Disaster on the runway

The newly appointed CEO from the Tata stable has his task cut out at AirAsia India

Since May 2018, AirAsia India has no CEO. The airline has no chief operating officer either. The chief commercial officer was first relieved of the position and then she resigned from the airline. The last head of strategy and planning has joined an operator in Riyadh as its head of legal. There is no head for cabin crew. 

What the airline does have are 19 aircraft, flying to 21 destinations and close to 2,000-odd employees making sure it happens. It has a head of flight operations. The gentleman is a pilot and the “manager accountable” for DGCA. In addition, the Tatas have put their own CFO in place so there’s someone to deal with the growing losses the airline makes month after month.

So I can’t help but feel huge sympathy for Sunil Bhaskaran, the newly appointed CEO from the Tata stable, who is being brought in to sort out this mess. As the CEO of one of the largest low-fare airlines globally once told me: “It’s much easier to start an airline from scratch than to fix one.” Bhaskaran is about to learn this the hard way.

For students of management, the AirAsia India history and journey is a classic case study of “how not to do it”.

AirAsia India started operations in June 2014. The airline had every ingredient needed for success. The low-fare airline concept was already familiar to India and it was a growing market. They didn’t have to be the one taking a risk and testing it out. Mistakes had been made by other airlines — many of which no longer exist — and you had all the learnings from those mistakes to rely on.

The airline had the backing of AirAsia chief Tony Fernandes and the wealth of experience that AirAsia Berhad brought with it. Most of the initial hires were sent for training to Malaysia. Almost all the systems, protocols and procedures of the parent were adopted for use. In fact, in the initial days the airline was practically run from Malaysia, and even at present the reservation system, accounting, sale and lease-back and maintenance are managed mainly out of Kuala Lumpur.

The year 2014 was a time when oil prices were at a low and from 2015 till the end of 2017, prices continued to fall. In fact, almost all the airlines in India started to make some profit, aided by low fuel prices. What I am trying to say is that the start-up had every chance of succeeding if it had proceeded sensibly. Instead, AirAsia India made all the mistakes possible.

Two CEOs were hired — neither familiar with the aviation business. Both came in from overseas; so neither was familiar with the Indian scenario. Both proved to be disasters for the airline’s operations with the first CEO involved in financial wrongdoing and the second one accused of inappropriate workplace bahaviour. In the scandal that ensued involving the second CEO, the then head of human resources was made a scapegoat and had to resign.

Both the CEOs had little clue about how to run an airline and that showed in almost every decision the airline took or failed to take. The airline changed its hub even before it started running. Routes were haphazardly chosen and abruptly stopped. Defying all logic, the airline now operates out of three hubs with less number of aircraft, while a sister airline, Vistara, operates from one hub with more number of aircraft. Losses have mounted — cumulative losses are over ~5 billion — and the Tata group has far exceeded what it had planned to invest in the airline in the first place.

The only area where the airline has given stiff competition to anyone in the sector is to low-fare airline GoAir in the frequency of resignations and the almost constant churn. I spoke to a few former AirAsia India staffers and they all said that there was “too much confusion” at the airline and too little autonomy. If keeping track of who is heading what at GoAir at any point is a challenge, in AirAsia India it’s impossible. My ex-AirAsia India directory is growing and is fast catching up with the ex-GoAir directory. 

In conclusion, I wish Mr Bhaskaran all the very best. If he succeeds in turning it around, he’ll be in competition with SpiceJet’s Ajay Singh for the never-ending shower of awards we love bestowing on each other in India.