Air India has moved from its “taxi” phase and is now in “take-off” mode, the second phase of its comprehensive five-year transformation programme, said Chief Executive Officer and Managing Director Campbell Wilson.
In an interview with The Hindu and The Hindu businessline, Mr. Wilson spoke about the dramatic fleet transformation that will happen with its 470-aircraft order. He also focussed on the challenge of its four-airline merger (Vistara with Air India and Air Asia India with Air India Express), sketched an outline of the product improvements and the much anticipated rebranding exercise, highlighted the technological improvements and its crew training plans, touched upon the potential of its Star Alliance membership, and also what it has planned in its quest to be the airline of choice in India and the world. “We are investing very significantly in training capabilities, to serve our needs but it is also to really build an ecosystem of aviation professionals for India.” This also includes an Air India cadet pilot training programme, he said, adding that it was still too early to comment on what the model for this would be. Edited excerpts:
I wanted to take the chance whilst I was in Chennai to visit you and to talk a little bit about the transformation Air India is undergoing, but also to hear from you and to talk about what it means for southern India in particular.
But first some context.
As you know, Air India was privatised in January 2022. So, a little more than a year ago. I joined in June 2022, so [it is], nearly a year. I spent the first few months getting the lay of the land, getting to know the people, travelling around the country meeting Air Indians, people from Air Asia, people from Air India Express, to understand what it was that they wanted to see from the new Air India... to understand their concerns and challenges, and to really help define a transformation programme. I also obviously met with the Tata Sons Group and also Mr. Ratan Tata to get a sense of what they wanted. In October last year, we rolled out the Vihaan.AI transformation programme, which is a five-year programme, with the objective of restoring Air India to the upper echelons of global aviation. There are three phases to that. The first was essentially the first six months, which finished in March, which we call the taxi phase. And that was really trying to address, at war scale, the accumulated issues that had built up over a few challenging years, whether it be punctuality, seat functionality, refunds that were not paid, offices that were not up to standard technology.... And so, that phase finished at the end of March. But really, it is not something that is completely finished, because some of these things do take longer than six months to raise.
We are now in the second phase of the transformation, which is “takeoff”. That is where we really start putting in place the systems, the process, the infrastructure, the people, the people skills, to start climbing higher.
And ultimately, it will be a five-year journey to where we want to be. In the first phase, I think we made some good progress. Obviously, the most publicised event in that phase was the order for 470 aircraft, which is the biggest aircraft order in history for any airline in any country. There was a lot of work done with respect to modernising the infrastructure, of reservation systems, to repairing seats, to ordering seats for aircraft that will soon be retrofitted, for recruiting staff for training. And I think so far the journey has been a positive one, bringing together an organisation behind the transformation programme.
So there is a tailwind to phase two....
Yes... I think the progress that we have made in phase one has set a good foundation for the subsequent transformation. And as I was saying that [has been] bringing an organisation behind a common agenda, having the erstwhile Air Indians so enthusiastically support for the transformation programme, to have the new joiners respect the legacy of the past and their contribution that had been made by people perform and having the legacy staff understand the contribution and value that the newcomers bring... I think [that] has been an important objective, but also something that has been achieved with some success.
So, moving forward, a lot is now about taking advantage of what has been put in place already. We have an aircraft order, which brings new aircraft, obviously new products, new seats, new inflight entertainment. It will be complemented in due course by a new brand, new livery, new interiors, new uniforms. It is supported by new systems, whether it be reservation systems, revenue management systems, employee self-service systems, rostering improvement systems for improving their efficiency, but also the work-life balance of our group. Bringing people into a new campus in Delhi so that we have got people consolidated in a central place, better communication, [who are] better able to be supported by technology... a lot of these things now [in] this coming year are now going to hit the road. Hopefully, in the eyes of the public, this will transform their perception and the reality of Air India.
Talking about the new branding, can we expect the ‘Maharajah’ symbol to be visible, because that seems to be the original face of Air India?
While going around the company and the country, it was very clear that one of the things that people wanted to retain was the ‘Maharajah’.
And the ‘Centaur’?
The ‘Centaur’ is not owned by Air India any more. As part of the divestment process, it was retained by the government and is now a part of Alliance Air, and other assets. So it was not sold to Air India. But the ‘Maharajah’ was. And certainly the ‘Maharajah’ will have a future in the Air India brand. It might evolve a little bit. Society evolves a little bit. But certainly, it is an important icon and an important link to the past. But it is important in my view... a symbol of service and hospitality and [has] certain positive attributes that we want Air India to be associated with.
Will the livery also change?
So, do we have the jharokha palace windows?
I cannot give you that sort of detail.
There is a hint. In the booking engine when you make a booking, you do a palace window prompt....
