Air India-Vistara merger: CEO Campbell Wilson's blueprint

Campbell Wilson, the Chief Executive Officer (CEO) of the TATA-owned Air India airline.
Campbell Wilson, the Chief Executive Officer (CEO) of the TATA-owned Air India airline.


  • Campbell Wilson, CEO of Air India, outlines a comprehensive and transformative vision with the Vistara merger, emphasizing enhanced services and a unified flying experience for passengers

New Delhi: The Tata group acquired Air India and its low-fare unit Air India Express in January 2022 under a government-led strategic divestment programme. Later that year, the Tata group announced a merger between Air India and Vistara, and between Air India Express and AirAsia India. The two mergers are currently underway.

Campbell Wilson, chief executive officer of Air India, in an exclusive interview with Mint, talks about the future of the airline, and the complexities that come with the integration of four airlines under the Air India umbrella.

Q. What kind of integration do you foresee between Air India and Air India Express after their respective mergers?

The family connection will be clear. The ability to book the two airlines in a single transaction, having a loyalty programme recognition, and a seamless journey across the two will be there. But, there will be two different airlines. One is a full service airline, one is a low-cost. There are means to equalize the experience to an extent with respect to baggage or meal.

But, at the same time, we want to make clear the reasons for having a low-cost airline, which is to provide the lowest possible price point, opening up travel most people possible. And at the same time, those who want a full service experience get a genuine full service experience.

Q. At what stage is the integration between Air India and Vistara?

In the case of the full service airlines, we've recently received approval from the Competition Commission of India, and there are couple of approvals that we require from other regulators overseas. We're into the second phase of the NCLT process and we hope to complete that by the end of the financial year. And thereafter it's a matter of when we feel the time is right to effect elements of the integration and ultimately merge the airlines into one.

There's a little bit of work that Air India has to do to get up to the level of Vistara. Some of that will come as new aircraft enter the fleet and then when we feel the time is right then we can bring them together.

Q. How long will Vistara brand stay?

We don't have a timeline to that. I think we're in no hurry to make a change. We'll continue working on elevating Air India to the point where it is as good or better than Vistara, and now that we can talk more freely with Vistara, we can use them as a catalyst and an accelerant for that process. And then, we can take a call based on what the public thinks about the respective airlines and how we can bring them together.

Q. How do you plan to prevent competition between in-house brands Air India and Vistara until the merger gets all approvals?

I think because we have competition clearance and once we receive the same from a few foreign jurisdictions, we can plan the network together. We can avoid the internal competition. For example, rather than fly completely in parallel to Frankfurt or London, we can space the service out so that the customer has better spread of schedules and therefore more choice. So it will be operated as two separate businesses but in a complementary rather than competitive sense.

Q. Can you shed some light on staff integration between Air India and Vistara?

We have gone through a very extensive process during the course of this year to impartially assess the capabilities and fit of people from all four of the airline groups, all four of the airlines within the group and ascertain what is the most appropriate role for them moving forward. That process has been complete to the CXO-2 level and is continuing further down the line. We couldn't do and in fact can't do some of the full service integration until we get competition clearance (in foreign jurisdictions as well). But, ultimately there is a role for everyone and there is a place for everyone.

Q. In the domestic space, will you also move to a three-class configuration like Vistara has?

I think business and economy classes are probably the ultimate configuration. But again, let's not get ahead of ourselves. We'll refine and reveal the product in good time.

Q. Is the 25.1% stake of Singapore Airlines frozen when it comes to SIA's shareholding in the merged Air India?

I think the agreement that has been struck between Tata Sons and Singapore Airlines with respect to the merger is quite clear on the stakeholding, quite clear on the valuation and quite clear on the contribution that SIA would need to make in terms of the equity value of Vistara as well as any top-up. So, unless there's a change to that agreement, which there hasn't been, that's what it is.

Q. Your competitor has over 1,300 aircraft on order. You have a firm order of 470 aircraft but a significant pie goes into replacement. When will you start planning for the next order?

I think we've been quite clear that this order comprises a set of firm aircraft. There are a number of options and rights that we also have that we can choose to exercise. But that won't be the last order that Air India ever makes. And so we'll continue to assess the market, assess our needs and if necessary make the additional investments.

Q. You also have announced plans to lease 36 aircraft.

We have already received four of the 25 leased narrow-body aircraft. The rest are expected by May 2024. We expect to receive the six leased Boeing 777 and six Airbus A350s from the firm 470-aircraft order by March 2024.

Q. By when do you plan to complete the retrofit of B787 and B777 fleet?

We hope to complete both fleets by the end of 2025.

