Article: Air India: Will the Comeback Kid defeat competition?


Air India: Will the Comeback Kid defeat competition?

Can Air India survive the competition and move to the top slot?
Air India: Will the Comeback Kid defeat competition?

Aggressive fare schemes and an improved on-time performance are the two biggest reasons why Air India is seeing an increase in its market share


 Can Air India survive the competition and move to the top slot?

 If numbers are to be relied upon, then data for the last six months show consistent increase in Air India’s market share. As a matter of fact, it has inched past other airlines to take the number two position in the domestic market over the last two months. It has risen from 16.2 percent in May 2012 to 20.8 percent in October 2012. For June, July, August and September 2012, the market share of Air India was 16.8 percent, 18.2 per cent, 18.2 percent and 19.3 percent, respectively. Can the increase in market share be attributed to ‘the bad times’ for ‘the king of good times’ or is the ‘Maharaja’ improving its management-employee relations, rebuilding its customer base and all the more relearning lessons about quality services? Air India, for some reason or the other has been mired in negative publicity. The lack of professional leadership and good management practices, the inability of the national carrier to function on sound, independent, commercial lines (thanks to the high handedness of government and political leadership) and the employees holding the airline and its passengers to ransom through strikes and protests, may lead one to believe that this gain is a temporary one, primarily due to the crisis at Kingfisher Airlines. While the reason cannot be rejected outright, there are ample reasons to believe that Air India is improving it and the gain in market share is rightfully theirs. This raises the more important question: Is Air India the comeback kid and can it survive the competition and move to the top slot?

When in May 2012, the IPG (Indian Pilots Guild) took the airlines to ransom, analysts and commentators were worried that India wouldn’t survive the mess and rebuild its image and brand loyalty. On their part they reasoned that an emphasis on management – employee relations, customer relations, and quality of service to passengers could help Air India get back traffic and generate the revenue to recoup the losses. Irrespective of the amount of money the Centre pumped into Air India, nothing could probably succeed without good management – employee relations. A give and take approach, where protesting employees gave up their agitation and the management paid their salaries and dues, was adopted. It constituted a committee to ensure the implementation of the Dharmadhikari Report. A cash surplus of Rs. 48 crore during April-July, and the government’s infusion Rs. 2,900 crore to the airline (under the Rs. 4,000-crore budgetary allocation for 2012-13) gave ample elbow room to make payment of PLI (productivity linked incentives) and clear payment of salaries of all its employees before Diwali. As a result of these measures there was a perceptible increase in Air India’s traffic.

It is argued that aggressive fare schemes and an improved on-time performance are perhaps the two biggest reasons why Air India is seeing an increase in its market share. This implies that it is gradually getting its customer relations and service quality on track. Increase in load factor implies that there have been fewer cancellations and rescheduling of flights (as a matter of fact, ordinary passengers and India Inc. had lost faith in the airline on account of the strikes, the cancellations, and the rescheduling of flights). As for the quality of service, Air India is learning from its rivals. It is now trying to modernize services to improve the entire experience of flying with it. The airline has roped in the National Institute of Fashion Technology to design crew dresses. Soon flyers when flying in the new Dreamliner (Boeing 787) to any international destination can order from a variety of international cuisines.

The role of independent directors (usually well-known industrialists) at Air India has been put to question more often than not. Perhaps they could not see eye to eye with anything that the management proposed. For a change, the management has decided to invite professionals to take up the role of independent directors. In a bid to do away with petty politics and focus on the turnaround, it is expected that their expertise and professionalism would give the corporate restructuring process a leg up. Perhaps, this is put to rest the question of lack of professional leadership at the helm.

In a dynamic aviation market, it may be too early to term Air India as a comeback kid but nevertheless the approach seems to be on the right track and will certainly help rebuild its image and brand loyalty. If these can be taken care of being ‘numero uno’ is a mere number game.

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Topics: C-Suite

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