The booking engine is more legacy of the past... it is not an indicator of the future. But you might be right, you might be wrong. I am not going to say.
In the 470-aircraft deal, when can we expect the first aircraft [to feature] a possible ‘Maharajah’ [branding]?
Let us be clear. The ‘Maharajah’ might not be on the aircraft. Well, the first aircraft of the 470 [aircraft] that have been purchased arrives in July-August, [which is] one of the Boeing 737s [MAX]. It might be a little later.. maybe August... it is around that period. The first widebody aircraft is the Airbus A350 which comes in October-November.
Will that sport the new livery?
Maybe. But those aircraft [the Airbus A350] do not come with the Air India-designed interior. So the first of those 470 aircraft comes this year. The bulk of them start coming from 2025. But in addition to those 470 aircraft that we have purchased, we have also leased a lot of aircraft. So [there are the] Boeing 777s, some of which are from Delta and some from Etihad. And then there are 25 A320s which are coming in over the course of this year.
And the A321Ns from [Russia’s] Ural?
Correct. So we wanted to be able to use these aircraft to expand quickly, to improve the onboard product and buy some time until we could start taking deliveries of the 470 aircraft that we have purchased.
How much of the existing aircraft in the fleet will become redundant?
The Airbus A319s will be retired over the course of the next 12 months or so... as the new aircraft come in. The other aircraft will just retire as their leases expire, and as the new aircraft come in. So we do not have any plans to make any further significant fleet changes. It is going to be a matter of continually refreshing the fleet.
The [four] Boeing 747s obviously will not fly again, We are in the process of disposing them of.
What happens to the jumbos?
We have put an RFP [Request for Proposal] up for interested parties to bid. And so those will be disposed of, in whatever way depending on who the successful bidder is.
Is there a chance of retaining one of the 747s as a part of the airline’s heritage?
Let us wait and see, because we need to find out how much they are worth, whether there is any market for them, and then whether there is a case to keep one for heritage purposes.
The group airlines are now moving to a stage closer to merger. Could you elaborate on the challenges you face in the merger of Air Asia India with Air India Express, and also full service carrier Vistara with Air India? When will there be a complete integration plan put in place? Are there any regulatory issues?
So, in the case of the two low-cost carriers, the competition approval was given last year. Since then, the two parties have been working very closely. They have merged the reservation systems together, they have consolidated an organisational structure under a single managing director... they have also commonalised a lot of the customer-facing touch points. And that process will be complete throughout this year, hopefully, by the end of this year, for the two companies to be legally merged, and the two air operator certificates are merged into one. So the low cost carriers should complete their merger by the end of this year.
For the two full-service carriers, it is a bit earlier in the process. The competition approval is being submitted and is being reviewed by the authorities. Assuming that it is approved, then it is a case of bringing the organisations together to plan for what happens next. And that is probably a year before you would go through the legal and then air operator certificate mergers. So, the full service carriers will probably be by July-September quarter of next year.
In parallel, there are four airlines, which at the beginning... each operated on a different reservation system. The two full service carriers have moved on to the same vendor. And eventually, when they merge, they can merge into the same instance. And the two low cost carriers moved into the same vendor, and now into the same instance. There are also four sets of operating manuals and operating procedures, more than 160 manuals, 140 IT systems. So those are being identified and a plan made to harmonise them over the course of the next year. Bringing four operating manuals into one is a very complex process. So we are working with the DGCA [Directorate General of Civil Aviation] and others, to go through it in a very structured manner so that it is safe and clear. That is probably the biggest task to do because that really governs how the airline/airlines operate. And all of them are going to have to change a little bit to get to a common landing.
If you ask me about a challenge, that is probably the biggest challenge.
Once you are done with this, what sort of Air India will we have at that time, in say one and a half years from now, as a consolidated Air India?
The consolidated Air India will be one full service airline called Air India, and one low cost airline called Air India Express which will fly narrowbody aircraft domestically and short haul international. Air India full service will fly both narrow and widebody aircraft domestically, short haul international and long haul International. So that is the frame. Presently, if you include Vistara in the mix, there are about 220-225 aircraft in the group. And by the end of next calendar year, it will be about 300. And then about a [little more] the year after that. So [that will be] quite a substantial growth. The growth will be in both narrow body and widebody, domestic and international.
As part of the Vihaan objectives, we had said that at 30% market share for domestic and about 30% market share for international, [for] domestic, with the consolidation of the four airlines... we would have about 25%. So, there is another five percentage points to grow on top at least. Internationally, it would be about a doubling of the share of Indian carriers. Thirty per cent is the objective for international as well.
At that time, at a global level, where would Air India be compared to other airlines?
