Air India’s Turnaround Plan Does Not Inspire Confidence

Air India

If there’s ever been an airline in desperate need of a successful turnaround, it’s Air India. The long-bloated, play-thing of the Indian government has finally been privatized, and the new plan — entitled Vihaan.AI — is out. I do not have hopes.

Air India has been a mess for as long as I can remember. It used to be the Indian government’s chosen instrument for international travel. Then in 2007 it was forced to merge with the Indian government’s chosen instrument for domestic travel, Indian Airlines. That sounds like it would be a good thing, but it did not go well.

As if a botched merger wasn’t enough of a problem… while Air India was saddled with terrible inefficiency and bureaucracy, private airlines were allowed to eat the airline’s lunch. First it was the now-deceased Jet Airways but more recently it has been the more efficient IndiGo which has surged to become the largest domestic airline in India by far with well over half the market. It has grown the pie while also stealing from Air India.

On the long-haul front, the Middle East carriers have gleefully spent years bulking up their flying into India to connect people from Africa, Europe, and the US. Emirates is effectively the national airline of India at this point when it comes to traveling beyond the border. Increasingly, there is little need for Air India to exist.

But, as is often the case (hello, Alitalia) India is letting national pride get in the way and won’t just let Air India die. At least it did finally let the airline go private. Tata Group took the airline over earlier this year, reclaiming the ownership it lost when the airline was nationalized in 1953.

To put it mildly, Tata has a lot going on. In the airline space alone, it already has its stakes in AirAsia as well as Vistara. Now it can add Air India and Air India Express to the mix. For those keeping score at home, that’s two semi-low cost carriers, one premium short-haul airline, and… whatever you want to call Air India. To say some rationalization is needed would be quite the understatement.

So now we have the Vihaan.AI plan to fix Air India, and it reads like something a consultant wrote. Step 1, find a good name for the program. Vihaan.AI apparently means “dawn of a new era” in Sanskrit. Check.

Step 2, come up with a variety of pillars for your go-forward plan. Also, make sure you call them “pillars.” Check. Air India has 5 of these:

  • Exceptional customer experience
  • Robust operations
  • Industry-best talent
  • Industry leadership
  • Commercial efficiency and profitability

Note that Air India saved what really matters here to be last on the list.

Step 3, set some pretty hefty-sounding goals even if you have no intention of meeting them. Check. In the next 5 years, Air India wants to climb from having less than 10 percent of the domestic market to 30 percent. That sounds really aggressive… except that Vistara and AirAsia have 15 percent share. I don’t think anyone would be shocked to see that brought under the Air India banner to goose those market share numbers without making huge gains. If that’s not the case and Air India just wants to grow its own share, then oh my, good luck.

The international plan — at least in the press release — is much more vague just saying there will be “significant gains.” No matter what happens, Air India can say it met that goal.

The problem with this plan is that it doesn’t say anything that makes me believe Air India can outcompete those who already took all the relevance away from Air India in the first place. How is the airline going to beat much more nimble competitors like IndiGo or Emirates. Running a good operation? That’s just the price of admission to the competition. And having better customer service? Ditto.

There’s talk of having the best technology and attracting the best talent, but I don’t see how that happens without significantly overpaying people to effectively bribe them to come work for a subpar company. Even if they get good people, so what? That does not create a competitive advantage over the other airlines that already have good people. I need to see a niche or some differentiation, and I don’t see it.

Nobody ever thought turning Air India around would be easy, but you would have hoped that any serious effort would have something significantly more inspiring and actionable to give the airline a chance to succeed. This one may look good in a Powerpoint deck, so congratulations to the consultants who wrote it, but in reality this won’t fix an airline.

27 comments on “Air India’s Turnaround Plan Does Not Inspire Confidence

  1. “But, as is often the case (hello, Alitalia) India is letting national pride get in the way and won’t just let Air India die. At least it did finally let the airline go private. Tata Group took the airline over earlier this year, reclaiming the ownership it lost when the airline was nationalized in 1953.”

    As soon as I read the title, the first thing that came to mind was Alitalia. Once you explained the complexity my thoughts moved to LH & how bloated they are as well.

  2. Ah yes, the wonderful consultants. A company I used to work for got so fed up with consultants coming in and trying to change the world (and lacked such a simple knowledge of how things work like one assigned to me asked why the cost to rent an office in Bogota was different than in Chicago) that leadership finally went to bat with the board and told the consultant group to get out of the building – paid to end just to go away.

    Looks like Air India is the victim of another off the self recovery plan… wonder how many hours Tata had to spend doing “Find and replace” to remove some other company and input Air India before presenting it. I say this only half tongue in cheek after reviewing similar lofty drivel from a consultant group known world-wide where they accidently left another client’s name in there. Because apparently what works for Pella Windows works for an aviation enterprise.

