While Air India wants to maintain operational profits, it is also looking to raise fresh loans, says chairman and managing director Rajiv Bansal

Air India’s impending privatisation has not hit its expansion plans. While employees are naturally anxious about its implications, there is no sense of fear in the ranks, says the national carrier’s new chairman and managing director Rajiv Bansal in an interview on board the inaugural Delhi-Copenhagen flight. While it wants to maintain operational profits, it is also looking to raise fresh loans. Edited excerpts:

How does it feel to take charge after the government decided to privatise Air India?

Privatising is a different issue as it is for the shareholders to see. The shareholder is the Government of India and it is examining it. My job is to run the airline professionally and profitably. So I am channelling my energy on that.

But before privatisation, have you set goals for yourself?

My focus is not to enhance value for privatisation which could be a side benefit. My focus is on running the airline. I have been here since about 25 days now and my only focus is to run the airline on time. I can’t monitor all the planes and flights, so I’m monitoring the first flight of the day, inter-metro flights and five ultra long-haul flights.

How is the mood of employees ahead of privatisation?

Employees are naturally feeling it’s an uncertain future. Any employee would, they have been in the airline for long and the government is now saying it will be privatised. So there is an apprehension and uncertainty. My feeling is that a lot of employees feel they are good in their work and they will continue to get employment under the new owners. So they are not unduly worried. Another thing is that my average age of employees is quite high — about 53-54 and retirement age is 58. So a large number of employees will retire in the next 3-4 years. The government has a reasonably good experience in privatising the Delhi and Mumbai airports where AAI employees were assured that they would continue to be in employment till superannuation and I hope that the government would give such an offer to my employees too. But on the whole, [there is] some uncertainty but no fear.

What progress have you made in terms of on-time performance so far?

We pushed very hard. I roughly monitor around 30% flights. There are about 20 inter-metro first flights of the day and there are about five ultra long haul flights. We have witnessed significant improvements in the on-time performance (OTP). There are some bad days but on some good days we have crossed 90%. My target is to consistently maintain 90% OTP and towards that end, we have improved our ground handling. We have looked at all points of delays and corrected them. We have also taken action against any shortcomings on the part of vendors or our own staff.

Do you think airlines can be run professionally under government control just as private airlines?

There are some challenges and some opportunities also. Opportunity in the sense that it’s a national carrier and I have a huge commitment from the government that all government officials will fly by Air India. It’s a big comfort for me. Running it as a government entity has other challenges as it’s not easy to operate a ‘hire and fire’ policy. It’s a matter of building processes, so if you do that you can work in the PSU environment also. I see no reason why we can’t run as a public sector airline.

Do you think the government’s move to put on hold induction of new planes due to disinvestment talks has become a challenge for you for expansion?

I have about 110 planes and for the winter schedule, we will be operating about 90 aircraft and I think that’s pretty good in terms of the immediate future for about six months.

How do you see the competition from IndiGo and SpiceJet that have plans to operate low-cost long-haul flights?

Competition is always a challenge, so we need to stay abreast with the times. We need to create value in our offer. I think we are fortunate that along with Air India, we have Alliance Air that operates smaller aircraft which feeds into my destinations. I also have Air India Express that runs on a low-cost model. I think we will be able to take on the low cost carriers (LCCs) on international sector through Air India Express and we are a full-service carrier, so we will be able to position Air India to command better yields because of the value proposition. Passengers don’t mind travelling on LCCs in the short-haul but on a long-haul flight, passengers are naturally looking for comfort, so I am better positioned.

What measures do you plan for cost optimisation?

This is going to be my next goal. Right now I am focussing on running my operations on-time.

Air India stopped serving non-vegetarian food on domestic routes to save cost. Any plans to review it when you take up the cost rationalisation exercise?

We are serving non-vegetarian food in the business class and reducing cost by not serving it in the economy class. We will hold on to that position for sometime. We haven’t got significantly adverse feedback till now. Passengers in domestic sector value on-time performance. So that’s what we will ensure along with comfort, in-flight entertainment and food.

Do you think the government should continue to keep in mind Air India’s interest while going for bilateral negotiations?

As CMD of Air India, I will be happy if the government protects its national carrier. But this is a call government has to take. But a certain amount of assured allocation to Air India would ensure that national carrier gets some preference.

Any profitability targets that you have set?

I don’t think we are in a position to earn net profits but continuing to earn operational profit is my major challenge. If I can close the current financial year with an operating profit, I would be happy.

How are finances doing in the first six months?

Finances are challenging because my debt burden is huge. Monsoon season is not a tourist heavy time but now we are getting into the festive season, so we are hoping that September and October figures will be better than July and August.

You have floated a tender for taking short-term loans of about ₹3,000 crore recently? What would that be used for and do you need more such loans?

Yes, we need more loans to cover our losses. The government has come forward to guarantee these loans, so that is why we floated the RFP (request for proposal). We hope to pay off our dues to various oil companies and the airport authorities.

Do you think the government should split and sell Air India’s businesses during the disinvestment process?

As I said, the government should answer this question. [It is] Not proper for me to answer. Also it’s too premature as the government has floated a tender to hire transaction adviser which will advise whether to sell in pieces or as a whole unit.

(This correspondent is in Copenhagen at the invitation of Air India)