I am a co-author of the Bangalore Aviation blog, which covers the industry in India and the ASEAN countries.
In terms of format; Fish’s original words will be italicized, and my comments in normal text.
Yes Air India was once a top-class airline admired around the world. However, the world in which Air India was considered an upper-crust carrier was entirely different from the world we have today. Air India’s “golden years” were in the 1960s and 70s; a time when international traffic around the world was heavily regulated. In that environment, Air India, as did most world carriers, competed for passengers based on service; as prices were set by the IATA and other such organizations. By the 90s, when international skies had begun to be de-regulated en masse, Air India no longer had a great service reputation; it made its profits on volume traffic.
“Air India’s reputation as a highly respected airline can be traced to the roots of another airline, Singapore Airlines. Early in Singapore Airlines’ history, the now Five-Star airline turned to Air India for consultation on establishing a superior customer experience. Based on initially on Air India’s model, Singapore Airlines is now renowned for its stellar customer experience and Air India has become renowned for its inferior customer experience.”
While it is true that Singapore Airlines asked for Air India’s help; Air India’s true service rep was born in the mid-1950s as it struggled to compete with BOAC’s Comets. With a fleet of turboprop Constellations flying to London, Air India could not hope to compete with BOAC’s speed. So they turned to on-board service, wowing passengers with the humorous little booklets they handed out to every passenger; with such useful information as how to (not) steal cutlery and a reminder not to stuff children in seat-back pockets. Air India further increased its reputation with the advent of flights between London and NYC, where it fought tooth and nail to take passengers from BOAC and Pan Am.
“Somewhere between October 15th 1932 when Air India first took to the skies and now the airline lost its way. The airline’s problems are frequently blamed on the Government of India, however the government has been in control since August 25th 1953. It is hard to overlook it now, but it was a Government owned Air India that became the envy of all airlines around the world on June 11th 1962 when it became the first airline in the world to opera an all jet aircraft fleet.”
Two qualms with this. Firstly, while Air India was owned by the government, it was managed by a Mr. J.R.D Tata. Mr. Tata was the founder of the carrier, and he often went against the grain of the government (for example in selling them on the 747). Tata was one of the most brilliant airline executives in all of history, and he kept Air India independent of government meddling. Once Mr. Tata retired in 1977/1978, the government slowly began to stick its fingers into Air India’s business; by the 90s, India’s Aviation Ministry was in firm control. So Air India is today a fundamentally different company in terms of management structure than it was in its heyday.
Secondly, Air India was NOT the first all-jet airline in the world. That distinction belongs to VIASA, the Venezuelan international airline, which began service on April, 1st 1961 with DC-8′s wet-leased from KLM. Additionally, VIASA took delivery of its two initial Convair 880s prior to Air India’s final retirement of the Constellations.
“Airline hubs follow the same motto of retail shops, Location, Location, Location and Air India’s hubs in Mumbai and Delhi are geographically situated in ideal locations to be strong global hubs for international connections, as well as handle the substantial traffic to, from and within India. Air India competes day in and day with Gulf rivals in the UAE and Qatar, this competition isn’t only for global traffic, but passengers traveling to and from India, many of whom are from India.”
A couple of things here. Firstly, Mumbai and Delhi are not as supremely located as the Gulf Hubs; in fact they are at least 1000 miles east of the major Gulf hubs; meaning that they cannot serve Northern and Eastern Africa with narrowbodies as the MEB3 can. And while Asian flights become easier, service to North America routinely requires the 777-200LR, which is relatively inefficient, and designed to cater more to premium O&D passengers, rather than connecting volumes.
Secondly, neither Mumbai nor Delhi is ideal for connecting passengers from the world to India. Mumbai, suffers from split operations; where domestic flights are operated from an entirely different terminal. Connecting international to domestic at Mumbai means that you have to go through immigration, bus to a different terminal, re-check your bags, wait in security lines that often can take hours, then finally board a new flight, often on airstairs. While Delhi has integrated operations within one terminal, a passenger is still required to go through customs and immigration, re-check their bags, and re-enter security. Delhi and Mumbai are by far the largest Indian airports, with booming O&D demand. Given this factor, lines for immigration and/or security are often cramped and tedious.