  3. Whether their turnaround plan works or not, they are throwing alot of international capacity into the air and that will esp. impact United which is the largest US airline from the US to India. AI will have an advantage because they don’t honor Russian airspace sanctions that most countries are doing. Some routes like SFO to India require using Russian airspace to be viable; it isn’t a surprise that SFO is becoming one of AI’s largest foreign stations.
    Add in the ex-DL 777LRs that AI has apparently picked up and they will have alot of immediately available, high quality but not necessarily fuel efficient aircraft. If their plan works, they can pick up other aircraft. QR has a large fleet of A350s they would like to get rid of – on top of the copies Airbus still holds, plan to produce and is reportedly selling to DL.

    1. Air India is part of Star Alliance, so United could be helped to some extent by Air India’s ability to overfly Russian airspace.

    2. You are either with us or against us.

      Didn’t think I would ever quote W. But here we are. Not going to fly Air India over Russian airspace. Or actually consume other services from our “friends” in India if I can avoid it.

      The US should not allow flights to fly to/from the US if the route goes over Russian or Belarusian air space.

      1. Agreed. Also, as a US citizen I would not want to risk getting stuck in Russia in the event of a flight diversion by AI (or any other airline that still overflies RU).

    3. If you have ever flow AI’s J class, I think you’d agree that it’s not “high quality.” They really are the worst *A carrier.

      1. Now, now, let’s not be hyperbolic. South African Airways is in Star Alliance, remember, and they’re pretty much the pits, and they can’t even refuel their planes right now. Croatian Airlines is in Star Alliance and is so desperate they’re betting the farm on Airbus actually manufacturing more than five A220s a month, not to mention seeming to count on Aegean, of all airlines, to be their sugar daddy. SAS’s service has gone so far downhill their passengers are wondering if there is a bottom. Air India isn’t even the only Star Alliance flag carrier for a right-wing would-be theocratic state; LOT is in the same position. And where do you start with EgyptAir?

        I’ll defend Star Alliance because I love being a United 1K and had a great time at the why-is-this-here Lufthansa Lounge at DTW last week (oh, how I missed lounges with self-service booze and edible food), but even I’ll admit that Star Alliance has some very sketchy and poorly-run airlines in it. Not every airline is a Singapore or Turkish.

        As for the shibboleth going around the avgeek blogosphere that Indians would rather fly Air India because they’re treated “properly” and it has “India” in its name, why is it that every time I pass the gate in B Concourse at ORD that has United’s flights to Delhi, the gate is loaded to heaving with Indians? Why aren’t they in Terminal 5 boarding the Air India flight? Apparently they’re being treated “properly” on United. As much crap as United gets on avgeek websites, apparently the service is better on United than Air India. Which is a pretty severe indictment of Air India, isn’t it?

  4. No turnaround seen, recently travelled by Air India. No changes seen. Everything same. I posted in Twitter about the kind of food served in business class. Air India won’t change.

    I am cancelling my tickets which I booked from DXB to DEL on AIR INDIA & rather switching to EMIRATES.

    1. I believe the announcement of a merger (or new global alliance) between Air India, Aerolineas Argentinas, Aeroflot, and ITA (among other airlines) isn’t yet being official released, but will likely be published by Crank in early April. :-)

  5. The debt-laden Air India may make a short-term ‘gain’ by using the closed Russian air space to its loss-making SFO route, but by doing so, it would go down in history as a war profiteer at the cost of Ukrainian blood. No matter what, AI with its much higher ticket prices may never be able to compete against the ME3, particularly the Emirates – the de facto national airline of India.

  6. Emirates is the national carrier of India? What a joke. Plenty of folks are very price sensitive or don’t want a layover in a theocratic, authoritarian gulf state.

    Air India evacuated thousands of Indians from Ukraine and Afghanistan when things went south. Fat chance getting Emirates to do that.

    Knock off the India bashing and let’s give this a chance. Look at what Tata did for ailing Jaguar/Land Rover.

    India haters all over the Internets… jeez

    1. > or don’t want a layover in a theocratic, authoritarian gulf state

      … on their way to another theocratic, authoritarian state that is doing military exercises with Putin’s army and profiting from the war on Ukraine by importing cheap Russian oil instead of joining the democratic world in sanctioning Russia and supporting Ukraine.

      1. Yah, right. Europeans are still buying from Russia. Their plans are that they will taper down energy purchases after December. What a joke.

        India is doing any capitalist would do (guess who taught that to the world) shop around and get the best deal.

        Sanction everybody in the world, that is what will happen, kill yourself with inflation. US is going down the drain. Bail out while you can.

