 "Rohit Nandan")
A day before his term came to an end, Air India Chairman and Managing Director Rohit Nandan spoke to Anjuli Bhargava on the state of the government-owned carrier, what he feels he has managed and what is yet to be done. Edited excerpts:
What is the carrier's state, financially? How do you see things?
Let me tell you one big change, in my view. When I took charge in 2011, we were in a bad financial position. Fuel bills were unpaid, salaries were late and losses very high. We improved operations and planning. We did away with a lot of our loss-making flights. We sold harder. We tried to be on time.
But, your own pilots alleged you gave away profitable international routes to private airlines, a sellout of sorts?
Yes, they did and they are absolutely off the mark. Not a single discontinued route was (an) unjustifiable (decision). Flights like Canada alone, stopped during my tenure, were making us lose Rs 350 crore a year.
We stopped routes where we were consistently losing money. The decisions were entirely based on commercial considerations. I have had a very detailed internal report done on these 32 routes and given it to Parliament. I cannot share the report with you right now but in due course, everyone will be privy to it.
Isn't your improved performance more to do with fuel prices coming down than steps directly taken by you?
Fuel prices started coming down only at the end of last year (2014). I am talking of earlier. Our first small cash profit, though only Rs 6 crore, was in 2013-14. We were after years able to generate a cash surplus over variable cost. A small profit but we did it and on international operations, where we make our larger losses. It won't be fair to attribute everything to lower fuel prices.
Even more than reducing losses, we have brought in a lot of financial discipline. The equity that has come in has reduced the stress on the balance sheet. We did not have working capital in 2011 and were running to the banks all the time. There was a lot of financial indiscretion in that sense. We were always borrowing without security. You take money like this and it gets spent like this. Unsecured loans of Rs 22,000 crore had been given to Air India.
After I joined, I have insisted that money be released to us against a specific thing. We should be answerable. Today, every paisa given to us is against a specific head. I and the management can be held accountable. You were given money for X; why was it diverted to Y? This is an important change in the system.
Why has so little happened on MRO (maintenance, repair, overhaul)? What will you do with the new facility at Nagpur?
Nagpur has come to us virtually free. We will, of course, use it for our own fleet but eventually we will service any other airline's aircraft there, too. We will handle third-party business. We have applied for YASA (the global non-profit safety standards body) certification. They are coming next month for inspection and by December, we should have the certification. Then, of course, we will have to try and get business. Just because you have an MRO doesn't mean aircraft will come to you. We have approved an internal marketing team. We might even outsource some younger staff for making presentations digitally and to push for new business.
What is important is that the present fiscal structure for the MRO business in India has to change. We charge 14 per cent service tax. There are octrois. Then, there are royalties paid to airports. So, Indian MROs are 25 per cent more expensive. This has to be resolved. Else, planes will still leave the country to be serviced. This can, in fact, be a big factor towards the Make in India initiative - it can be a big contributor if this fiscal issue is settled. It is a huge business that is waiting to be exploited.
Have you been able to bring some discipline on the policy of upgrades for own employees and their family members?
Upgrades are offered only if a seat is vacant. There are only 12-15 senior people in the airline who are entitled to a firm upgrade if a seat is available. I can't speak of the past but we never allow an upgrade at the cost of a revenue passenger.
Is it true that the private airports at Delhi and Mumbai are beginning to pinch and are among the most expensive?
I think Delhi for a while has been among the more expensive. But, if there is a 78 per cent cut as is being discussed, it should be fine. We are a bit worried about Mumbai; since there has been a large investment there, there is likely to be a steep hike.
But, this dichotomy between airport operators and aerodrome operators will always be there. We will always want things to become cheaper and they will always want to recover their expenses and investment. The twain cannot really meet.
