to improve,” he told Reuters, referring to a service record peppered with reports of pilots delayed by shopping trips, temple visits and, in one case, a craving for fried onion snacks.
Air India is in a better state now than it was when Lohani’s predecessor took over in 2011, four years after a merger with state-run carrier Indian Airlines.
The aircraft-to-staff ratio, for example, is at one to 120, above global standards of around one to 100. It was one to 256 in 2007.
Yet Air India is still heavily dependent on the state to pay 500 billion rupees ($7.68 billion) in debt, and annual interest costs topping $600 million - as its market share slides.
“You’ve got an inherent advantage in the drop in fuel prices, and on-time departure has come back into focus. So with all that very soon we can make at least operational profits,” said George Abraham, General Secretary of the Aviation Industry Employees Guild. “There’s a lot of political pressure for various things, to which (Lohani) should not succumb.”
As a tourism official, Lohani claims to have overhauled a “rotting,” loss-making government chain of hotels into a successful luxury brand that is now profitable.
But this time, there’s something he can do little about: the government relinquishing control.
“He needs to engage the government to get the political support to make the necessary changes in the company,” the high-level Air India executive said.
“And at the same time convince the politicians to leave him and the airline alone.” ($1 = 65.1170 India rupees)
Reporting by Tommy Wilkes and Siva Govindasamy, with additional reporting by Rupam Jain Nair in NEW DELHI and Devidutta Tripathy in MUMBAI; Writing by Clara Ferreira Marques; Editing by Ian Geoghegan
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