AirAsia India's short history suggests experience helps to run aviation biz

Airline chief Tony Fernandes' "out-of-the-box" choices of CEOs have proved to be disastrous for AirAsia

It was when Mittu Chandilya was working with a head-hunting firm in Singapore with AirAsia Berhad as one of his clients that he met the airline’s chief, Tony Fernandes. The former model had no experience in the airline business, barring having tried to recruit for airlines as a head hunter. Fernandes, however, was convinced that airline experience was not essential to successfully steer a start-up airline. Instead, he was more drawn to “out-of-the-box” choices and selected the young and relatively inexperienced candidate as the first CEO of his maiden venture in India.

Barring the fact that the two have fallen out since at a personal level, reams have already been written on where this decision took the carrier. Chandilya was CEO from the word go (June 2014, when the airline took to the skies) till he was replaced in 2016.

Airline professionals, including those working in AirAsia back then, assumed Fernandes’ next choice would be more circumspect. Nobody, therefore, expected the AirAsia boss to pick yet another CEO with no experience in the sector. But that’s precisely what happened. Fernandes handpicked Amar Abrol to head the airline in April 2016. Abrol had worked some years in the credit cards business and had subsequently become CEO of Tune Money (an AirAsia company).

As many even at the time predicted, Abrol proved to be a second disaster for the airline. The company’s operations continued to flounder while his handling and dealings with staff, and even at government meetings, brought further embarrassments to the management. “Malaysia tried its best to minimise the damage from a distance but with little success,” says a former board member of AirAsia India. The airline accumulated losses of Rs 1,284 crore by the end of March 2019 during the tenures of the two CEOs and the auditor raised concerns over the airline being called a going concern since current liabilities exceeded assets by Rs 962 crore.

It was, therefore, with disbelief that the industry watched when the Tata group, which has a 51 per cent stake in AirAsia’s India venture, took charge in November 2018, and put in the top spot yet another CEO with no airline experience. A Tata loyalist, Sunil Bhaskaran was heading corporate affairs and communication for Tata Steel when he was selected for the unenviable task of piloting the troubled airline. Bhaskaran had to contend with five years of mismanagement at AirAsia, a hornet’s nest of controversies besides a floundering business that needed to compete in a cut-throat environment. Bhaskaran, however, was trustworthy, stable and dependable, a true Tata product, so to speak. He demonstrated his willingness to learn and was an adept manager, even if his own understanding of the sector was still shaky.

Soon after Bhaskaran took over, the company was able to hire Sanjay Kumar, IndiGo’s chief commercial officer, who’d spent 11 years at IndiGo and almost six years at SpiceJet prior to that. He was among the most sought after for his expertise in strategy and revenue management. Although Kumar was wooed by GoAir and SpiceJet, he joined AirAsia India as chief operating officer a few days after Bhaskaran. A head of engineering, S K Bansal, was also hired from IndiGo. “At the time, the company had some airline experience in its top management,” an airline industry source points out.

Through 2019, however, as the Tata group took over the affairs of the airline, a large part of the senior team was brought in from various Tata companies, leading to a situation where little of the top management had ever worked in an airline. R Ranganathan, former VP finance of Tata Steel and retired since, was brought in to advise Bhaskaran, a move that raised many eyebrows at the time.

More and more Tata veterans made their way into the company. Vikas Agarwal was inducted as CFO from Titan, and a HR head was brought in from Tata Communications. An old Tata hand was brought in as head of marketing. Barring Kumar and Bansal, almost none of those in charge had worked in any airline. Very little talent from outside — aviation or non-aviation — was brought in.

The company has over the last year turned into a typical Tata firm with a bureaucratic feel and attitude, according to a former Bombay House stalwart. He argues that many Tata companies run in the same laid-back fashion, more like a public sector unit than anything else. “The Tata Administrative Service, while being a good training ground for competent managers, is alarmingly like the Indian Administrative Service,” he adds. While the Tata culture and ethos may work fine for some industries, in aviation it is proving to be a major disadvantage. Even Kumar, used to the IndiGo pace and culture, found the airline too stodgy and slow and left to rejoin IndiGo in just over a year.

Industry veteran Shakti Lumba argues that some understanding and experience of the airline business is necessary to run the business well. More so in India’s unique operating environment. Lumba had been asked to head flight operations for AirAsia India and had even visited Kuala Lumpur in 2013-14. He declined the offer as he was not convinced that the venture could be run the way it was being envisaged, with Malaysia pulling all the strings.

Many in the sector now say that the Tata group ought to induct some serious aviation talent into the company if it plans to stay in the game and wants to compete with the IndiGos and SpiceJets of the world. This may be good advice, yet, in a sector starved of talent, it’s easier said than done.