How are Nandan and his team managing this turnaround? One of the first
things Nandan did after coming to the airline was to stop taking on
fresh loans from banks and manage from internal resources. "When I took
over we had an unsecured loan of about Rs 22,000 crore. The borrowing
was reckless," he says.
The next priority was boosting staff morale. Employee morale was low mainly due to the airline's uncertain future and disparities in wages of employees of the erstwhile Indian Airlines and Air India. There also was a lack of communication between management and employees. The situation has improved since then. The time lag in getting salaries has come down to less than a month from six months earlier. "In the past, every year there were at least two strikes. The employees were not sure whether they would get their next month's salary," says Civil Aviation Minister Ajit Singh. "There are no such concerns now."
The airline is also improving fuel efficiency and maximising revenue generation from aircraft. "We will turn Air India into a hybrid service," says Singh. "While some flights will have all economy seats, others will have two classes." The airline has introduced all economy seats in 14 Airbus A320 aircraft for flights that take less than one hour. It is looking to lease 19 more A320 jets with all economy seats. The carrier also has 48 narrow-body aircraft with both executive and economy classes.
Nandan says Air India has 19 planes that are more than 20 years old on average. These jets guzzle a lot of fuel and will be replaced with new fuel-efficient aircraft that will have 180 all-economy seats to earn more revenue, he says. The airline is also inducting more Boeing 787 Dreamliners. These jets, says Joint Managing Director Ali, are 25 per cent more fuel efficient than aircraft of the Boeing 777 family, which accounts for 60 per cent of the airline's long-haul fleet. Air India, which had grounded its Dreamliners for about four months until mid-May after reports of a battery malfunction, has ordered 27 such jets.
It currently has six Dreamliners and will get eight more by December. The new aircraft will help it wipe out losses in the Europe sector and fly to more international destinations. Air India flies to 33 cities overseas and plans to connect Birmingham, Melbourne, Sydney, Milan, Rome and Moscow this fiscal year.
Another important reason for Air India coming out of turbulence is falling staff costs. Its wage expenses dropped about seven per cent in 2012/13 to Rs 3,323 crore. Finance Director S. Venkat says wages accounted for a quarter of revenue in 2012/13, down two percentage points from the previous year. The ratio would drop to 14 per cent from 2013/14. The airline is getting leaner - almost 7,000 employees will retire over the next five years. It has about 24,000 employees now. This includes staff at its ground handling and engineering services businesses, which have been hived off into separate companies. The hive-off of Air India Air Traffic Services Ltd, its ground handling business, and Air India Engineering Services Ltd will cut costs by Rs 1,000 crore a year. This has also led to a fall in the number of employees per aircraft, a measure of operational efficiency, to 100 from about 220 previously, which was nearly double the number at some local rivals.
The airline is implementing several other measures to curb expenses, as suggested by a committee led by Ravindra H. Dholakia, a professor at the Indian Institute of Management, Ahmedabad. The steps, announced in May, include restructuring or withdrawing lossmaking flights, selling or leasing out underused assets such as land and buildings, and stopping excessive allowances to pilots and crew members.
Air India expects to save Rs 1,000 crore this year by implementing these measures. The carrier had also appointed global consultant DTZ to raise money from its real-estate assets. The target is to get Rs 5,000 crore from leasing and selling off its assets in the next 10 years.
Air India is also managing its units better than before. Its helicopter subsidiary, Pawan Hans Ltd, posted a net profit of Rs 7.7 crore in 2012/13 compared with a net loss of Rs 10.35 crore in the previous year. Air India Charters, which runs low-cost carrier Air India Express, will likely make a cash profit this fiscal year. Air India executives say the ground handling business will make EBITDA profit in the current fiscal year, while the engineering arm will take another two years.
The next priority was boosting staff morale. Employee morale was low mainly due to the airline's uncertain future and disparities in wages of employees of the erstwhile Indian Airlines and Air India. There also was a lack of communication between management and employees. The situation has improved since then. The time lag in getting salaries has come down to less than a month from six months earlier. "In the past, every year there were at least two strikes. The employees were not sure whether they would get their next month's salary," says Civil Aviation Minister Ajit Singh. "There are no such concerns now."
