The trained staff will be tempted to go to the highest paying employer leading to increased inter-company movement
The Indian aviation scene is heating up with the arrival of a new entrant and the existing players trying to scale up. Over the past 10 years, the aviation sector has undergone dramatic changes and is now poised for growth albeit challenges in the talent space and the fall of a domestic airline.
Days after AirAsia announced the launch of its India operations by the end of 2013, IndiGo President Aditya Ghosh disclosed in an interview to Business Standard the airline’s plan to scale up. Ghosh talked about an aggressive growth plan saying, “Today, I am running a 66-aircraft airline. In another 48-60 months, we would be a 100-aircraft airline.”
Sukhjit Pasricha, Vice President – Human Resources at IndiGo Airlines, said, “India still remains a highly underpenetrated aircraft market where we have only about 400 commercial planes. That’s less than one commercial aircraft for every three million Indians. Even developing economies like Indonesia, Philippines and Brazil have three or four times our aircraft penetration. We at IndiGo saw these opportunities well in advance.”
In another development, Union Civil Aviation Minister Ajit Singh announced in June that the national carrier Air India was planning to scale up its international network. “We have extensive plans to scale up AI’s international network with low-fuel consuming 787s that will give the airline an edge over the other airlines. Plans are being worked out for the national carrier to provide direct services to major destinations around the world. The 787s will be used to open up new routes that are financially viable for the airline to operate,” Singh told IANS in an interview.
These announcements are significant considering that India has opened its doors to foreign investment in the aviation sector in September last year. However, the Jet-Etihad deal, touted to be the largest FDI in the aviation sector in India, is hanging in balance.
Pasricha believes that just like the telecom boom, which completely changed the way people communicated with each other, the aviation sector will also do the same. “The potential for growth and the runway ahead of us is for many many years,” he said.
In the beginning of July, media reports suggested that there may be an exodus of commanders from IndiGo to AirAsia India. The news, captured by news agency PTI, claimed that as many as 100 IndiGo commanders had applied for jobs in the Indian unit of the Malaysian carrier, which is also Southeast Asia’s largest carrier by fleet size. The report quoted an airline source as saying, “As many as 100 commanders have sought jobs with AirAsia India.” The update, which wasn’t confirmed by IndiGo, is a clear indication of the biggest challenge that the aviation industry may face in the days to come: The talent challenge. An email query sent to AirAsia India in this regard remained unanswered.
As more companies come in and existing companies spread their wings, the number of jobs will increase manifold. While companies will struggle to find the right quality and quantity of talent, the trained staff will be tempted to go to the highest paying employer thus causing increased inter-company movement.
Karan Khara, Associate Partner, Travel and Transport at IBM, warns about a larger talent challenge that the aviation industry needs to wake up to. He says, “The main challenge is the quantity and quality of the staff. Traditionally, India hasn’t trained specialised talent such as maintenance engineers. There is a very small talent pool available.” Talent crunch won’t be only for the airplane crew. The industry will need people to maintain, fly, design aircrafts as well as a large number of ground duty staff to facilitate operations. The main problem area is MRO (maintenance, repair and overhaul), which requires highly specialised talent that isn’t aplenty in India.
The talent tug-of-war will put another factor into the equation: The cost factor. For companies planning to scale up, it will be a challenge to manage profitability in the face of new challenges.
Traditionally, the main cost factor for Indian airlines has been fuel and taxes. People cost wasn’t really that much a part of this equation. Though salaries offered to pilots are comparable with international standards, pay for other departments haven’t been anywhere near it. An impending wage-war seems inevitable as more companies try to attract the small pool of specialised talent. Also, with the rupee depreciating, it will inflate the fuel bills. Aviation turbine fuel price in Delhi was hiked by Rs 3,617.84 a kilolitre (kl), or 5.8 per cent, to Rs 66,034 a kl with effect from July 1, 2013, according to Indian Oil Corporation, the nation’s largest fuel retailer. This will put additional cost pressure over airlines.
The airlines may not see much of these challenges thanks to the ready talent pool of almost 6,500 ex-employees of Kingfisher Airlines. Secondly, there is a possibility of people being laid off after Jet-Etihad deal. Khara says, “Due to this ready pool, the talent crunch might not make or break airlines’ in the short-term, but in the longer run it needs to be sorted.”