Air India’s new ‘Dreamliner,’ the Boeing 787, makes its inaugural passenger flight today. In a twin strategy to attract passengers and also train more of its pilots to fly the new aircraft, the national carrier has decided to operate it on the Delhi-Chennai and Delhi-Bangalore routes, in addition to international destinations. Curious passengers are bound to be keen on flying in this aircraft, about which so much has been said and written. Of course, the airline has yet to sort out the ‘pilots issue’ with the two associations. Pilots from the ‘Air India’ stream of the national aviation company are not trained to fly this machine, and this ‘discrimination’ led to a devastating strike earlier this year. Coinciding with the delivery of the troubled airline’s first Dreamliner earlier this month, the Union Cabinet cleared a proposal to set up two subsidiaries to hive off the engineering and ground handling services. With these simultaneous developments, things may finally be looking up for the erstwhile ‘Maharajah.’ Between now and March 2013, 14 of these massive aircraft will be handed over to Air India, enabling it to operate long-haul flights across the world.
The move to set up the subsidiaries was cleared by the Air India Board two years ago, as a plan to create profit centres and hive off thousands of employees. Its aircraft-to-manpower ratio last year was 263, nearly double that of the other airlines operating in the country. While Air India Engineering Services Ltd. will take care of maintenance, repair, and overhaul (MRO) operations in the country, Air India Transport Services Ltd. will take charge of ground handling services at the airports. The MRO wing will accommodate 7000 of Air India’s staff, and the ground handling services can absorb 12,000 employees. That will leave Air India itself with a staff of about 10,000. The creation of these subsidiaries involves equity of Rs. 768 crore, which will be part of the Central government’s rescue package for the national carrier. The expectation is that the MRO business could generate enough profits, considering that all airlines in India, and many in the Asia-Pacific region fly out to Europe, Dubai or Singapore for these works. The MRO business in the Asia-Pacific region alone is worth about $ 1.5 billion every year, and the new company could tap this huge and growing market. Ultimately, Air India will have to become profitable and start paying the Centre back for the generous infusion of capital and funds as and when required. Who knows, if the airline does become profitable, there could well be suitors for a stake in it, now that the Government of India has cleared 49 per cent FDI in the aviation sector.
Keywords: Boeing 787 Dreamliner delivery, Air India expansion, commercial airplanes, FDI in the aviation sector
With increase in FDI in aviation sector,its not just an opportunity for
Air India but for all other airlines to expand their infrastructure and
make it world class. It would help make services more compliant and
generous.
As an old insurance employee witness in 1956 to the successful merger
of 243 insurers-varying in size, structures, operations and in
traditions and culture into LIC in just about four years, the current
uninspiring merger exercise of two airlines comes as a disappointment.
What a difference in ministerial guidance and vision, civil service
and regulators’s helpful attitude, cooperation between management and
employees and their unions in both these exercises. What the latest
issue of The Economist writes on Japan Airlines recovery is noteworthy
for AirIndia too: employees of JAL from the boss to pilot and ground
staff spend a day every quarter studying a little white book –its
turnaround manual, some discussing it in departmental meetings every
day. JAL too was lavishly supported by the government emerging
profitably from the nosedive to bankruptcy. The turn around says The
Economist highlights the pros and cons of government intervention and
its return to profitability is stunning.
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