There are a few mega carriers, the American carriers [with a large fleet], Chinese carriers about the same. But then you look at the likes of the Singapore Airlines group, the Emirates group, Qatar, they are around 200 to 250 thereabouts, maybe a little bit less depending on how you cut full service low cost. So Air India is above that group but below the mega carriers in those big markets. But I think if you look at the structure of and the opportunity in the Indian market, there is upside growth for Air India, beyond that level I am describing, whereas some of the other players in smaller countries, smaller geographies, are probably near the limits of their size.
Could you talk about the technological transformation of the airline.
I mentioned the realignment and adoption of new reservation systems. That was particularly true for Air India and Air India Express because Vistara and Air Asia India were already on relatively modern platforms. We have moved from on premises hardware servers into cloud applications. We were the last company in the world on SAP’s mainframe, which we have migrated to the cloud. We have adopted workplace Work Chat as a company-wide communication platform. We have adopted success factors so that staff can self serve their leave and their learning, their travel and other things.
Microsoft Office has been rolled out across the business, which sounds like a small thing, but it is probably a good indication of what Air India did not have before... basic things as that. Pilots and senior cabin crew have been provided with iPads so that they do not have to carry around trolleys of manuals. Or if they are submitting reports about catering or incidents or whatever else, they can do it electronically so that it can be automatically routed, tracked, the follow up reported and analysed for trends and resolutions. It is a complete replacement of whatever technology existed in the business before with state-of-the-art modern technology. And furthermore interfacing it together so that systems talk to each other, data flows seamlessly... we do not require manual work and transposition. It becomes a much more modern, automated airline. And as a consequence of the fact that we are not so much adding on to existing systems as opposed to completely replacing systems, Air India should ultimately come out of this world as one of the most technologically modern airlines, because it is able to adopt today’s best technology rather than to layering on yesterday’s technology.
The airline world as of today is dominated by the Gulf carriers. How do you see a change when you establish yourself? Do you see a complete transformation likely to happen in terms of people choosing Air India over the Gulf carriers? They too will be expanding. Do you see yourself as that kind of a carrier?
I think part of the reason people choose to fly via other places is because there isn’t and has not been enough non-stop options. And if there has been a non-stop option, maybe the quality was not the same or the price was not good enough, or the service was not what people expected. Or maybe there just was not the service to the destination people wanted to go. And much of that is now in our ability to redress [by] buying new aircraft, fitting it with new products, new IFE [inflight entertainment], improving punctuality improving catering, increasing service to new cities, improving connections via Delhi, Mumbai, Bengaluru, building new non-stop flights from cities.
Chennai obviously is one that deserves more non-stop connectivity. But equally we have got [flights from] Ahmedabad to Gatwick, Kochi to Gatwick, Bengaluru to San Francisco. All of these [flights] are new connections. So I think if we provide the Indian customer with an Indian carrier that has a really world class product, [with] good prices [and] good reliability, I think people will naturally choose to fly, in part because it is going to be faster, easier, more convenient. But equally, I think there is an inherent desire to support Air India’s future success. The other carriers will continue to exist, they will continue to grow, they will continue to compete, but I think we will be in a much stronger position to compete than has been the case in the past.
The pilot and cabin crew strength is an issue. What about the expatriate pilot plan and what are the challenges here?
The expatriate pilot plan, I need to make this very clear, is a temporary solution to a temporary problem. Air India had not grown for many years, in fact, it was shrinking. And especially not growing in the widebody aircraft arena because it did not have spare parts or it was cannibalising parts from some aircraft to keep other aircraft flying. So the widebody fleet was shrinking. Upon privatisation, we saw a huge opportunity in the long-haul international market, which can only be served by widebody aircraft. And so we were able to lease these 11 aircraft [the Boeing 777s] plus the [Airbus] 350s that are coming this year. So 17 aircraft [are] coming in [in] the space of less than 12 months. You do not have the pipeline ready to fly those aircraft overnight, as it takes time to build. And clearly we would want to build it from within and staff these aircraft from within... the time is just too short.
So we promote as many people internally as we can. We recruit from the market as much as we can. But there is a gap. And so that gap was the one that was to be filled by expatriates. The intention was and remains for them to fly only so long as it takes to recruit and promote from within. And that is actually happening faster than we expected. This recruitment and promotion of Indian nationals coming in. So whilst we still need some expatriates, it is smaller than we had first estimated and probably shorter than we first estimated.
For such a huge fleet, the demand for crew is going to be phenomenal. How are you going to address that? Have you already started preparing a road map in terms of training?
Let me just add one more point to the previous answer before I get to [answer] this [question].
