Don't see India turning into a duopoly market: Air India CEO & MD Wilson

Inducting an aircraft every six days on average over the next 18 months — that seems to be at the centre of Air India’s transformation. Air India Chief Executive Officer and Managing Director Campbell Wilson spoke to Deepak Patel and Nivedita Mookerji in Gurugram on how the aviation industry in India is at the cusp of change, while ruling out a duopoly scenario. Edited excerpts:  

How difficult is it to steer an integration involving four airlines (Air India and Vistara; Air Asia and Air India Express)?

There’s no example in the aviation history that’s quite this complex. But we have a number of things in our favour. This is an aspirational India with the desire to be on the world stage and there’s an overall hunger to go back to the days of JRD Tata in the 60s and 70s when he was steering Air India. … It’s an opportunity for us: Air India hasn’t recruited for 15 years except for the flying crew, it hasn’t done any succession planning. So we can get a lot of new people into the organisation, to bring in a cultural and capability change. Our commitment for inducting 470 new aircraft plus the investment in IT and training academies are statements of intent like no other.

Staying on the subject of Air India ordering 470 aircraft earlier this year, you have said that one aircraft will be inducted every six days on average over the next 18 months. That’s a tall order… 

It’s a large order but it has not happened without pre-planning. We are hiring 550 cabin crew a month most of the year. We are looking at doubling of the fleet size from when we took over (in 2022) to 2024.

When can Air India turn around financially?

All that we are doing is to progressively become more efficient, improve our unit revenue and lower our unit cost. It is the difference between the two that determines the profitability. Many steps in both directions lead to the outcome. Air India was not a profitable airline for a long time. It can’t be turned around overnight. 

Many airlines have been going bankrupt in India. Are you concerned that India could be a duopoly market?

It is categorically not a duopoly market at the moment. But it is equally categorical that it is not a healthy market by the virtue of the fact that airlines have gone bust so frequently. There is investor harm and consumer harm, and I think it has been a detriment to infrastructure…. What is happening is similar to some other regions around the world where you have gone through this period of a lot of small, perhaps under-capitalised airlines slowly starting to consolidate into well-capitalised professionally-operated airlines. This cleans up and creates a profitable ecosystem, which then encourages new entrants to come in. … Air India’s privatisation was probably important because the erstwhile Air India, in some respects, inadvertently, was a bit of a spoiler for the market because it was not necessarily operating for profit.

Can you explain?

When you have a large player in the market not really operating for profit, then you have got a lot of smaller airlines that might be under-capitalised and chasing cash flow. It becomes bit of a ‘tragedy of the commons’.  So, it is a transitionary period to hopefully, something a bit more sustainable.

However, do you see Indian aviation becoming a duopoly market?

No, I see India having parallels with North America and Europe where it is clearly not a duopoly.

Since your fleet is expanding so fast, do you have any plans to have your own MRO (maintenance, repair and overhaul) facility?

At the moment, we use AIESL (AI Engineering Services Limited) for most of the maintenance. It is part of the divestment agreement to maintain that relationship on a formal basis for a couple of years. For line maintenance, we are improving our capabilities in-house across all four airlines. For base (comprehensive) maintenance, we are still in the process of exploring options . With a much enlarged fleet, we are going to have facilities of that scale and quality to support that fleet. … We are still exploring. We want to make sure that we can do that in India because it is just not cost efficient to be sending it overseas. We want to ensure that whoever is doing that for us in India is doing to the level that we want.

IndiGo is considering introducing a business class on some of its planes. Do you think it could give a stiff competition to Air India?

I won’t talk about any particular airline but don’t forget that Air India has been operating around the world and competing with many airlines. When we fly to the UK, we compete with Virgin Atlantic and British Airways. When we fly to Germany, we compete with Lufthansa. It is nothing new to be facing competition from very established, very successful, very well-regarded carriers with all sorts of cabin classes and all sorts of cabin propositions. So, this isn’t an unusual situation.

Does it mean that competition does not worry you?

Competition should always worry us but it doesn’t frighten us. A lot of solutions are in our hands. Is our reputation good? Are we safe? Are we reliable? Is our seat product up to a certain standard? A lot of that is in our control. It is not easy to deliver but that is certainly what we want to do. So, in that sense, it (competition) should not scare us because we have all these things at our disposal. Doing it consistently is another thing that demarcates a good airline from a great airline and that requires a lot of systems, training and processes and that is what we are working hard to put in place. Also, look at the market dynamics. India is such a huge travel market but so much of the (international) market is not travelling on Indian carriers in part because Air India and other Indian carriers either haven’t had the capacity investment or product investment or haven't built the reputation. Therefore, so much of the market is travelling via somewhere else. And if we can get better, all that market will come back to us because I think there is a great desire for an Indian carrier to be good enough. That market size is there. If we do our job better, we can capture it.