The airline is also improving fuel efficiency and maximising revenue generation from aircraft. "We will turn Air India into a hybrid service," says Singh. "While some flights will have all economy seats, others will have two classes." The airline has introduced all economy seats in 14 Airbus A320 aircraft for flights that take less than one hour. It is looking to lease 19 more A320 jets with all economy seats. The carrier also has 48 narrow-body aircraft with both executive and economy classes.
Nandan says Air India has 19 planes that are more than 20 years old on average. These jets guzzle a lot of fuel and will be replaced with new fuel-efficient aircraft that will have 180 all-economy seats to earn more revenue, he says. The airline is also inducting more Boeing 787 Dreamliners. These jets, says Joint Managing Director Ali, are 25 per cent more fuel efficient than aircraft of the Boeing 777 family, which accounts for 60 per cent of the airline's long-haul fleet. Air India, which had grounded its Dreamliners for about four months until mid-May after reports of a battery malfunction, has ordered 27 such jets.
It currently has six Dreamliners and will get eight more by December. The new aircraft will help it wipe out losses in the Europe sector and fly to more international destinations. Air India flies to 33 cities overseas and plans to connect Birmingham, Melbourne, Sydney, Milan, Rome and Moscow this fiscal year.
Another important reason for Air India coming out of turbulence is falling staff costs. Its wage expenses dropped about seven per cent in 2012/13 to Rs 3,323 crore. Finance Director S. Venkat says wages accounted for a quarter of revenue in 2012/13, down two percentage points from the previous year. The ratio would drop to 14 per cent from 2013/14. The airline is getting leaner - almost 7,000 employees will retire over the next five years. It has about 24,000 employees now. This includes staff at its ground handling and engineering services businesses, which have been hived off into separate companies. The hive-off of Air India Air Traffic Services Ltd, its ground handling business, and Air India Engineering Services Ltd will cut costs by Rs 1,000 crore a year. This has also led to a fall in the number of employees per aircraft, a measure of operational efficiency, to 100 from about 220 previously, which was nearly double the number at some local rivals.
The airline is implementing several other measures to curb expenses, as suggested by a committee led by Ravindra H. Dholakia, a professor at the Indian Institute of Management, Ahmedabad. The steps, announced in May, include restructuring or withdrawing lossmaking flights, selling or leasing out underused assets such as land and buildings, and stopping excessive allowances to pilots and crew members.
Air India expects to save Rs 1,000 crore this year by implementing these measures. The carrier had also appointed global consultant DTZ to raise money from its real-estate assets. The target is to get Rs 5,000 crore from leasing and selling off its assets in the next 10 years.
Air India is also managing its units better than before. Its helicopter subsidiary, Pawan Hans Ltd, posted a net profit of Rs 7.7 crore in 2012/13 compared with a net loss of Rs 10.35 crore in the previous year. Air India Charters, which runs low-cost carrier Air India Express, will likely make a cash profit this fiscal year. Air India executives say the ground handling business will make EBITDA profit in the current fiscal year, while the engineering arm will take another two years.
Rohit Nandan I.A.S., 1982 Batch, Education : Post Graduation in History, First Class Candidate, worked as Additional Magistrate, Project Director in Land Revenue Management & District Administration.
CAN SAY A Leader who transformed Air India in a span of two years.
Where there is a will, there is a way............
| Complete Biodata | ||||
| Name : | Shri Rohit Nandan | |||
| Identity No. | 01UP051500 | |||
| Service/Cadre/Allotment Year : | IAS/Uttar Pradesh/1982 | |||
| Source of Recruitment : | RR | |||
| Date of Birth : | 27/01/1957 | |||
| Sex : | MALE | |||
| Place of Domicile : | Uttar Pradesh | |||
| Mother Tongue : | HINDI | |||
| Indian Languages Known : | ENGLISH | |||
| Foreign Languages Known : | ||||
| Retirement Reason : | ON SUPERANNUATION | |||
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