I just want to stress that if we did not get these expatriate pilots in, we would not be able to fly these aircraft. And if we could not fly this aircraft [this boils down to] destinations that we could not serve or frequencies we could not operate, or opportunities for a first officer to start flying a first officer and become a commander, or opportunities for cabin crew to be employed. So, they are not taking away anything actually. They are providing an opportunity which will ultimately be filled in India.
Getting to this question. We are now recruiting and training more than 550 cabin crew per month. We have been inducting and training 50 pilots a month. Ab initio pilots... we have been recruiting in many pilots, a few 100 pilots, who were seeking to join Air India from other carriers simply because I think under [the] Tata[s] people see a solid future. With 470 aircraft, people see good promotion opportunities and command opportunities. And I think there are a lot of people who whether they are in India or elsewhere, of Indians in India or elsewhere, [would] really love to fly with Air India if given the chance. Now, there is a chance.
.. we are ramping up faster than the existing supply.
We are also investing very significantly in training capabilities. We are just about to sign the lease on a new training academy in Gurugram, which is purpose built and brand new. So in addition to cabin crew training and training of engineers, there is scope for up to 19 flight simulators. We are in deep discussion with partners to do joint ventures with ... for Airbus training and Boeing training. And that will ultimately be one of the larger training centres in the world. That is to serve our needs, but it is also to really build an ecosystem of pilots, engineers and cabin crew for India as much as for Air India.
So would there be plans to start an Air India cadet pilot training programme?
Absolutely. That is part of that project, too.
Would it be fully financed, because students would still find flying to be expensive in India?
That is a good question. But I do not have an answer to that. I do not know what the model would be at the moment. We are still at the stage of where the locales and the airports would be... where we would set up the cadet schools and how we would actually run those cadet schools. I do not know yet.
What would the pilot ratio between Indians and expatriates be in a full-fledged Air India?
Frankly, we do not have any ratio, because except for this very temporary need, we do not have expatriates. And after this very temporary need, we do not foresee a need for expatriates at all. So there is no ratio. It should be 100% Indian.
In Air India, because I do not know the figures for Vistara... so in Air India, in Air India Express and in Air Asia, I think in total, we are talking about two and a half thousand pilots [in] total. I think at the moment, we have got 15, 20 [as in numbers and not per cent] expatriates... it is next to nothing. And it is for a very short period simply to allow the ramp up in the [Boeing] 777 fleet. And so that is why I want to stress that it is to simply allow us to accelerate... so we can ramp up faster.
But looking at the way you will be expanding, people from other countries would like to come and apply. At that time, could it be lucrative for the expatriates?
Well, I think we look at it from a company perspective... that we would much prefer to give opportunities to our own people to come in the company, grow with the company, progress to command, progress to wide body, progress to being an instructor. Because if you do that, you can attract people.. there is no reason why India cannot supply the number of pilots and cabin crew that Air India needs.
One issue at this point of time is we do not have good institutes which can match the requirements of the industry. People do tend to move to Singapore or may be the Gulf to get trained. So other than the Tata Group, can others in the private sector chip in, looking at the demand, creating more institutes? What are the challenges especially when there is going to be so much of a demand?
I think it is exciting. I think if the Tata Group airlines... Air India is growing so fast, and Indigo is growing, and other airlines in the country are growing, people will see a career opportunity in aviation. And so besides us, there are [people] already there, and they will obviously continue to be the other providers of training capability. Our responsibility, I think is to ensure that the standards that people are being trained to are up to [the] mark so that when people come in, they are coming in with the right capabilities and skills and training that we need. But beyond that, I think our responsibility is just to keep growing and keep giving people opportunities.
Coming back to the fleet. How is the existing fleet shaping? What are the plans for a better ground and inflight experience? Could you also highlight the contributions of the other Tata Group companies in shaping the fleet?
Maybe on the narrowbodies [fleet] side first, which is a little bit simpler. I mentioned that we will be retiring the [Airbus] A319s, and then we have got the 25 [Airbus] 320s coming in this year. We have the [Boeing] 737s and others next year. So, by the latter half of 2024, a significant majority of our domestic full service aircraft will be essentially brand new. And if you layer in the Vistara aircraft, assuming there is competition approval, 75% to 80% of the aircraft flying with full service Air India will be essentially brand new. So from that respect, I think that is a very rapid and a very significant transformation.
On the widebody side, I mentioned the 11 [Boeing] 777s and the six [Airbus] A350s, that comprises about a third of our eventual widebody fleet... a third of the aircraft, by the end of this financial year, will be operating with a modern interior product.
Starting from the middle of next year, we will be seeing the retrofits of our existing 40 odd aircraft start coming into service. So we are spending $400 million on completely gutting the interiors of the aircraft, installing brand new seats, installing brand new inflight entertainment systems to a modern, high class standard.
Would that be four-class?
