Born again Air India

In mid-2018, India’s government was without a single bidder for its indebted flag carrier, Air India. The once prestigious Maharaja’s reputation was in tatters. Nearly five years later and back in its founder’s fold, it is hell bent on returning to its former glory as a top ranked global airline. Associate editor and chief correspondent, Tom Ballantyne, reports.

April 1st 2023

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It is the biggest order in aviation history - 250 new jets from Airbus and 220 from Boeing. Read More » But Air India’s New Zealand-born managing director and CEO, Campbell Wilson, insists the fleet commitment does not amount to order overkill. “You might think 470 aircraft is a lot, but when we look at the scale, the potential and opportunity of India, you can put it into context,” he told Orient Aviation last month.

The order includes 70 wide-bodies and, as Wilson points out, India has fewer than 50 wide-bodies in 2023. “There are many countries around the world much smaller in size and in population that have multiples of that,” he said.

'In Sanskrit Vihaan.AI means the dawn of a new era and it really is a dawn of a new era for AI,” Wilson said. “This is an opportunity for India to take back control of its aviation destiny with an airline that is of significant scale, is growing fast and is serving non-stop to all of the key metros around the world'

Campbell Wilson Air India CEO

“So the opportunity is there. When you look at population, at demography, at the diaspora. When you look at geography and at supply chain reconfiguration around the world, there is every reason to expect India will rise up the ranks, not just economic rankings, but aviation rankings. The investments we are making in Air India will power that and catalyze this whole industry.”

Nine decades after the Air India (AI) story began, with J.R.D.Tata piloting the first commercial flight in the country, the airline was officially bought by the Tata Group – India’s government took it over in 1953 – in January last year for US$2.4 billion. The carrier was a mess. It had accumulated around $9.5 billion in losses. Fortunately, as the government was the airline’s owner, the terms of Tata’s purchase and debt were less onerous for the buyer than in the normal space of airline financing.

At times in past decades AI was regarded as an equal among the best airlines in the world, Wilson said. “It also spent time facing some challenges. But with AI back in the Tata fold, the significant ambition of India and Tata’s and the ambition of AI itself means we are very much embarked on a transformation journey to return to the top tier of international aviation. It is not just an ambition with respect to size. It is not just an ambition with respect to quality. It is an ambition to be back to world class,” Campbell said.

In cricketing parlance, Wilson said AI’s transformation program is a Test Match, not a T20, with many milestones along the way. “There have been quite some years of under-investment across the business. We are working at full steam to repair and restore that. It will take time. We are fixing all of these areas - IT processes, service, product, people issues – they all require attention,” he said.

“Probably the most urgent need is IT. Most processes were manual. As a consequence, they required a lot of people. Information is not readily available and the ability to ascertain where things are in a process is not so easy.

“It is why there is so much effort and so much money being put into improving the IT platform to have data and visibility, the capability to track and the ability to measure [performance] against targets to assess if there is improvement.”

The transformation agenda is being pursued under a five-year plan, Vihaan.AI, launched in October last year. “This is a pivotal change in India’s aviation timeline,” Campbell said.

There is little doubt the transformation is being driven hard. Twelve months after Tata’s took control, AI’s operating fleet has expanded by 27% to 100 aircraft. Average daily flights have increased by 30% and weekly international services by 63%. Average daily passengers carried have jumped by 72% and average daily revenue has doubled. AI’s call centre manpower also has been doubled, reducing average wait time by nearly 90%. On time performance has improved from 70% in December 2021 to nearly 90% at press time.

The massive order – with more commitments in the pipeline From Airbus: Firm order for 250 jets. These are 140 A320neo and 70 A321neo single-aisle and 34 A350-1000 and six A350-900 wide-bodies. From Boeing: Firm order for 220 jets. These are 190 B737 MAX single aisle, 20 B787 Dreamliner wide-bodies and 10 B777X, the newest version of its wide-body now going through the certification process. Deliveries will commence late this year, but the bulk of the aircraft ordered will be arriving from 2025. Asked if he has concerns about delivery delays, which both plane makers are experiencing, Air India CEO, Campbell Wilson, said no as the early aircraft to arrive “already exist”. He declined to discuss details of more options Air India has with the two plane makers, saying he wants the focus to be on the firm orders and not be carried away by additional possibilities. However, Orient Aviation understands the airline has options and purchase rights on another 200 Airbus and 170 Boeing planes.

