question. There are concerns among travelers about the merger of Vistara and Air India. Air India still has a long way to go in terms of overall improvement. Will the merger happen by March 2024?
answer. Vistara will continue to operate as Vistara as a separate entity until we determine that Air India has reached an appropriate level to consider a merger. I never said March (2024) is the deadline. These two airlines will continue to exist separately. The final name of the full-service airline is Air India. Whether we reach that point will depend on whether Air India feels ready. We are taking many initiatives to elevate Air India’s standing.
It would be helpful to obtain permission to compete from the Indian authorities. Start sharing best practices. Vistara can help accelerate this journey. Cultural aspects will become important. We need to make sure that the AI guy accepts his Vistara input, and we need to make sure that the Vistara guy is enthusiastic and excited about the national mission to bring back AI. There is also a need.
The ongoing consolidation (Vistara-AI and AI Express-AirAsia India) is unprecedented in the global aviation industry, going from four or even five airlines to two (previously known as Indian Airlines). Air India was not properly integrated). I don’t think anything like this has ever happened before, not just for the airline, but for the staff of the 5 groups as well. The future AI Express will be the merger of two airlines and operate as a low-cost airline.
question. What are the main processes of a merger?
answer. Broadly speaking, there are three elements to the regulatory process. One is permission to compete. CCI India is obviously one of its components, but Singapore and a few other jurisdictions will have to give permission as well.
Then there is the NCLT, which is the legal permission to actually complete the transaction. And then there is the aviation regulatory process (DGCA and BCAS). The process of consolidating airline licenses will take place after legal closure.
And then there’s the third part, which is not regulation. That’s when he actually merges the two brands and operates them as one consolidated business. And that’s a matter of our discretion.
question. The first of 470 planes ordered has been delayed. Will this affect your plans?
answer. We take ownership of our first Boeing 737 MAX this week. The number of MAX aircraft we expect to receive by the end of this fiscal year (10-12) is lower than we expected (15) due to issues with Boeing that will add several weeks to each aircraft. It’s slightly less than.
As for the Airbus A350, it should have five, if not six (as expected), by next March. There will be a slight delay in initial testing as the seat manufacturer required additional testing on some seats. We expect to see one, possibly two, A350s this calendar year.
[These delays]are obviously unwelcome, but it’s not the end of the world. Not everything is significantly delayed, with slight delays for the B737 MAX and A350. We plan to lease 25 A320s over the next 12 months to augment our AI fleet. These far exceed the 470 aircraft ordered.
question. The DGCA has suspended AI’s aviation safety chief twice in the past four months, and the airline has faced a number of recent blowbacks from the regulator. your comment.
answer. The promotion of practices that are not fully adhered to is clearly unwelcome. We have made and continue to invest significantly in improving our overall safety culture, including our people, practices, training and systems in place to tighten reporting, monitoring and tracking data. I’m planning on going. No effort will be spared.
But in organizations where the culture is ingrained in a lot of ways, not just safety,[AI]has to be accepted. (We’re) changing that culture, creating accountability, changing the understanding of what is currently acceptable and what may have been acceptable (in the past). It’s not about checking a box, it’s about actually understanding the intent and spirit. It takes time. All it takes is a concerted, consistent, and long-term effort. Obviously we’re not there yet. And we are disappointed that such a finding has come out, and we fully accept it. It’s another reminder that we have work to do. I will keep trying my best.
question. Tatas acquired AI and AI Express at the end of January 2022. Is the resurgence program on track?
answer. We had no illusions about this Everest of corporate turnaround that it would take long. When we launched the Vihan (reconstruction) program a year ago, we said it would take five years. And for the first six months, I’m really going to focus on cleaning up. There’s a lot going on right now: ordering planes, hiring people, acquiring planes, increasing flights, putting systems in place. So based on that plan, I think we’re a little ahead of schedule. However, that does not mean that we have achieved all our aspirations.
Some are mechanical and take time. We have $400 million invested in refurbishing the aircraft, which will not occur until mid-2024. So there’s a lot going on under the hood. It may not be physically visible to the consumer, but just slightly exceeding expectations is enough.
We have unlocked the supply chain. The supplier did not provide parts to his AI because the AI was not paying. We are resolving all of those claims. Tens of thousands of parts are now back in the pool. We have a warehouse at the Delhi airport because while most of our business was in Delhi, most of our spare parts were kept in Mumbai.
The company had not been hiring for 15 years. As a result, there was a lack of exposure to modern practices, modern thinking, and succession planning. We employ a huge number of staff and develop talent within our organization.
question. So when will the profits come in?
answer. We are a private company and have our own internal goals. We are happy with the situation at the moment. I don’t set a schedule (until I get a profit). Tatas had done extensive due diligence and knew the amount of work the investment would take and the time it would take. No one is under any illusions about the scale of the job and the amount of time it will take. AI has not been a profitable business for many years. And it would be strange if it became a dramatically more profitable business overnight. it takes time.
question. What is the status of the planned training school?
answer. The lease for a new training academy spread over 600,000 sq ft in Gurugram has been completed. Meet the training requirements of pilots, flight attendants, engineers, airport operations, security, commercial and other staff. A dedicated safety center will be set up through which all Air Indians will pass through now and in the future. In terms of simulator training, things are going very well with the two consortiums. Over the next few years, we will spend more than $200 million.
question. AI is in talks with Lufthansa Technik and KLM Royal Dutch Airlines for MRO here. What are the engineering advances?
answer. We have been in discussions with many potential partners for MRO facilities. We have issued an invitation to express interest to 9-10 global players. I have narrowed it down to a few that I would like to dig deeper into. It’s not necessarily about (the bid for) AI Engineering Services Ltd or AIESL (if the government sells it). It’s a partnership to develop capacity. AI must support your fleet and product standards. And there may be many paths to that outcome. One of them might be ESL.
Question Does the Indian aviation market look like the Indian telecom market with two major players?
answer. The Indian aviation market has not been healthy for a long time. It’s just that new entrants and subsequent failures were very frequent. Something wasn’t right. In my assessment, Air India had a very important player but was not actually operating commercially (until 2022). And then there were companies that came into the market that were promoter-driven, didn’t necessarily have enough capital, and were always chasing cash flow. And I couldn’t keep it going because it wasn’t stable.
There are currently two important players who are well-funded and professionally oriented. It can bring some stability and health to the ecosystem. And then there’s the profit pool that other people might want to come in and participate in.