Cosmetic surgery will not do

Air-India’s ambitious turnaround strategy needs more substance, as it fails to provide answers to the key question of a hugely bloated workforce.
Its plans to mainly convert to a low-cost carrier, too, lacks any conviction as it has many legacy issues that would make it difficult to achieve this transition.
The strategy largely hinges on reducing costs through loan restructuring, retiring leased aircraft, and shifting employees to four subsidiaries, none of which is easy to implement. Instead of thinking up ways of trimming its 31,000 strong workforce, which is to be rendered even more workless if the airline goes ahead with plans of retiring leased aircraft, it wants to park the employees in new strategic business units — maintenance and repairs, cargo, ground handling, and engineering.
If these are to remain subsidiaries of Air India then this would be mere window dressing. Besides, it is not clear how the airline can persuade the highly unionised staff to move to these units, especially if it plans to induct strategic partners in them.
The proposal to morph into a largely a low-cost carrier may be a non-starter. The key to low-cost carriers is not just cutting down on frills or services, but also standardising operations and building efficiency by cutting overheads to the bones.
11/08/09 Economic Times

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Categories: NACIL Aug 2009