Air India Sets Out Really Ambitious Goals for Itself in New Turnaround Plan

Photo credit:  Flickr / Shashi Bellamkonda

Vihaan.AI. That’s the name of Air India’s new strategic plan that would see the once respected flag carrier recapture some of its prestige over the next five years.

Under the plan unveiled Monday, Air India aims to boost its domestic market share to 30 percent, “significantly grow” its international market share, and make needed improvements in the customer experience, operational reliability, and other aspects of its business, the airline said.

“This is the beginning of a historic transformation for Air India,” CEO Campbell Wilson said. “Vihaan.AI is our transformation plan to make Air India the world class airline it once was, and that it deserves to be again. We are absolutely focussed on being recognized as a world-class airline serving global customers, with a proudly Indian heart.”

Wilson, and his management team put in place under Tata ownership, have their work cut out for them. Since Air India was nationalized in 1953, it has languished among the globe’s state-owned airlines. In recent years, the country’s private airlines, particularly IndiGo, have dominated the domestic market. And foreign competitors, like Emirates, carry much of India’s longhaul international traffic.

Air India only had an 8.5 percent share of the country’s domestic market — a far cry from the target 30 percent — from January through August, according to the latest India Directorate General of Civil Aviation (DGCA) data. Tata’s other airline, Vistara, which is a joint venture with Singapore Airlines — where Wilson worked before taking the helm of Air India — had a 9.2 percent share, and market leader IndiGo a 56 percent share.

And internationally, Air India had just over a 13 percent of passengers in the first quarter, the DGCA’s latest data show. Including its budget subsidiary, Air India Express, which internationally flies almost exclusively to the Gulf and not longhaul like Air India, its share jumps to 23 percent. But for longhaul, Air India’s greatest competitor is Emirates, which is seen by some as India’s de facto global carrier, with a little over a 6 percent share of international passengers in the first quarter.

Emirates strength has been on display in recent months as Air Canada and United Airlines have signed partnership agreements with the airline citing connecting opportunities to India among their rationale for the deals. Notably, both Air Canada and United are members, along with Air India, of the Star Alliance yet they have sought an outside partner to boost the number of destinations in India that they offer passengers.

Air India began its transformation last week with a deal for 30 new aircraft. The airline will lease 25 Airbus A320neo family, and five Boeing 777 planes with a goal to increase its fleet to 143 aircraft by the end of 2023. The leases are expected as just the beginning with industry expectations that the airline will place a large order — potentially for as many as 200 aircraft — with Airbus and Boeing in the near future.

But capturing market share, and winning over alliance partners like Air Canada and United, will take more than just new planes. That’s where improving the customer experience and operational performance of the airline, as well as boosting staff morale, comes into play; something that is arguably much more difficult to do than simply buying new metal.

Few airlines have successfully achieved the kind of turnaround envisioned for Air India. Air France is among those that have evolved from a taxpayer albatross to a global champion following its merger with KLM, forming Air France-KLM, in 2004. But the list of those who have not succeeded in such a turnaround is a lot longer, including Alitalia, Malaysia Airlines, South African Airways, and SriLankan Airlines.

Most believe that if anyone can achieve the kind of turnaround envisioned for Air India, it is the Tata Group. The Indian conglomerate has achieved successful turnarounds of other global brands, including Jaguar and Land Rover.

Air India provided few concrete details of its Vihaan.AI plan. It has been split into several phases including the current “taxiing” phase focused on fixing basic operations and product issues; and the “take off and climb” phases will focus on growth and building sustained operational and product excellence.