Given these factors, it’s not surprising that many passengers choose the easier experience of connecting through Dubai or Doha, then proceeding straight to their destinations (Chennai, Bangalore, Kolkata, etc.), where security and immigration are much quicker and easier.
“Any airline with its sights set on a global market requires a sizable fleet. While many of Air India’s direct competitors are first building their fleets, Air India already has a sizable fleet in place and existing order to significantly increase the fleet’s size. Air India’s fleet of 99 current aircraft range from the Airbus A319s to the Boeing 777s (200LR and 300ER variants) with every potential capacity gap covered in the middle, as well as three more Boeing 777-337s joining the fleet and an additional 27 Boeing 787-837s.”
While Air India certainly has a great fleet on paper, there are numerous problems limiting its utility. The 777 is fundamentally too big of an aircraft for Indian international operations. With India-based carriers splitting the long haul pie three ways (Jet, Kingfisher, and Air India), the market has proven that an A330 sized aircraft is optimal for operating internationally from India, with the flexibility to serve Asian routes and the range to cover Europe and Africa. Air India has recognized this to an extent, with a plan to lease 10 A330s, and obviously the 787 purchase. But till those aircraft arrive in significant numbers, Air India will be at a disadvantage with its too-big aircraft.
Furthermore, Air India’s ability to utilize its fleet is severely reduced by the carrier’s split MRO operations. With maintenance bases in numerous cities, including Mumbai, Delhi, and Trivandrum; Air India is forced to limit its scheduling to fit these conflicting demands. Thus, Air India has one of the lowest fleet utilization rates in the world, despite having a young fleet.
“The Boeing 787s are scheduled to begin joining the fleet before the end of 2011. An advantage in Air India’s favour is the age of its fleet, averaging 9.5 years old, their fleet has a lot of life left in it before aircraft must be replaced, reducing future fleet expenses and lowering potential MRO expenses for older aircraft.”
This statement makes little sense; even if the average fleet age decreases, MRO expenditures will go up as the 777s and A320s age. Plus, they still have a fleet of 5 747-400s, which are some of the oldest on the planet. These aircraft will all lead to increasing maintenance costs with time, especially for short-haul aircraft.
“From a domestic tactical stand point Air India is better suited that its Indian rivals for moving passengers where they need to go through its 15-year-old regional airline, Air India Regional inherited from Indian Airlines during the merger if the two airlines. Air India Regional may be small, with just 11 aircraft, a mix of ATR-42s and CRJ-700s, with an additional 14 A320s joining the fleet in the near future, but unlike its domestic competitors, Air India already has its foot in the door with regional service and the ability to expand this service with a relatively low investment into the subsidiary.”
Actually, Air India’s rivals Kingfisher and Jet Airways were the first carriers to really recognize this, and they have 25 and 20 ATR 72 turboprops respectively. They serve a myriad of small O&D routes from a broad base of destinations. Even LCC SpiceJet is bringing in Q400s to serve secondary regional routes. In contrast, Air India Regional essentially serves as a feeder to Air India’s Delhi hub (akin to US regionals), and mostly ignores secondary routes within the South, Northeast, and West.
“Along with Air India Regional, Air India has attempted to fend off low-cost carrier competitors through Air India Express, a wholly owned subsidiary. Air India Express’ fleet of 21 Boeing 737-800s makes the airline competitive, especially if it can differentiate Air India Express from the rest of Air India, while leveraging its network and operations to feed its mainline international traffic. Air India Express has had some difficulty separating itself from Air India, but the low-cost carrier has begun to challenge a rival low-cost carrier in the UAE, Air Arabia, by establishing an Air India Express base in Dubai. Many Indian travelers choose UAE based airlines over Air India, so this move is a small step in the right direction for Air India as a whole company to seek to regain some of the passengers they are bleeding to competitors.”