That would depend on the aircraft. We have some with a two-class, some with three class. The intention in the future is to have premium economy on all widebody aircraft. The question comes on how many aircraft do we put first class.
And will there be a unique Air India product? Take Singapore and Emirates for example and their products?
Eventually, yes. But these things take time to design, to certify, to build and refine. And that time typically is six to seven years. And we just do not have six to seven years. So what you will see in the very near term is us using other people’s good products and then you will see us taking a certified product and making whatever tweaks it is possible for us to make. And then in a few years time, that is when the true Air India designed product comes about. It is not as if we do not want to do it faster. We would love to do it faster. Certification is a big thing.. G-Force tests, safety tests, fire tests, toxic smoke tests, weight, cost.
And the contributions of the Tata companies?
Oh, yes,. Across this whole transformation, we have had a really huge contribution from [the] Tatas.. IHCL [Indian Hotels Company Limited], Taj helping with catering, obviously helping with crew in due course We would love to have their advice and help with service training, TCS [Tata Consultancy Services], clearly. Tata Communications, again, helping with a lot of the connectivity.Tata Elxsi designing some of our customer touch points, the heritage centre, safety centres. Tata Realty [and Infrastructure Limited] is helping us with the new campus, new training academy, consolidation of land requirements. Tata Technologies is helping do 3-D modelling and design of some spare parts that we cannot procure on the market because they are obsolete. So we can manufacture spare parts to keep existing seats workable until we can replace them.
There are many other Tata companies that are assisting.
Tata Motors as well...
Tata Motors.. that is the interesting one. We had people from Tata Motors coming in to share with us ... [on] how they run their procurement. Because that is a real core skill of theirs. But it is a need that we have. So we are learning from them on how to really run a tight ship on procurement.
Tata Business Excellence is a sort of an in-house business consultancy that [the] Tatas have. There is a core group of full-time employees. But they also have a network of people that operate within different types of Tata businesses... every year, they will go in and do sort of a SWAT team in different businesses to elevate their performance. And there was a group from Tata Business Excellence with Air India for six months to try and cross pollinate the strengths of different Tata companies to accelerate Air India’s transformation. We have talked to Jaguar Land Rover too about how they design interiors of luxury cars. Is there something that we can learn from them on how to do an interior or a seat, or finishing. We are very, very fortunate to be part of the Tata Group. It gives us the experts we can talk to, it gives us people that can provide a capability, it gives us a pool of companies that have a shared interest in our success.
How about the MRO because it plays a critical role. Where do you see yourself in this area?
Air India was privatised without Air India Engineering Services [Limited (AIESL)] which was their maintenance and MRO. Since privatisation, the airline has, by necessity, had to build its own engineering capabilities, as a responsibility but also a need. We continue to use AIESL, and will continue to do so at least until the end of next year, and almost certainly longer for many services. But we do need to have a bit more capability inhouse. So part of the merger process with Air Asia and Air India Express... Vistara is separate for now... is that they already do some of their own inhouse line maintenance services. We are expanding that a little bit so that it can cover and serve the Air India fleet. We will continue to strengthen that.
For heavy maintenance, we are looking at what the future holds, whether it is with AIESL or whether it is in some other way, shape or form. But it is probably a little bit early to comment further except for the fact [that] we need to build a stronger MRO capability in India.
The good news is that our 470 aircraft order has given a lot of excitement and a lot of impetus to many of the component manufacturers, engine manufacturers, airframers to think more seriously about the opportunity in India and potentially partner with the Tata companies to help catalyse the whole ecosystem here.
There has not been much news about fellow partner, Singapore Airlines. And Lufthansa has also talked in terms of closer technical cooperation. Could you elaborate on this?
Singapore Airlines is a potential shareholder. If the Vistara merger goes through... that is obviously subject to regulatory approval. So for the moment, they are the financial investor in a related company
Lufthansa is a potential alliance partner. We are part of Star Alliance. And both of them are Star Alliance members. So do not read too much into anything that you might see reported now, because it is probably speculation.
We are a member of Star Alliance. We are talking to members of Star Alliance [and] including them about how we strengthen the partnership, because to be honest, Air India did not really contribute a lot to the alliance. And so it did not receive a lot from the Alliance. But they now look at India and Air India very differently. We are still in those exploratory talks about how our alliance partnerships can take hold, whether it can then translate into an MRO, or other arrangements. I think that is more for time to tell.
What about the issues about cabin crew and pilots on staff compensation? There was also news about some staff not being convinced?
That was quite a few weeks ago. Obviously, things progress, people read the contract, they understand the implications, they understand the opportunities. So in both cases, we were very well over 96%-97% acceptance. About the balance, we are talking to the individuals. In many cases, they are people who have been medically grounded for a while. Otherwise, we are following up into the queue. The unions have now withdrawn any opposition to the contract. They now see the opportunity that is in front of people and the airline.