Q. So, would it be safe to say that post 2025 Air India will have a new product or a better product?

Yes, absolutely.

Q. How much of the $400 million has been spent so far on aircraft refurbishment?

The $400 million was a provision. It gets progressively spent on engineering work, on regulatory work, on production of seats, on hangar work for the installation of seats. So, it's just a progressive investment. At this particular junction, I can't tell you how much of that $400 million has already gone out the door, probably not a great deal, but it will all go. And that should suffice.

Q. What were the things that immediately caught your attention when you joined Air India?

The one that immediately springs to mind, I think, was the fragmentation of the organization, with some functions in the airline house, some at Safdarjung airport, some at Delhi airport, some in Mumbai, some in Hyderabad. So, it was a very fragmented organization which meant that communication was not so good, alignment was not as tight as it could be, oversight and efficiency was not as good as you would hope. So that's one.

Second is that there was a lack of data in the organization. The performance management in the absence of data was more difficult because there was no threshold and then there was no consequence for under performance or indeed reward for over performance. Most processes were manually based, paper-based and therefore, required a lot of people, a lot of reconciliation which obviously takes time. Business was being conducted by Gmail accounts that people had set up. Revenue management was largely a manual process. Interacting and handling employees was largely a manual process.

Q. So, you have started to address these.

We're relocating everyone to the new office campus, including the three other airlines in the group. We have completely refreshed the technical landscape with respect to IT. We have put in place ways to capture data and process and present and analyze data as well as a performance management system that gives clear expectations, thresholds, consequences, rewards. So all those three things have been, I wouldn't say completely addressed because so much of it is now, we've got the capability now, it's about the culture and the execution but certainly the foundation has been laid.

Q. While Air India has significantly improved on on-time performance, there are regular complaints from passengers on the interiors of your aircraft.

On-time performance hasn't improved to the point that we're consistent or comfortable. And, one of the reasons why it hasn't become as good as we would want is because the aircraft are old and they haven't been kept up to date with the latest components and systems because there was not the money to do so in the past. We're trying our best to bring those aircraft up to modern standards together with Boeing and making some progress but it is somewhat at the mercy of the supply chain around the world which we're all well aware of those challenges.

Q. What about the interiors of the aircraft?

With respect to the onboard product, again it's not something that can be fixed overnight. We've gone through all of the interiors of existing aircraft and changed seats, cushions, curtains, carpets. In some cases we're on to our second refresh since privatisation to keep things spin and span. We've replaced a huge number of components, both of the seats and of the in-flight entertainment systems. And we've restored, for example, in-flight entertainment system availability in business class and first class to more than 99%. But, the sad fact is that the seats and the in-flight entertainment were about as old as the iPhone. And, so they're out of production, very difficult to maintain in the absence of spare parts. So, we're doing the best we can in keeping things functional until such time that we can do the retrofit of the aircraft which starts next year around July, August of next year.

Q. By when will the entire wide-body fleet have modern generation interiors?

So, the seats are in the process of being produced, the in-flight entertainment systems are in the process of being produced. It's simply just a matter of getting enough produced and then into the aircraft. By the end of this financial year, about a third of our long-haul fleet will be modern generation interiors. I think we'll have about 60 widebody aircraft at that point and about 20 will be modern generation.

Q. How do you plan to make a full-service product profitable?

I think your reference to profitability is more pertinent to the domestic market because the full-service product is successful internationally. I think we're very confident that we're in the right place for full service being long-haul, medium-haul international. Domestically, it's quite clear that the market is most appropriate for low cost, which is why we have Air India Express that will form the bulk of our domestic as well as some short-haul international.

Q. What kind of presence will Air India have in domestic market?

There will be a full-service presence on metro-metro and on routes that we believe have significant international connectivity. But, the market is clearly most conducive to low-cost domestically.

Q. Where does Air India Express stand in the Air India operations?

So, Air India Express will be the majority of our domestic operation. The positioning of Air India Express is very definitely going to be low cost. We won't be putting business class seats into the aircraft.

Q. Out of the 400 narrow-body aircraft that you have on order, how many could go to Air India Express? Would it be safe to say that a large number of them will go to Air India Express?


Q. At what stage is the integration between AirAsia India and Air India Express?

They have been merging their customer facing infrastructure. They've been operating under a single CEO since January and then the single management team for a couple of months. They are in the process of getting NCLT clearance. We don't have a clear timeline for this but we hope it is going to be by the end of the financial year. And, then the final step is to merge the two air operator certificates which again will be sometime in early to mid 2024.