Apart from the aircraft order - first deliveries will begin late this year but the bulk of the new fleet will begin arriving in Delhi from 2025 - the carrier has hired 285 pilots and 1,900 cabin crew since April 2022. In 2023, it wants 4,200 cabin crew and 900 pilots on the payroll.

It is leasing new aircraft with new product to accelerate growth and is hastening the deployment of better products than AI previously offered, explained Wilson. “We have been restoring our fleet. Many of them were grounded for some years because of the absence of resources, parts and the like,” he said.

“More than 20 airplanes have been returned to service. It has allowed us to spread our wings a little further than in the past. Sixteen new destinations have been announced or launched in the last 12 months and frequency has increased on nine others.

“We have committed US$400 million to completely refurbish all our wide-bodies with new seats and inflight entertainment. The process is well underway from a regulatory and design perspective. We should see these aircraft in service from mid next year.”

Leased in aircraft, with new product, are operating to North America from Delhi, Mumbai and Bangalore. “With existing aircraft we are refurbishing, or at least tidying up, the product,” Wilson said.

“The seat product on these aircraft is more than a decade old. Because the planes are out of service, in some cases we have challenges in securing spare parts for them. We have resorted to manufacturing some parts ourselves in partnership with others in the group such as Tata Technologies. It is a stop-gap solution.

“When you take into account aircraft we are leasing in, first deliveries we are receiving from the new aircraft order and the aircraft we are refurbishing, by the end of 2024, certainly on the wide-body fleet, more often than not you will be flying on a brand new product.”

In the midst of this, the management team is integrating sister carriers in the Air India and Tata Group. Air India, a Star Alliance member, is full service Air India and LCC Air India Express. “We have acquired and subsidiarized AirAsia India in which Tata held equity. It is being merged with Air India Express into a LCC.” said Wilson.

“In parallel, we are seeking regulatory approval to merge Vistara, a joint venture between Tata’s and SIA (Singapore Airlines) into Air India. It is awaiting clearance but preparations, should the application be granted, are well in train.”

Given Wilson’s own career history with SIA and the Singapore carrier’s investment in Vistara, how much input is SIA having in AI’s transformation? “At this point. not much. In fact, nothing because they are a shareholder in Vistara and clearly their contribution is to Vistara,” Wilson said.

“Once we go through the regulatory process, we can talk more fully. If that is approved they become a shareholder. Clearly the path will be more open to do it. However, we have modelled a lot of Air India’s transformation on the systems and practices of Vistara. Vistara itself is modeled a lot of the systems and practices of its shareholder SIA. There is a warm relationship. At this point it is friendly but removed.”

“In terms of the fixes, we have spent significant effort, time and money in addressing foundational problems. More than $200 million has been invested in the last year to completely re-platform the airline for specific technologies such as reservation systems, rostering systems and other back-end type functionalities. They will be used by our employees. Microsoft Office, Teams, all of these systems that are quite commonplace for private sector organizations, were not so much so in the erstwhile AI,” Wilson said.

Other areas of IT investment are very much focused on the customer, he said. “New website. New App notification systems and much improved customer experience interfaces,” he said. Some of it is still a work in progress. “For example, the App and the website are only at version 0.5. We are working on what will replace it to transform the proposition,” Wilson said. AI also is establishing a dedicated Information Technology centre in Kochi as part of its IT upgrade.

His single largest challenge is manpower, Wilson told Orient Aviation. “There has not been a national champion airline in India to build an airline pipeline. It would normally be the national carrier, but Air India in its previous guise was a shrinking airline,” he said. We really have to catalyze this industry, not just for the airline. It is why we are investing in a very significant training academy to develop pilots locally, to grow cabin crew and engineers and other professionals from within India.” he said.

“East Asia, North America, Europe, Southwest Pacific, Africa are all regions within our reach and all of them are in our sights.”

“In fact, there is probably no better place in the world to pursue a career than Air India right now given the scale and ambition of our growth. This is probably the biggest challenge, building the talent pipeline. The training academy will go a long way to resolving that.”

For years a significant amount of India’s air traffic has been syphoned off by foreign carriers, particularly the major Gulf airlines. Building AI’s international network is a priority. “The opportunity for Indian aviation and Air India is significant,” Wilson told Orient Aviation.

