‘Revenue-sharing with Air India has turned our balance sheet red’

Pawan Arora has been in news for all the wrong reasons since he took over as the chief operating officer of Air India Charters (known as Air India Express) on October 5. His appointment has been questioned by a cross section of people, from independent directors on parent airline Air India’s board to government nominees on the same board and then by the aviation regulator DGCA. Questions pertain to his competence on safety parameters in previous assignments, his salary package (which is over Rs1 crore per year) and the fact that his appointment was not cleared by the Appointments Committee of Cabinet (ACC).

His appointment and objections to it are expected to be part of the agenda for Air India’s crucial board meeting next week so obviously the issue hasn’t died down even now. But Arora appears oblivious to all criticism.

In a freewheeling chat with DNA, he spoke of plans to turn around the airline by separating it from larger-than-life parent Air India, launching domestic low cost operations next fiscal and undertaking a complete organisational restructuring of the airline. Arora also made it clear that the 25% revenue-sharing pact with Air India must be cancelled for his airline to return to profitability. But what happens if his very appointment is put in cold storage? Arora merely reiterated that he meets all the criteria laid down for the post of AI Express COO and has a valid explanation for even the ‘lapses’ in his safety record. Excerpts from a freewheeling chat:

There has been a drastic curtailing of Air India Express flights in recent months…
We had no option but to cut flights in September because of a severe shortage of cabin crew. We need 440 cabin crew, but have only 361. So flights per week were reduced from 205 to 155. Some stations such as Delhi and Jaipur have even fallen off our map. We used to operate Delhi-Amrtisar-Dubai and Delhi-Jaipur-Dubai but had to stop both flights. We were short of crew by about 20 per cent so naturally 20 per cent flights had to be cut.

Will some of the flights be restored soon?
By December 1, we will add 14 flights per week, largely by increasing frequencies on existing routes. Since the people of Kerala have been protesting the withdrawal of flights the most, 6 of these 14 flights will be for Kerala. We plan to add another 14 in January and then get back to the original 205 per week by February. In each round of additions, 6 flights will be from Kerala.

AI Express wants to be independent of Air India. How do you achieve this?
Express operates on a revenue-sharing model with Air India where we give away 25% of our revenues to the parent. This has turned my balance sheet from black to red. I want this revenue share to go. AI Express is a completely different airline, we and Air India file separate flight plans. Instead of a revenue-sharing agreement, I want clarity on goods and services provided by AI for which I will pay separately. Similarly, anything AI takes from me should also be paid for. If this is done, outgo from AI Express revenues will be only about 5-10%.

What are the services AI provides to AI Express?
Air India helps us with flight support (route plan generation etc), manpower (many of our functions are outsourced to AI), engineering support, hangers and parking for our planes. We need a Service Level Agreement (SLA) between the two airlines so that services rendered by each are clearly defined and paid for.

What led to severe crew shortage for AI Express?
The DGCA (Director General of Civil Aviation) guidelines allowed 1,000 hours per year for cabin crew but Air India had got waiver for 1,250 hours for long haul flights some time back. But then this rule was wrongly applied to AI Express cabin crew also, when cabin crew for short haul can only put in 1,000 hours per year duty time. Now, we are trying to correct this anomaly and this effectively means I must use less crew hours to make up for the earlier excess. This has led to overall crew shortage.

What are the key changes you would like to bring to the functioning of AI Express?
First of all, I want to get an AI Express cadre of people. Right now, we have five cadres within pilots alone. We have AI Express captains and AI captains flying Express planes, AI Express First Officers and those coming from AI - and then, some Air India pilots also fulfill certain management functions at AI Express. This needs to change. We have functions like Human Resources, Finance, Engineering which are being supported by Air India. There is urgent need to get our own people to these posts.

What about beginning low-cost flights on the domestic sector?
Right now, only about 10% of our flights are doing the domestic leg. We plan to scale this up from March/April next year. But I cannot reveal the proposed destinations right now due to competitive reasons. Of course, Delhi and Jaipur will get back on our map and we will look at some new destinations as well.

How are you planning to improve the international leg?
We let Bangkok—an important station—fall off our map in recent months because of crew shortage. Unfortunately, this happened at a time when competitors such as Air Asia began additional services between Bangkok and Kolkata.....we were doing three flights a week earlier and plan to restore this service as soon as possible. From the December schedule, we will run a Chennai-Singapore-Bangkok-Kolkata-Dhaka thrice-a-week service with a change of crew at Singapore. More international routes will be added as we get back crew strength.

What is the investment needed to turn around AI Express?
I have no separate figures for investment since we look at it for the entire group. This means Air India, Alliance Air, Vayudoot and AI Express together.

Do you plan retrenchments and salary cuts, since parent Air India is plagued with a high salary bill?
Where is the question of asking anyone to go? I am looking to just hire people.

What are the steps taken to improve AI Express’ safety record after the Mangalore crash?
I am building an organisational structure to improve safety values all across. We are formalising standard operating procedures, training manuals and basically building a clear organisational structure from scratch. As for the enquiry into the Mangalore crash, the court of enquiry instituted for this purpose has to come out with its report.