The Tata group completes one year of taking over Air India on January 27, 2023. What would have been a splendid January leading up to the occasion has been marred by one or the other controversy and notices from the regulator. This is an indication of how harsh aviation as a business is and how the Tatas will face more challenges in aviation than in any of its other customer-facing businesses.
After a false start with the appointment of the CEO, the airline has made rapid progress on multiple fronts — starting with getting more aircraft back in the air, getting a nod from CCI (Competition Commission of India) for the merger of AirAsia India with itself, and following it up with a nod from the Singapore Airlines group to merge Vistara with Air India and form one mega entity.
Interestingly, for half of last year leading up to the Farnborough air show, the airline was in the news for a mega order of aeroplanes with both Airbus and Boeing. The latest rumour indicates that the order could be placed today.
The airline went in for fleet augmentation after having signed up for five B777-200LR which were earlier operated by Delta, and later, six B777-300ER, which will join in the next few months. These B777-300ERs are in a four-class configuration, while the Delta planes are in three-class configuration, with a premium economy, not first class. This will see Air India operate premium economy for the first time. The airline has already done a soft launch on its Mumbai-San Francisco route.
Focus on OTP and in-flight service
The low-hanging fruit are being tackled first and rightly so. From improving its on-time-performance (OTP) by leaps and bounds, to standardising meals and service levels based on flight duration, the low hanging fruit have been tackled well. This helps the airline offer a seamless experience to its passengers with clean aircraft, on-time arrival, and keeping them fully aware of what to expect during the flight.
Network changes towards one big airline
When the Tatas took over Air India, there was little time to make changes to the summer schedule, which kicked in from the last week of March This was also the time when international services were allowed to and from India from 2022. The Tata’s made their first move in August, making tweaks and timing changes, network-wide. This was followed up by periodic increase in capacity on metro routes to make the offering stronger.
Come February 2023, AirAsia India, which is now a 100 percent Tata airline, will take over some routes from the parent and vacate others for it. This is the first sign of network integration across brands.
As for Air India, the expansion is shaping up well even with limited resources. Domestic flights are up 14 percent, while international flights are up 62 percent.
Aircraft availability and quality
The most pressing challenge that remains for the airline is the quality of aircraft and seats. Global supply chains have collapsed leading to snags in the supply of new seats. Help from other group companies as well as internal engineering know-how has still not helped overcome challenges pertaining to seats and in-flight entertainment (IFE) systems.
The total operating aircraft reached 100 with 27 percent more aircraft becoming operational over the span of the last one year. This ensured that the average daily flights increased by a whooping 30 percent.
The addition of former Delta aircraft has given the airline a good product but it is not standardised. It will take time for all of this to come together, but if it has to think of taking on global carriers, the bare minimum that would be needed is a standardised product, both hard (planes) and soft (services).
As one of the recent groundings in San Francisco showed, availability of aircraft or better handling of IRROPS (irregular operations) too is the need of the hour.
The Russia factor
Within a month of the Tata group taking over Air India, Russia attacked Ukraine. The war led to the closure of Russian airspace for western carriers as a tit-for-tat measure. Russian airspace remains open for Indian carriers and that means the shortest non-stop route to north America is open to Air India but not to United Airlines, American Airlines, or Air Canada, the other carriers who fly non-stop on the route. This has helped the airline immensely, with other carriers either curtailing their network or having to take a tech stop at times.
No one knows how long the conflict will remain active and if the resolution would bring along the use of Russian airspace by other carriers in future. If that happens at a time when Air India adds more aircraft, it could find itself in the middle of a sudden competition.
Air India made the most of it as the weekly international flights increased by 63 percent. This was facilitated by 16 new international routes being launched (or announced) and frequency increase on 9 existing routes.
Challenges remain
Indian Aviation is invariably joined at the hip with another word — challenges. The airline has said that its revenue has doubled, understandably due to increased fares and additional deployment. For Air India, it is no different. It is attempting to follow a house-of-brands strategy. Will it operate multiple brands in the same market or have distinct markets for different brands? Two airlines have tried it in the past — Kingfisher Airlines and Jet Airways — and both ended up utterly confusing the market. What will Air India do differently to not repeat the same mistakes?
There always are two lines of thought: would you want to operate your LCC (low-cost carrier) in a market because it is a large LCC market, or does being the only FSC (full-service carrier) in an LCC market provide an opportunity to grab market share? Should Tatas integrate everything into one website and booking engine, or operate the two brands (Air India and Vistara) separately? The value will be in integrating just about everything to reduce costs.
The merger, fleet renewal, and subsequent expansion will decide the fate of the airline. Often this decade gets described as “Decade of India.” If all goes well, it could be a decade of Air India as well.
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