Air India Express is a (relative) success story for Air India. However, Air India Express caters almost entirely to transit traffic of Gulf migrant workers from the South. It has little to no operations at Mumbai or Delhi, and as such won’t be a useful tool in competing with the likes of Emirates and Qatar Airways.
Air Arabia is based in Sharjah, not Dubai; so perhaps he means FlyDubai? The base in Dubai actually doesn’t change much for AIX; it’s primary operations are South India – Middle East, and 5-7 destinations are served from Dubai with once or twice weekly frequencies. Rotating the aircraft through Dubai simplifies scheduling; the base is not designed to compete with Dubai based LCCs for traffic to say, Africa or Central Asia.
“Air India’s route network is a significant positive factor in the airline’s potential to survive, grow and regain its place amount top-tier carriers. Air India’s current route network includes more than a dozen Gulf Region destinations and 24 international destinations on five continents, in addition to its extensive domestic route network. In addition to the airline’s current destination, Air India has extensive unused fifth freedom rights between Europe and North America and elsewhere in the world. Granted, in some instances Air India made a wise decision to reduce or eliminate its fifth freedom flights, such as its New York (JFK) – London (LHR) flights, which was usually a full flight, the options to revive certain routes may prove to be lucrative to the airline.”
The count in terms of number of destinations is wrong; Air India currently serves 33 international destinations as a group; Fish may have based this off of the Air India website; which has not properly updated its list of destinations.
Air India’s 5th freedom rights were valuable under the Bermuda II Treaty, when only a few carriers were allowed to serve US-London Heathrow. Air India and Kuwait Airways were two other carriers given the right to serve LHR from the USA. But in 2007, under the new US-EU open skies agreement, the Bermuda II Treaty was abolished and all US carriers (and EU ones) were allowed to operate US-LHR flights. Today, with the addition of Delta, Continental (now United), and the like on NYC-LHR, those rights are essentially worthless; especially given Air India’s horrible service reputation.
“Along with Air India’s unused fifth freedom routes, the airline posses many dormant route authority options. As Air India adds additional long haul aircraft to its fleet the flexibility to revive previously popular routes, such as from the west coast of the United States, advance Air India ahead of its domestic competitors, as well as a number of its regional competitors in terms of providing non-stop or one-stop service to destinations other are not serving directly.”
Even with Air India serving NYC-India nonstop, the market share and revenue leader between NYC and India is Emirates; as they are currently to the West Coast. Simply adding routes for the sake of adding routes won’t work for Air India, they have to be able to attract passengers as well.
“Now, outside of the passenger side of things, Air India has many options, many of these options are through joint ventures. One example of Air India’s joint venture financial potential commences operations in 2013, when Air India is scheduled to open its new 50 acre MRO facility in Nagpur as a joint venture with Boeing. With MRO outsourcing being a highly competitive and profitable business unit for other airlines, this joint venture can be very successful provided the airline’s management and the Government stays out of its business.”
Air India does not have a very high maintenance reputation, so it’s unlikely that any carriers will be trying to outsource MRO operations to them; beyond the likes of Iran Air.
The choice of Nagpur for an MRO base presents its own problems. Nagpur, while centrally located, is currently a small spoke in Air India’s network. With the airline already struggling with aircraft rotation as it is, getting aircraft to Nagpur presents a serious complication; especially because Air India’s Boeings will mostly be long haul 777s and 787s, which are unlikely to be normally scheduled into mid-sized cities such as Nagpur.
So in conclusion, while Fish’s post gives an optimistic view of Air India’s situation; the reality is really much bleaker. It is possible for Air India to be saved; but that’s more likely to happen with smart contraction, not expansion.
Vinay Bhaskara is an aviation analyst and history buff based in the United States (New Jersey). In addition to his analyst’s position at Aspire Aviation, he also writes for the Bangalore Aviation blog, and does a podcast on Indian and ASEAN Aviation. He can be reached at @TheABVinay on Twitter, as well as at firstname.lastname@example.org.