On operations, there is one view that the airline is very strongly positioned towards Delhi and Mumbai. On the other hand, you have Bengaluru and Hyderabad as big hubs. Chennai is caught between and seems to be losing out. You also have Indigo capitalising on it. So where do you see yourself coming back to the southern market? We seem to be missing connectivity, even from a domestic point of view to either Mumbai or Delhi. And how do you see the southern market, especially Chennai?
Just to add to this.
Yes, of course.
It is interesting that when you look at the Airbus A350 fleet, you have more of Airbus A350-1000s when compared to the A350-900s, which is an indication that you are looking at ultra long haul. Is there a well-thought-out route plan for these aircraft?
To answer that question, yes, but [you have to] bear in mind that the A350-1000 comes with more payload, and we can use that for range or capacity or both. So the reason that we wanted the A350-1000 is that we see that we can serve a lot of quite thick, long haul international routes. And so we can use the extra seats that the A350-1000 would give us over the A350-900. But there are also many markets that can use the capacity of an A350-900, not maybe quite as thick as the A350-1000.
I guess my first response to the earlier question or comment is, I totally agree with you. I think southern India, and Chennai, in particular, is not well served by Air India. And that is really regrettable and something we certainly want to fix.
I will not go into history. ... Delhi is a great hub geographically for many markets. But in some respects, we have not served Mumbai well either, as the commercial capital of India. There is certainly a massive opportunity in southern India for a hub. And then there is a lot of point to point opportunity from places, especially Chennai.
Why hasn’t it been done before? [The answer is] An absence of aircraft. And that is partly why 470 aircraft was committed.
Can we look forward to any plans with the widebodies?
The short answer is yes. But I cannot tell you what and I cannot tell you when. Because there are three really conflicting priorities that we have, just to be very transparent with you. You have read about the government and you know that we would like to build a hub in Delhi.
It is geographically great, it can compete very strongly with other hubs around the region. And you need to build a network effect by having lots of spokes because they feed traffic onto each other. So we need to put more flights into Delhi. Likewise, there is a huge opportunity out of Mumbai. So we need to put aircraft out of Mumbai.
And then we have got to build a hub in southern India, because there is also [strength] here. Apart from a point to point market and the economic opportunity, [i.e.] Asia to the Middle East, Africa to Asia, Australasia to Europe, that will cross southern India too. What do you do first?
Will you consider South America?
In most airlines, you have got maybe a few too many aircraft that you are struggling to find an opportunity to deploy them on ... economic versus viable opportunity. In India, we have so many opportunities, but too few aircraft to deploy. And so that is really our challenge at the moment. How do you prioritise the opportunities?
So South America... it is a long way away. When you consider the opportunities again, to prioritise the opportunities from an economic return perspective, cost of operations and the amount of effort and time it will take to nurture, it is not the high priority. But eventually, it is something that we certainly consider.
Where do you see yourself in terms of cargo because we are hugely dependent on the foreign carriers to move cargo. At one point in time you had your own freighters. Are there any plans with the new 470 aircraft fleet to have dedicated freighters?
Within that 470 aircraft, they are all designed for passenger operations. But bear in mind that each of those aircraft comes with belly hold capacity, and a lot of those widebody aircraft have a lot of capacity. So the cargo capacity of Air India is going to increase multi-fold.
The organisational capability of selling, filling, promoting and servicing cargo is undergoing dramatic transformation because we see this as a huge opportunity that has not been well tapped.
It has been an afterthought as much as it has been a significant revenue opportunity. So, in the short term, [it is about] improve[ing] our cargo infrastructure [and] in the short to medium term, as we get more aircraft, [it is about] dramatically improve[ing] our cargo capacity. In the longer term, maybe aircraft that are dedicated for this, but at this point in time, we’re not going to...
But is it also due to the fact that the volume is also not there to justify having a dedicated freighter?
Honestly, I think it is more a case of prioritisation of the opportunities and our capacity to do anything well. I think, maybe to set the context, I do not think there is another example in history of four airlines merging into two concurrently. And, I do not think there is another example of a long-time government-owned airline being privatised and expanded at the rate that it is being expanded at the same time as you need to build your pipeline of pilots and crew and the training academy. And at the same time as building an MRO and land maintenance operations. On all of these things, [one has what] is essentially unprecedented in aviation history.
But will Vistara cease to exist as a brand?
That is the intention, at least as it pertains to aircraft. We are in no rush. Obviously, there are a whole lot of regulatory approvals that we need to go through first. I think you are assuming that [till] all the regulatory approvals are given we would want to keep the Vistara brand until [there is an] Air India product and then match it up. And then whether the Vistara name is used for something else, we need to wait and see.