“We have purchased a very large number of aircraft and that really reflects the fact we see opportunities in all parts of the world. India’s geography is such that we can serve virtually all the world.”

AI also wants to fly internationally from multiple India hubs. “Delhi clearly is the political capital and the northern most major metro so that accords some geographical advantages in where you want to fly. It is a very sizeable market,’’ Wilson said.

“Mumbai is the commercial capital and from an Air India perspective is underserved. And we think southern India, from a geographic as well as a market opportunity perspective deserves and needs a significant hub.

“These are going to be the three areas of principal focus. Everyone will want air service from their city. I fully understand it. We will be augmenting those hubs with other services. But there is a network effect that comes from aggregating in a few key points. We will be doing a combination of both.

“If you look at the size of India’s population, favourable demography, economic growth and then you look at the size of the diaspora, 37 million people who are often the wealthiest diaspora of any country in which they are resident, people want to fly non-stop point-to-point.

“It is inconvenient to lay over for four, five, six, seven or eight hours at an intermediate point. So, Air India, with our growth plans and with our intention to operate not just from one hub in India, but multiple hubs can serve more people with a product they have long been wanting but have not been receiving.

“This is clearly a key part of AI’s future: to do it reliably, to do it at good value, to do it with good service and modern aircraft. Why would you choose to inconvenience yourself with a long layover?”

Wilson points out that besides the airline the other principle stakeholder is the airport. “The airport needs to have the capacity. It needs to have the experience. To be a hub it needs to have seamless transit functionality without bottlenecks. It needs to have speed of throughput, whether that is physical layout, staffing levels on service counters and others and the deployment of technology to facilitate the passenger experience,” he said.

“A lot of things have to come on line if India is going to be a world hub, but there is absolutely the capability to do it.”

While international operations are a priority, AI will not be ignoring local India. “The domestic market is certainly important in its own right and also in providing feed and de-feed to international operations,” Wilson said.

“We have publicly stated our intention to achieve a 30% market share in the first phase of our transformation process. We have increased it from about 8% to what will be 23% or 24% should the acquisition of Vistara be approved. Beyond that, we will see what the opportunity is in respect to the economics as well as the strategic drivers.”

With respect to the path to profitability, Campbell is very confident there is one. “There is a huge amount of low hanging fruit for Air India in cost efficiency, revenue volume and revenue quality. There is a lot of work to be done to realize this: The investment in technology, in aircraft, in pricing and revenue management systems. Having the data to run the business with full knowledge of what’s going on,” he said.

“We are not putting a timeline to it. We certainly have an internal timeline. We are very happy with the progress being made. We are very confident this will not just be a successful business in terms of scale, it will be one of quality and financial returns.”

And what about AI’s iconic mascot, the Maharaja, unveiled in 1946 and a key icon in promoting Air India’s brand and services around the world. “As befits a 90-year-old airline there is a lot of heritage and history in Air India,” Wilson said.

“The Maharaja is certainly one very powerful component of that. It is very well known, very beloved in India and amongst the Indian diaspora. It is not necessarily fully understood beyond that. We are definitely going to keep it. How we keep it so we respect the past but also have a brand that looks to the future is a work in progress.”

Relishing “the Everest” of turnarounds Born in Christchurch, New Zealand in 1971, Campbell Wilson began his aviation career in 1996 as a management trainee with Singapore Airlines (SIA) in Auckland after completing a Master of Commerce (Honours) in Business Administration at the University of Canterbury in Christchurch. He was appointed vice-president of SIA’s operations in Canada in 2006, becoming general manager of Hong Kong two years later and then head of Japan operations in 2010. He was a founding member of SIA’s LCC Scoot, in 2011, and then moved back to SIA in 2016 as its acting senior vice president of sales and marketing. During that year he completed the Global Strategic Management course at the Harvard Business School. He returned to Scoot as its chief executive in April 2020, leaving that role in June 2022 to run Air India. “I think this is probably the most exciting role in aviation today,” Campbell said. “We should not underestimate the challenge. It has been described as the Everest of corporate turnarounds and when you mirror that with two concurrent airline integrations, I am sure you will appreciate the magnitude of what we are trying to do. But it is for a good cause. It is for a national mission and we are very excited by it.”