  7. Jumping in late to this thread:

    1. Don’t disrespect the talent-&-capability across the >100 year-old Tata Group, as their combined enterprises have a market cap of >$300B. It is disrespectful to compare a Tata owned business to an Indian Government nationalized business.
    https://www.tata.com/investors

    2. Please read Indian news sites too, as they share that Tata Group has to only retain the existing staff for 12 months and is already consolidating the operational staff of their 3 airlines.
    https://www.airindia.in/writereaddata/Portal/News/737_1_Press_release-Air_India_embarks_on_strategy_to_consolidate_workspaces.pdf

    3. Indigo deserves the kudos they receive, but per their IR results they fly 281 narrow-body, single-aisle aircraft (#246 A32x, #35 ATR)
    https://www.goindigo.in/information/investor-relations.html

    4. Spice Jet has financial challenges and is looking for 3rd party investments, with news stories of ME3 or TBD.

    5. Indian market has secular growth in most areas.

    6. New CEO of Tata’s Airlines is from Singapore Airlines and ran their Scoot LCC operation

    7. Tata appears to desire to retain the relationship with Singapore Airlines (eg Vistara)

    8. Please look at Great Circle Mapper and you can see many North America to India flights route thru Russian Airspace. I fully support Ukraine, however India has a Cold War relationship that has led them to abstain in the UN. At last month’s Shanghai Cooperation Organization (SCO) meeting in Smarkand, Uzbekistan, ALL of the global heads made Putin sit and wait for their 1:1 meetings and Modi publically said “I know that today’s era is not an era of war, and I have spoken to you on the phone about this,”
    http://www.gcmap.com/
    https://www.reuters.com/world/china/putin-xi-speak-summit-uzbekistan-2022-09-16/

    9. Please be aware of changing Cold War relationships, with India moving away from Russia and is a founding member of The Quad (U.S., Japan, Australia, India)
    https://carnegieendowment.org/2022/09/20/russia-and-india-new-chapter-pub-87958

    10. The legacy USSR-&-India alliance and the USA-&-Pakistan alliance are remnants of both Cold War (1945 onward) and Independence (1947 onward, 75th Anniversary!).

    Suggest CF calendar a regular series (1x/year?, 2x/year) on how Tata Group is doing turning around Air India across RASM, CASM, and all the standard metrics.

    Keep up the great work

  8. Cranky,

    You bring up some fair points and insights. I am by no means an AI apologist as have had plenty of miserable experiences in my day. However, at one time it was hailed for it’s service and elegance (granted probably in the early ’70s). Maybe a brand reboot, etc. is in order. Additionally, the market share goals do seem aggressive. However, given passenger growth in India is projected to grow to 827 million by 2032-33 (from 341 million in 2019-20) per Economic Times of India, isn’t profitability/market share growth realistic if Tata can get AI’s house in order?

    1. Vinay – Thanks for the response. Being known for service and elegance isn’t going to translate into Air India becoming a competitive domestic force. There’s a reason the big growth has come from low cost operators.
      The big opportunity is in low fares, and Air India has just never had the cost structure (or the will) to pull that off. I don’t anticipate that changing. Even if it does become known for service and elegance on long-haul routes where it might matter… how is that different than Emirates? People already feel that way about Emirates, so Air India wouldn’t be able to leap over the airline. It’s a big uphill battle.

      As for growth, India’s growth sounds good, but it also requires the political will to grow and expand airports. India doesn’t tend to be in the same category as a China which just drops airports into open fields whenever it feels like it. So I would expect that the opportunity is lower than demand would suggest. Either way, why would Air India be the one to get that traffic? Low cost airlines will be able to offer sustainably lower fares and will probably capture the lion’s share of the traffic.

      1. I remember reading that part of the reason why China “drops airports into open fields whenever it feels like it” is because the government there has found that it’s more cost effective to build airports to serve remote, mountainous areas than it is to build the necessary road and rail infrastructure to serve those areas.

  9. It sucks even now. There is no customer centrik approch. Air India website is horrible.
    People at the counters treat passengers very arrogantly like they are giving the passengers some extra ordinary favours.
    Refund policy is the least tp talk about.
    If you send a mail to customer service you will be directed to contact at some other e- mail. They are not able to identify ticket from the PNR issued by them. They ask for tkt no’s. There are 2-3 tkts no’s. Even then again they ask to share the details.
    I am aware everthing can’t change in few months. But with TATA’s at the helm, some basics could have been changed
    Even rhe new Airline like Akasa have better customer service, visibility on website etc.
    TATA can do it but they have to change mindset of people on the ground.
    Wishing TATA happy flying.

  10. Damn you for mentioning Indian Airlines, Brett. Any airline that served Gulab Jamun as an in-flight meal was good with me. However, we did have one entertaining IA flight from BLR to MAA on a 737-200 when the front ceiling panels collapsed upon landing, with a fairly substantial amount of water coming in to the cabin – 17y.o. me was worryingly unfazed at the incident.

    Last trip to India was on Jet Airways a decade ago, and they were actually great.

  11. What a B***S*** of an article
    Author criticises X & Y plan but cannot back up as to why it won’t succeed.
    Also how the F**k do you expect any turn around within a few months of taking over.
    Any aviation ndustry expert know that you got to give atleast 5 years before we start talking about profits with Air India.
    Author just proved his India bashing mindset and zero experience in Aviation industry column writing.

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