Infrastructure seems to be a big issue in aviation. Expansion is likely to happen at a rapid pace but on the other side the infrastructure does not meet your requirements. The metros are fine, but the smaller places seem to be struggling.
I must say that I have not been to every city in the country, so I cannot comment broadly. But certainly, I have been to many. I am really quite pleasantly surprised at the quality and just the regular upgradation of airport infrastructure here. I was at Chennai airport, having a tour. The same in Bengaluru, Navi Mumbai, Mumbai, Noida airport, and the expansion that is going on at Delhi. It is happening everywhere all at once. And that is wonderful. So I guess where the challenge is, is that it is being designed for growth that in some cases, the airline has not been able to articulate what it wanted until now.
So if we look at some of the airports, they have not been really designed for international to international transit, unlike some of the airports for the airlines that you mentioned overseas. And clearly, there is a huge point to point opportunity to and from India. But there is a massive transfer international hubbing opportunity in India, and the airports are not quite designed for that yet.
It is our fault, because we never said that [that] is what we wanted to do. And we never showed them the scale of the growth that we wanted to do. But now its clear. And so now we are having some very constructive discussions with the airports about how we might be able to, to build to make that happen. It will take time, but I think everyone is on the same page.
So I think, to the extent there are infrastructure constraints, they are probably less than people think. But they are the airline’s fault.
Would you be looking at Jewar NOIDA airport? Is the airport on your radar?
The Air India group through AI-SATS [Air India SATS Airport Services Private Limited] is already participating in Jewar airport. We have got the concession for the cargo facility there. We would like to perhaps put some MRO capacity there if that is what we end up doing. But for the moment now, we are talking to everyone, but we are very committed to the current Delhi airport for the time being.
Air India appointed Henry Donohoe as head of safety and quality in 2002....
His predecessor reached retirement age. And I thought it was important to have someone that had a lot of world class international experience. In Henry’s case, he was eight years with Emirates, head of flight safety and flight ops. He has been chief pilot and head of flight safety at Aer Lingus. He had been with the Norwegian group as head of flight safety and consolidating a lot of different airlines.. air operating certificates into one. And I thought in the context of Air India, where we are merging airlines, where we need to, perhaps take a more international view of what is the latest state of play with respect to safety practices and regulations, someone that can look at things with a fresh eye [is crucial]. I just thought it was important, because it is a critical area. I think he is enjoying it and contributing value. And I very much feel that the pilot community is equally feeling as though there is value from having a fresh perspective.
Are there any plans to launch the Maharajah lounges, which used to be the pride of Air India?
The whole lounge proposition, the whole ground product proposition is an area of focus. Clearly onboard the aircraft is one, ground is another.
So over the past few months, we have reviewed the lounge relationships and all of the cities that we operate domestically and internationally. And in many cases, we have made changes to upgrade the lounge. In most airlines, you use a partner lounge... you operate a handful yourself and then the rest of the network you share a lounge with someone else. But we have gone round all of the airports and selected the best lounge that we can find. In places that we did not have a contracted part in the lounge, we have filled the gaps. I think [that] in every city that we fly now, there is a premium lounge. We have a few of our own lounges, and in a few cities, they have not been invested in unfortunately in the same way that the aircraft perhaps have not been sufficiently invested in. We have got a project team underway to look at how in terms of size, design terms and location, we improve them.
It is a serious project.
What sort of requirements have you put forth to the government and what is the sense that you getting?
I would like to say very clearly that the government has a very clear vision for the development of aviation. And that is really quite impressive and very positive. In their vision, there is a very clear desire for Indian airlines to build international capacity, particularly widebody, long haul international capacity. There is a very clear desire to build hubs, and connecting hubs. And all of those things are very much what we are doing, but also what we want to see happen. So there is a lot of alignment... there is a central coordination role, that the government does and is playing to optimise airports hubs and processes for passengers to do a transit. And some of that is work in progress. Because as I said, with the airports the airline has not been clear on what it wanted to do. And so sometimes the infrastructure or the policy has not been built to accommodate... but I am very confident that it will happen. So I would not want to say that we are asking the government for anything because we are already very aligned. And now it is just a case of dialogue that we are helping it happen.
Moving to the area of green technology. In the new fleet, the engines, the Trents, the General Electric and CFM-LEAP, support 50% Sustainable Aviation Fuels. So is there a plan in place to go down that path?
Maybe I can say categorically that we are part of IATA [International Air Transport Association], we support and have publicly stated that we support the net zero objective [net-zero carbon dioxide emissions from aviation by 2050]. These aircraft, as you rightly say can accommodate SAF, which is probably the most significant contributor to getting to net zero in addition to using the latest technology aircraft ... we have bought 470.
