The resignation of Amar Abrol, MD & CEO of AirAsia India (AAI), comes at a crucial time for the young airline.
Unlike its sibling, Tata Group and Singapore Airlines-promoted Air Vistatra, AirAsia is still struggling to get a stable leadership in place, given the conflicting management styles of the Tatas and Air Asia group’s Tony Fernandes, said sources in the airlines industry.
The first two CEOs of the airline were seen as Tony’s men, and the fact that the airline has not made any remarkable headway may see the Tata Group weigh in.
Presently, the operations are largely overseen by the Air Asia team, while finance and related functions are the domain of the Indian conglomerate. Therefore while the CEO is appointed by Tony, the airline’s CFO is hand-picked by the Tata Group. This may be one of the reasons for Abrol’s exit given his aggressive style of leadership and wanting to make fast-paced changes, which conflicted with the Tata’s style of management.
Besides, Tatas do want a say on the routes the airline flies, something that curbs operational flexibility of the Malaysian partner. Air Asia is known to disrupt the market by exploiting less flown or virgin routes, which it has not been able to do in India.
“Tatas want accountability of the revenues – how much comes to the joint venture and how much needs to be transferred to Air Asia in Malaysia, which was redistributing the traffic capacity back to India. Also the effectiveness of yields was closely monitored,” said Mark D Martin, founder of Dubai-based aviation advisory Martin Consulting.
The fact that till very recently Air Asia India sold 60-70% of its inventory at very low fares, just going into the month, did not help the bottomline much. However, with some changes to this pricing strategy, the airline posted its first profitable quarter since its inception in December FY18, with a modest profit of Rs13 crore.
“For AirAsia, which is used to passive financial relationships as it is funded by banks or financial institutions, managing an active financial relationship like Tatas is tough. Both the partners need to evolve a kind of co-existive environment,” Martin added.
05/05/18 Financial Express
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Unlike its sibling, Tata Group and Singapore Airlines-promoted Air Vistatra, AirAsia is still struggling to get a stable leadership in place, given the conflicting management styles of the Tatas and Air Asia group’s Tony Fernandes, said sources in the airlines industry.
The first two CEOs of the airline were seen as Tony’s men, and the fact that the airline has not made any remarkable headway may see the Tata Group weigh in.
Presently, the operations are largely overseen by the Air Asia team, while finance and related functions are the domain of the Indian conglomerate. Therefore while the CEO is appointed by Tony, the airline’s CFO is hand-picked by the Tata Group. This may be one of the reasons for Abrol’s exit given his aggressive style of leadership and wanting to make fast-paced changes, which conflicted with the Tata’s style of management.
Besides, Tatas do want a say on the routes the airline flies, something that curbs operational flexibility of the Malaysian partner. Air Asia is known to disrupt the market by exploiting less flown or virgin routes, which it has not been able to do in India.
“Tatas want accountability of the revenues – how much comes to the joint venture and how much needs to be transferred to Air Asia in Malaysia, which was redistributing the traffic capacity back to India. Also the effectiveness of yields was closely monitored,” said Mark D Martin, founder of Dubai-based aviation advisory Martin Consulting.
The fact that till very recently Air Asia India sold 60-70% of its inventory at very low fares, just going into the month, did not help the bottomline much. However, with some changes to this pricing strategy, the airline posted its first profitable quarter since its inception in December FY18, with a modest profit of Rs13 crore.
“For AirAsia, which is used to passive financial relationships as it is funded by banks or financial institutions, managing an active financial relationship like Tatas is tough. Both the partners need to evolve a kind of co-existive environment,” Martin added.
05/05/18 Financial Express
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