Air India’s dreadful passenger services and why turnaround remains a pipe dream


New Delhi: Air India has made life tough for India’s private airlines with its last-minute Rajdhani-type fares, but when it comes to customer service it lags these very airlines by a wide margin. The latest data put out by the DGCA for June shows that Air India tops passenger complaints, lags every other domestic airline in on-time performance at the country’s busiest four airports and had to compensate almost 30,000 passengers in June alone for delaying domestic flights beyond two hours.

This is two-and-a-half times more than the number of passengers affected by a similar problem with market leader IndiGo, in the same month, at about 12,000. What Air India gains in terms of cheaper fares, it seems to be losing in the form of passenger goodwill.
File photo. PTI.

File photo. PTI.

Not just DGCA data, feedback from passengers is also telling Air India that it needs to pull up its socks. On an average, the airline flies about 50,000 passengers every day. Though only a handful bother to give feedback via those ubiquitous leaflets hanging out of seat pockets, those passengers who did take the trouble earlier this month were not too kind. So the airline got only 55 percent overall rating each on meal quality, washroom cleanliness and lounge experience. Passengers were asked to rate the airline on a scale of 1 to 4 and each of these three parameters got a rating of 2.2.

In other words, almost every second passenger was unhappy with all these parameters aboard an Air India flight. Cabin cleaning got more of a thumbs up, with a rating of 2.5 which translates to 62.5 percent. As per the DGCA data, the number of complaints against Air India in June exceeded those which were received against market leader IndiGo, Vistara, AirAsia India and SpiceJet together. Since customer service issues are almost a third of all complaints received against Indian airlines, it would be fair to say that there were most complaints in this regard from Air India last month among all domestic airlines.

As long as Air India remains immune to customer feedback and shows poor approach to customer services, the airline is unlikely to emerge from losses – regardless of what the airline’s management promises. It is true that the airline had posted a modest operational profit of Rs 8 crore in FY16 – the first such declaration in a decade – and is now eyeing up to Rs 800 crore in operational profit in the current fiscal.

The target for the ongoing fiscal looks ambitious because the airline had been unable to lower costs and has been instead banking upon benign oil prices and returns from sale & leaseback of aircraft to generate this operational profit – assumptions which could very well go wrong.

But even outside the financial implications, the airline’s customer service quality needs to improve. It is clear now from some media reports that one of the recommendations of the Niti Aayog — which has been tasked with drawing up a list of public sector undertakings (PSUs) for disinvestment — could be to revive Air India before any disinvestment. The Aayog is believed to have included Air India in a list of 22 PSUs where revival will have to happen before any value can be realised through disinvestment.

The only problem is Air India is past its sell-by date as far as revival is concerned. According to sources, Air India’s spend on fuel declined from about Rs 8,500 crore in 2014-15 to a little over Rs 5,700 crore in 2015-16. This means a saving of about Rs 2,800 crore straight away. Then, income from sale & leaseback activity was up by about Rs 500 crore. If we add the two figures — fuel savings and income from sale & leaseback — we get about Rs 3,200 crore. The actual improvement in EBIDTA for 2015-16 was over Rs 2,800 crore. From these figures, one might infer that the airline was worse off in 2015-16 since it did not show all the savings — from lower fuel prices and sale & leaseback—as operational profit.

In a presentation made before Civil Aviation Minister Ashok Gajapathi Raju earlier this month, Chairman and MD Ashwani Lohani spoke of improved operational profits this fiscal, an ambitious fleet expansion plan, new international flights to destinations like Madrid and Barcelona, and starting the Ahmedabad-London-Newark flights. Not much was said about action on cost control or the service standards of the airline.

Air India’s domestic market share plunged to 15.9 percent in 2015-16 from 17.9 percent in the previous fiscal. Its on-time performance is anyway poor, with Union Minister M. Venkaiah Naidu publicly berating the airline over flight delays some weeks back.

According to DGCA data for June, every third flight of Air India was delayed at Mumbai airport last month and its overall OTP at the four busiest airports was the lowest at 73.8 percent – which means every fourth domestic flight was delayed network wide. Except GoAir, every other private airline’s OTP was above the 80 percent mark.

So what should the airline be focusing on? A story in the Economic Times this morning spoke of how the Prime Minister’s Office wants Air India to target OTP of 85 percent, revenue increase by 10 percent besides meeting industry standards on load factor, capacity utilisation etc. Perhaps the first step should be to focus on passenger service. Every other parameter will automatically fall in place.