Tuesday, September 15, 2015

Can Ashwani Lohani turn Air India around?

New Delhi: On August 21, the government announced that Ashwani Lohani, from the Indian Railway Services of Mechanical Engineers' 1980 batch, would take over as the new chairman & managing director of Air India. The next day, some pilots reported late for duty, which delayed several flights. Ten days later, Lohani took charge of the loss-making airline. On the same day, the pilots' union asked its members not to extend their duty hours in case of a flight delay.

A week later, an Air India flight (Khajuraho-Delhi) made an emergency landing at the Delhi airport. Around 145 passengers were evacuated after smoke was spotted in the aircraft's wheel and five passengers were hurt.

These incidents highlight the challenges Lohani faces: an aging fleet, agitated pilots and huge losses. There's more: Air India's market share has slumped from over 30 per cent a decade back to around 15 per cent at present. Its average load factor of 78.8 per cent is lower than competition and on-time performance amongst the worst in the industry.

"Its legacy cost structure is high, competition in the domestic and international routes is increasing by the day, staff morale is low, good people are routinely poached by competitors, many old aircraft are still flying and engineering troubles with new aircraft continue," says Amber Dubey, partner and India head of aerospace and defence, KPMG.

According to Dubey, Air India needs to be privatised as quickly as possible. "The new owners may do well to recruit a bright young professional in his 40s from one of the leading global airlines to lead the airline and give him a free hand for at least ten years. Revival of Air India in the current state is well-nigh impossible."
14/09/15 Somesh Jha/Business Standard
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