Q. Work culture is something that you often bring up in your Friday mail to Air India employees, where is it currently at?

We're nearly complete with the rollout of performance management frameworks and the rewards and benefits, as well as the establishment of job descriptions with metrics and goals and accountabilities. It's early days with respect to differentiating increments and bonuses and promotions based on a performance management mindset. And until we start, until we go through a few cycles of this and people are seeing the consequence of good performance and not such good performance and empirically measurable success, until we go through this process a few cycles, it doesn't really sink in because it's theory, not practice.

And so, I think maybe we're 30-40% of the way. Maybe I'm being a little bit harsh because this was an organization that hadn't recruited for many, many years, more than a decade, at least with respect to non-flying staff. And so we've recruited a lot of people into the business and they come from organizations that did have a performance management mindset. And so, maybe the uptake will be a little bit faster amongst that cohort. Amongst the erstwhile Air Indians who had never been exposed to this before, maybe, it will take a couple of cycles.

Q. Since you mentioned talent, there is a particular airline that has moved court against pilots leaving without serving their notice period. How severe is the talent shortage in India? And how do you plan to address that?

There are three parts to this. The first is I think we're very blessed that we carry the Air India name. We have Tata Sons backing. We have a very significant order book of very interesting aircraft. We can offer people extremely fast path to command or to wide-body aircraft. The second element is that we have to invest a lot in building the talent pipeline, which is why we're setting up another training academy, Not just pilots, but cabin crew, ground staff, engineers, all this is part of the talent development for our own needs, but ultimately for the country. In the short term, there are some constraints. But, a lot of it falls upon us to solve our own problem.

Q. The government says we need homegrown carriers to develop a hub in India. What kind of trends are visible to you in international traffic?

So, we are seeing a shift in that regard, you know, the passenger pile moving towards Indian carriers a bit, that has started to move. There wasn't a homegrown Indian airline that was offering the service that people wanted. And, so in that respect, actually the opportunity is as much in our hands as anyone else's, as it is to finally deliver that proposition. And, so this aircraft order and everything else we're doing to uplift the product and experience is with a view to providing that.

Secondly, the diaspora remains very large, growing, increasingly wealthy. You've got the growth of the Indian economy and market growth, increasing the profile and the mix of passengers from more of a VFR (visiting friends and relatives) to a healthy mix of business and VFR. Air India, just by virtue of the things I've described, is never going to be completely reliant on hub transit traffic, simply by virtue of the amount of point-to-point traffic that exists. But, as we expand, as the airport infrastructure improves to facilitate this, in some cases as policy changes to make it a little bit easier, it will support the development of India and Air India as a much stronger hub carrier.

Q. You currently have your hub in Delhi. Are you looking at hubs beyond Delhi?

Well, the short answer is yes. Delhi is the principal hub at the moment. Mumbai is badly underserved, at least from an Air India perspective. We think that Southern India warrants a lot more attention.

Q. Will you look at turboprop operations for regional markets?

We've already got a lot on our hands at the moment with the transformation of Air India, with the expansion, with the integration. But, never say never.

Q. There is a criticism that there is a duopoly that exists in Indian aviation market between IndiGo and Air India. Is the concern genuine?

Well, I think it needs to be kept in context of the last 10-15 years, we've seen a procession of airlines enter and then collapse in the Indian market. And that's burnt a lot of travellers, a lot of travel agents, a lot of companies, and a lot of employees. And, it's clearly not a sign of a healthy ecosystem. And if you don't have a healthy ecosystem you're not going to have people invest. And, if people are not investing you're not improving and growing and building a foundation.

And, the consolidation of fragmented undercapitalised semi-private, semi-government environment is a step that many countries have undertaken in the past. And, it generally allows for the creation of a more stable, more profitable environment that then allows the maturation and ultimately profitable expansion of the industry.

Q. So will this model stay in the interim?

Until there is a healthy, profitable, domestic market, the only people that are going to enter are people who either have deep pockets and long vision of the likes of ourselves, or who see an opportunity for a quick buck and under-capitalised and are going to be more focused on cash flow to keep surviving rather than investment to help the ecosystem thrive.

Q. You have worked extensively in Asian civil aviation markets including a long stint at Scoot, Singapore Airlines and now at Air India. How has been the transition for you?

I've worked in western markets as well as Asian markets. So, I think this is my eighth country. So adjusting to different ways of working in different cultures, different styles, that's quite normal. I did startup for Scoot and then went back to Singapore Airlines to effect the transformation. And here, there are elements of both. There's a lot of Air India that is actually more start-up than anything else. And there's also a lot of it that is transformation of a legacy environment.

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