Headquarters in Kochi yet to be made operational
The failure of the authorities to
make operational the headquarters of the Air India Express (AIE), shifted from
Mumbai to Kochi in February, is likely to end up in the State losing the
office. (AIE is the no-frills airline of Air India).
Union Minister for Civil Aviation
Vayalar Ravi had inaugurated the AIE headquarters on February 27 but the
authorities had not been able to shift the staff from Mumbai (to Kochi) till
date.
The Kochi office was being managed
by a Senior Manager and a Deputy Manager, both retired employees, as the staff
had shown reluctance to move to Kochi. Both the officers had not been assigned
any duties, sources toldThe Hindu.
Several lakhs of rupees were spent to
spruce up and furnish the first floor of the 4000-odd sq.ft. office of the
erstwhile Indian Airlines at DH Road to accommodate the corporate office. The
ground floor housed the AI office. Even Chief Operating Officer (COO) S.
Chandrakumar, a native of Punalur in Kollam district, who was handpicked and
given the task of turning around the low-cost carrier, had been working from
New Delhi.
Besides housing the office of the
COO, the corporate office was to have the offices of the Heads of the
commercial wing and finance wings. It was also decided to house the work
schedule, cockpit crew schedule, flight networking schedule, cockpit training
and licensing, human resource, legal, security, procedures, finance, and
administration wings in the Kochi office.
Ground realities
The AIE's move to prepare flight
schedules by taking into account the ground realities and needs of the people
here also failed to take off, sources said. The only solace was that the Crew
Training Division was set up and 24 cabin crew recruited by the airline were
trained here.
The decision to shift the
headquarters to Kochi was taken to give more operational freedom to the airline
that operated 70 per cent of the flights from the Kerala sector. Further, the
shifting was to enable realistic decision-making and address region-specific
travel needs.
Sources said the first low-cost
carrier from the AI stable still enjoyed a 90 per cent load as it was the
preferred airline of the working class. Sources said it offered convenient
late-evening departures and early arrivals.
The first flight of the AIE was from
Thiruvananthapuram to Abu Dhabi on March 19, 2005, when V. Thulasidas was the
Chairman and Managing Director of the national carrier.
Of the 400-odd employees on the
payroll of the AIE, nearly 200 were cabin crew and 70 cockpit crew.
The carrier had 21 aircraft, all
new-generation Boeing 737-800 in its fleet at present.
All mergers are frustrating, but
have to be managed for synergies and economies of scale.
Implementing the Air India-Indian
merger at the earliest is thus inevitable, irrespective of challenges involved.
The government needs to bite the bullet now.
This will reduce cost, avoid
duplications in aircraft, routes, staff, spares, office space, improve capacity
utilisation and load factor, and provide bargaining power in terms of aircraft,
fuel and insurance procurement. This is a ‘low hanging fruit' which should be
seized upon.
Leadership factor
Mr Rohit Nandan is the fifth CMD of
the carrier, in four years. Infusing funds without empowered leadership, free
from political interference, is a waste of taxpayer resources. Air India needs
focused leadership, more than anything else.
US Airways went into two successive
bankruptcies within three years of 9/11 attacks; what turned it around by 2006
was the strong leadership of David Siegel and Doug Parker, who established the
necessary trust with the pilots unions, negotiated salary cuts to the tune of
$1.5 billion and successfully merged US Airways with America West.
Piyasvasti Amranand, an economist
from London School of Business with no aviation experience, turned around Thai
Airways when government infused a billion dollars in 2008, restoring the
airline to record profitability by 2010, increasing share price ten-fold.
Air New Zealand merged with Ansett
and subsequently slipped into bankruptcy during 2001, when the government
nationalised it back and infused billions of dollars. Ralph Norris, a banker,
successfully turned around the airline by 2005. Malaysian collapsed in 2005
when faced with severe competition from low-cost carriers such as Air Asia.
Idris Jala, professional of repute working for Shell, turned around Malaysian
by 2007, aggressively restructuring and taking Air Asia ‘head-on' in pricing.
If Air India is provided with an empowered leadership, why can't it turn
around?
A common thread in all the above
successful turnarounds is gaining staff trust in negotiating staff compensation
linked with productivity, entering ‘low cost' model directly or through a
subsidiary, deploying technology to enhance Internet bookings, hedging fuel,
all of which significantly reduces costs. These can be achieved only by a
strong leader, not necessarily with aviation expertise.
staff productivity
Staff is a major contributor to any
airline's success. With severe shortage in pilots forecast over the next ten
years, nurturing them becomes critical.
Pilots also need to realise that
unreasonable demands, holding the airline to ransom, would affect the very
viability of the airline. Pilot unions in the US negotiated benefits so much in
pilots' favour that eventually they had to forego a large part of it, when
their airline entered bankruptcy protection.
Pilots should objectively negotiate
compensation linked with productivity, in line with regional benchmarks.
Possibly, when an empowered
leadership is in place, Air India employees may open up to ‘less pay-more work'
type negotiations, realising that their compromise will make a difference to
the airline's profitability; today they may not have that comfort factor.
Turnaround plans have helped global
carriers become efficient; benchmarking with low-cost carriers, parameters such
as load factor, yield and employee productivity have steadily improved.
Clearly, it is the strong leadership that has been instrumental in successfully
turning around carriers.
However, the financials of these
carriers are still very sensitive; profitability is still minimal even at close
to 80 per cent load factors, signalling that a minor drop in demand for air
travel, due to whatever reasons, could spell catastrophe.
In spite of infusing capital,
empowered leadership and effective turnaround, Air India may still be exposed
to difficult times; after all, even the most efficient airline in the world,
South West reported third quarter losses in 2011. The story thus does not just
end with the infusion of Rs 30,000 crore, but the efforts, for sure, could
strengthen Air India.
If turnaround stories in other
airlines are anything to go by, a strong leadership can do the trick for Air
India.
http://www.thehindubusinessline.com/todays-paper/tp-opinion/article3506640.ece
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