Mumbai: Newly appointed civil aviation minister Vayalar Ravi plans to increase Air India’s West Asian flights and add more long routes to turn around the state-run carrier, which is facing the prospect of strikes and the exits of some senior executives.
Flights to West Asia account for one-fourth of total revenue and covers all cash costs for the airline, except for a few routes.
“My first priority is to bring flights to the Gulf back to profitability. We will add more flights to the Gulf. It makes more commercial sense to shift the operations base of Air India Express to Kochi as more Keralites are flying to Gulf,” Ravi said.
Air India Express, the carrier’s low-fare subsidiary, is stepping up hiring. It has been forced to cancel flights to West Asia because of crew shortages. The airline is currently in the midst of a Rs10,000 crore government-backed rescue plan.
“I am not frightened by any recent developments in Air India and I don’t think these things will prevent the implementation of the turnaround plan for the airline. I am on the job and I am talking to everybody. I am sure that I can turn around the airline as I have no vested interests,” Ravi said on Saturday in an interview.
Earlier this month, the Air India board sacked Pawan Arora, chief operating officer of Air India Express. Air India’s chief training officer Stefan Sukumar submitted his resignation last week.
One of Air India’s independent directors, Anand Mahindra, vice-chairman and managing director of Mahindra and Mahindra Ltd, last week stepped down from the board, citing conflict of interest.
He pointed out that his aircraft manufacturing company may supply parts to companies from which Air India buys planes. Two other independent directors could also be on their way out, two Air India executives said.
The government had appointed five independent directors, including Mahindra, as part of its plan to turn around the airline.
“We will take a decision whether to replace him (Mahindra) with somebody or not later. I had talked to other independent directors and as far as I know they are not quitting the airline board,” Ravi said.
Ravi doesn’t expect the unions to strike work.
“I had assured the unions that Air India will hire a third party to fix the wage negotiations. My officers are in talks with retired judges to head the wage negotiation panel. I will be announcing their names shortly,” he said.
On 23 February, the Indian Commercial Pilots Association (ICPA), representing a section of Air India’s pilots, served a 14-day notice for a strike beginning 9 March.
Deloitte Consulting India Pvt. Ltd and SBI Capital Markets Ltd, the investment banking arm of State Bank of India, have already finalized a debt-restructuring-cum-turnaround plan and are set to present before the board in March.
Ravi will try to get funds for Air India “but you cannot have the entire budgetary allocation”, he said, hinting the infusion may not be large. The airline has asked for Rs10,000 crore from the government, which has pumped Rs2,000 crore into the airline in the last two fiscal years.
“Air India has a fundamental problem and that cannot be solved by releasing government funds alone,” said an investment banker, who was involved in restructuring private airlines. He did not want to be named, citing the sensitivity of the issue. “One will have to take unpopular decisions to save the biggest airline asset of the country. To save Air India, one should opt for an enforced retirement scheme rather than voluntary retirement.”
A senior Air India executive, requesting anonymity, said, “Air India is flying back to normalcy and now it has a final turnaround plan after a struggle of 14 months. The minister has assured Air India of another Rs3,000 crore by early next financial year.”
He said the government is also expected to clear its dues of Rs800 crore for using Air India to carry VIPs. Besides this, India’s private carriers will pay Rs170 crore towards ground-handling services by Air India at various airports in the country.
Air India switched over to a single code, AI, on Sunday as it introduced a new Passenger Service System (PSS). The national flag carrier was using two codes—AI for international flights and IC for domestic operations.
The switchover is part of the long-delayed integration of services run by Air India and Indian Airlines and one of the key pre-requisites to join the Star Alliance grouping of international airlines.