Air India won’t oppose Qatar Airways bid to set up airline in India: Ashwani Lohani
In an interview, Air India boss Ashwani Lohani talked about the Udan scheme for regional aviation, competition from IndiGo, privatization and debt issues
New Delhi: Air India chairman and managing director Ashwani Lohani, 59, took over the reins of the national carrier in August 2015. Since Lohani took over, Air India has seen improved industrial relations and continued expansion. In an interview, Lohani comments on the airline’s priorities in 2017. Edited excerpts:
What is Air India’s focus area this year?
The key objective is expansion and consolidation. About 35 planes would come this year and we have to fly them. Of these, six will be long-haul planes which will go international with one return flight a day. We are participating aggressively in government’s regional connectivity scheme Udan. We have ordered 10 ATRs and we are ordering 10 more this year so our ATR fleet would become 30 by end of 2017. In the next two years, we are looking to add 20-25 planes so I will have a 50-plane airline in the country.
Some more international connections are being planned—Washington, Scandinavian countries. Israel is under consideration. We will be increasing frequency to Australia on existing routes. Then we are working to improve our services still further. We will improve our food further, staff should become more aggressive—in marketing, we have become very aggressive. And we want to keep on earning higher operating profits. Air India has almost come on track, we just have to find a solution to the huge debt we have.
You have been very vocal on several issues including massive debt burden piled onto the airline?
We have to run the organization openly. If you are working with honesty and commitment and not looking for a single illegal penny, then why should we not speak openly? I will. How do I compete with private carriers when our people are afraid of decision-making because of so many processes, while others can take decisions so quickly? The problems have to be accepted and brought in the public domain. The reasons have to be known—Rs50,000 crore debt and the fact that we are bound by a lot of rules and procedures.
There are things in the works to defuse debt issues?
We have to do financial restructuring. It’s a question of life and death. We will also have to inject fresh blood.
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But you have also moved a proposal to increase age limit from 58 to 60 in Air India?
Yes, because till the time we induct new people—following the long approval and induction process laid down by the government—we need experienced people to work in several areas.
Does the lack of independent directors on the board of the airline for almost a year hamper decision-making as some board members becoming wary of decision-making?
That’s something that the ministry is looking into. The decision for additional planes (major decision) was taken while they were there.
Even though there is no move towards Air India privatization, do you have a view on it?
My job is to run the airline. Privatization is subject to the government view.
Banks led by State Bank of India seem to have said no to conversion of their debt to equity in Air India?
There is nothing like they have said no to it. We are still talking to banks to convert some of the debt into equity; some way has to be found out. Discussions are going on. We want it to closed at the earliest but it’s not something in our hands.
Does it worry you that while you’re the biggest international airline out of India with a 17% share, your domestic market share has been shrinking?
One thing I have to remember is that we are an international airline. That is our market. Domestic we went down because our capacity remained fixed, while others’ increased a lot. So our domestic market went down because of inaction on our part. And the second reality is that while private airlines can place a 300-400 plane order, we can’t do it. I will not be able to get it past the system. There would be bribery allegations. So, market share will fall; we won’t be able to stop unless I can also order planes, run it like an owner, which I am not. So, we have to brand Air India more and more as an international airline. And we have to tap the untapped tier-2 and tier-3 cities where there is little competition.
Does IndiGo’s 40% market share in the domestic market impact you, your pricing?
It’s not very good for the ordinary passengers for somebody to have such a large market share. It will almost become monopolistic if it crosses 50%.
You have been benevolent in giving staff access—everyone from the top to the bottom can meet and seek help. Has that really helped the airline?
The staff are more aggressive, more responsive. We are supporting our staff. It is highly beneficial for the airline. The chairman of the company has to be attached to the ground. Those days are gone when we can run it like a maharaja. Air India chairman cannot be like a maharaja. I have to know what’s happening on the ground, I have to know my staff, I have to know my territory. If you are not involved, you will make wrong decisions, wrong assessments and you will always have an HR (human resources) issue. That’s why we never blame our staff; it’s our systems, our processes, our past that has to be blamed. In any airline, the number one focus has to be HR, the number two focus has to be HR and the number three focus has to be HR, then comes the rest. If staff is happy, we will serve the passenger well, the cleaner we will keep the planes.
You had plans to have an alliance with the Railways?
We did try but it did not work out. The plan was to have (the) wait list passengers of the Railways come to us so we could fly them last minute. It would have worked very well.
One hears how in the past some private airlines would often complain to the aviation ministry when Air India dropped fares and then Air India had to back off and keep fares up. How has it been for you when it comes to similar interference?
Yes, but in this government, one thing is very clear—there is no interference, there are no dalals (middlemen), there is no expectation to do anything wrong. So, we have absolutely no issue on this regard. We are running Air India—besides the bottleneck of processes that comes with being a government organization— impeccably.
Do you expect to get a big chunk of the Rs500 crore subsidy the government is giving to all those planning to fly regional routes.
In RCS (regional connectivity scheme) you can’t really fly big planes and people don’t have small planes . So, we have the first mover advantage. We will be able to connect 40-50 cities within the next 18 months. My thinking is that a lot of places, routes will be viable on their own—like Delhi-Kanpur we have started, it’s doing well. Then let’s say Lucknow-Dehradun we are planning, it will work on its own. In some places, it will not work on its own. So, it will be a blend of both. We have not worked out how much subsidy we will be able to get.
There were plans to bring a strategic investor for Air India’s Nagpur aircraft maintenance facility?
There is no demand. That we have given up. We will run it ourselves. You will see a total turnround of Alliance Air in 2017-18. I expect it to be a profitable airline. So, our Alliance Air will become profitable, Air India Air Transport Services Ltd (ground handling subsidiary) is profitable, Air India Express is profitable. Air India Engineering and Air India will take time.
You were initially very unhappy with Air India’s Star Alliance relationship?
Star Alliance is necessary. Now that our airline is becoming alright, it will get substantial advantage from Star Alliance. We will maintain the Star relationship.
Qatar wants to set up an airline in India. What’s your stand?
We don’t have any position. We are basically running our own airline. It’s for the government to decide, there is no airline’s role there.
But in the past, you have opposed such moves, even written to aviation ministry against giving any bilateral rights to Qatar?
The call has to be taken by the ministry. Air India has no locus standi in the matter. We will not oppose it, we will leave it to the government.
In the end, what more can a consumer look forward from the airline this year?
Good food, good cabin and WiFi should start soon in domestic flights from around June this year.