But the whole SAF ecosystem is really immature. Well, globally, if I know my figures correctly, about 4% of av-gas requirements last year were met by SAF globally. Every single drop of SAF that was produced internationally was used... it was four or five times the price of normal aviation fuel. And part of the reason that it is four or five times the price is because the whole production volume and the transportation logistics, and the interplane capability, or all of that stuff is niche. And it needs to scale. And when it scales, the cost will come down. So airlines are saying we want to use it. Manufacturers are saying we can use it, we are hoping that stimulates the production and the transportation and the supply. So that we get a virtuous cycle where the cost of SAF comes down to the point where it can economically be used in our business. Because if there is a mandate for us to use 50% SAF now, none of us can fly.
When will Air India become a mega carrier? In the top 10 airlines of the world?
We need to be humble. We are starting from a place where we are perhaps not where people hopefully will be in terms of the investment that has been made in the product and the brand and the like. But we have put in a lot of work in the last one year to start turning that around and made some really bold steps to signify the seriousness of which we are approaching this. And I hope people get a sense that we are setting our sights high both in terms of scale, but particularly in terms of quality.
It is not easy. I mean, it is a competitive market. There is a high bar that has been set. But I am quite convinced that we will get there. A look at the history of the Tata Group and Air India gives us the emotional reason. The financial strength and the long-term vision of the Tata Group gives us the resources. India’s growth story, India’s geography, India’s people, India’s hospitality. Everything is aligned behind this being a success. The fact that we have four airlines in the group, two of which are modern private organisations that can help catalyse and accelerate the other airlines in the group. I am completely confident that we can get there. I would not want to say when and I would not want to say what that would look like. But [there is] no question that this is the most exciting place to be in the world and aviation. I am sure.
Regional flying is gaining traction in India. So is Alliance Air, a potential partner? Are you getting into the turboprop segment?
As I said, we have got many balls in the air juggling at the moment. Clearly, regional connectivity is important. In the first case, actually getting connectivity between the four Tata airlines is important. Leaving Vistara aside because of competition reasons, we are putting a lot of effort into aligning the schedules of the full service Air India, Air India Express and Air Asia, allowing for interlining across the carriers so that people can travel on multi-carrier itineraries. Implementing codeshare in due course so that Air Asia or Air India Express is visible in the reservation systems of travel agents around the world.
All of those things are underway. And they do support regional connectivity. But then cooperating with airlines that fly that last mile to a city that we as a group do not serve. I think that is in everyone’s interests. And if in due course, we want to move into that, then we can and maybe we will. But I think for now the focus is on getting the larger aircraft and all of that working well. Because that to me is where the immediate need is and also where the biggest opportunity is.
Would you have a code share, especially in places such as the United States? Are you in discussions?
Yes, we are, and this is going back to the Star Alliance discussion. We are engaging with not just Singapore and Lufthansa but with others such as United and Air Canada.
Again, this is a relationship that needs to be rebuilt. Because like I said Air India did not contribute a lot to the alliance. And so it did not receive a lot. An alliance partner was perhaps a little bit reluctant to put their passengers on Air India because of the product or the punctuality. Whereas people are now looking at Air India with completely different eyes. We have gone from being the dance partner that no one wants to dance with. Now, everyone wants to dance with us. We are having these discussions, and it is not something that we want to rush into, because we know we are an attractive partner. And so we want to make sure that we dance when we are ready to dance.
But there is a perception that people are still not very convinced to fly the airline. That is going to be a big challenge.
I think I have been quoted elsewhere as saying this is a Test match, and not a T20. And that is without joking, [because] that really is quite true. Because there are a lot of things that need to be done in order for people to believe [in].
Over the course of this last year, I think we have tried not to get ahead of ourselves... just to talk about what it is that we have done, rather than what it is that we promised to do. And over time, we hope that this drip feed of things... Air India has upgraded meals, Air India has increased the movie selection, Air India has a better website, Air India has changed its call centre, Air India has GPT-4 [ChatGPT’s latest version] where people go through the things that we have done... [will be successful]. We see that some people are coming back as flyers... we see that sometimes we were not quite to their expectation, but more often than not we are. It is [also] going to be word of mouth. Hopefully it gets better. And then when the new aircraft come, and there is a new brand... wow, Air India really has changed. So I do not want to get ahead of ourselves. I want people to have an expectation that [when] they get onboard Air India, they are pleasantly surprised.
Across our four airlines today, we carry one hundred and forty thousand people a day. And each of those one hundred and forty thousand people comes with their own set of expectations... It does not take much to disappoint someone and when you are carrying one hundred and forty thousand people a day, in a world of social media that can become a big issue.