Manpower Shortage Becoming a Bottleneck to Air India’s MRO Growth Plans

In January 2015, Air India hived off its engineering department into a separate unit to tap maintenance, repair and overhaul business from other airlines. It still mainly caters to its own aircraft maintenance but aims to double its third party business to Rs 1300 million in FY 2017.

But today Air India is facing a severe shortage of aircraft engineering personnel. Its plans to grow its MRO business faces a big risk.

As per H R Jagannath, CEO of Air India Engineering Services Limited, Air India’s MRO unit has around 600 aircraft maintenance engineers and faces a shortage of around 100-150 personnel. Recently it hired around 100 of its retired engineers on contract but it was inadequate. Air India will require 250 engineers and the manpower shortage could become a bottleneck to Air India’s growth.

Part of the additional manpower through fresh hiring will be utilised to maintain new aircraft being inducted in Air India’s fleet. A part is also to be utilised to cater to vacancies caused by retirements of over 15-20 employees each month.

Hiring engineers essentially means poaching from another airline and is so proving to be a difficult proposition. It normally takes four years for a fresh aircraft technician to secure a type rating and maintenance engineer’s license. An operator like Air India must also groom aspirants for the job. Air India is now offering on-job training to technicians from other companies, enabling them to apply to the Directorate General of Civil Aviation (DGCA) for licence.

“We are seeking support of DGCA and Boeing for the training programme. The government too should support the MRO sector by offering five year tax holiday, ” according to H R Jagannath.

Earlier this year, Air India’s MRO began carrying out ‘C’ check (heavy maintenance check) on Jet Airways Boeing 777 aircraft. It has also signed a MoU with SpiceJet to maintain its Boeing 737 and efforts are underway to secure European Aviation Safety Agency certification for MRO facilities in Nagpur and Thiruvananthapuram.

The MRO unit will also start test and minor repairs of General Electric engines which power Boeing 777 planes at its Nagpur unit later this year and complete overhaul of engines will be carried out from next year. The engine overhaul facility, the first of its kind in India, will significantly boost the MRO business as it can undertake engine repairs of all General Electric engine customers.

Air India Soars on More Promotional Schemes

India’s aviation industry is currently witnessing a big fare war. When it comes to natural air fare war, it seems that the senior most Airline in the country, Air India, often has a leg up on new airlines. Air India does not want to lag behind. It intends to defeat all its rival airlines and attract passengers through lowest fares. The end user, the flier, has no complaints.  The flier does not see anything wrong with AI’s increased publicity campaigns.

So many plane players…. Air India is one of them.

“It’s tough to fight in terms of market share as the private airlines are adding capacity at a frantic pace. As a government airline, we don’t have the luxury to do so,” says a top official of the Air India. Aiming to attract more fliers and achieve higher seat occupancy in its flights on trunk routes, National carrier Air India has decided that it will be providing “unbeatable metros fare” to domestic passengers willing to return the same day from July 25, 2016.

Air India is now realising that it needs to market itself and grab visibility. It is pulling out all the stops in its high-decibel promotional offers and advertising campaigns. As part of the pricing strategy, Air India will drop fares on four key routes, Delhi-Mumbai, Delhi-Chennai, Delhi-Kolkata and Delhi-Bengaluru, for tickets booked four hours before departure. Air India has an average load factor of 74 per cent across its domestic network while the seat occupancy on these routes is around 80 per cent.

Speaking to media, S Venkat, Air India Finance Advisor, said, “We are going to introduce new scheme for our all passengers who want to return same day flights in metro cities. Fares will be minimum Rs 5,000 and maximum Rs 10,000.”

“This is very attractive fare for all passengers. I am sure this scheme will attract the flyers as the fare is affordable. Earlier, we had launched “equal to Rajdhani fare” scheme, which had received good response. Now, we are launching the special fare scheme,” he added.

Last month, Air India had floated a scheme to fly unconfirmed passengers of Rajdhani trains at fares matching with the AC first class ticket prices. A Mumbai-Delhi air ticket is now available upwards of Rs 3,700 for next day travel on all airlines, while a Rajdhani AC first-class ticket costs Rs 4,755.

These have resulted in improved sales and better engagement with the trade. Ticket sales are rising on travel portals. Air India is engaging with agents and is implementing more customer-friendly initiatives. AI has also agreed to agents’ requests for web parity in fares, offering the same levels on its website and other portals. Thus, bookings for AI this year on travel portals like NC Airways, have increased with especially strong growth in long-haul international flights.

In FY16, the airline cut its losses to Rs 2,636 crore from Rs 5,859 crore in 2014-15, mainly due to a Rs 2,754 crore saving in fuel. “Fuel, of course, helped but I believe the turnaround has been due to efficiency in the management. We are now running the house like a proper corporate,” says Ashwani Lohani, Air India’s CMD.” He is of the view : “A professional firm cannot function on crutches. We want to fly, fly and fly more.”

Air India’s decision to reduce fares is likely to leave its rivals uncomfortable as they have been accused of raising the fares by 2-3 times for last-minute bookings.

Coming Up : Ahmedabad-London-Newark; Delhi-Madrid Flights from Air India

The National airline of India, Air India (AI), will launch Ahmedabad-London-Newark flight from August 15, 2016 and Delhi-Madrid in December 2016.

“We will be launching the Ahmedabad-London-Newark flight from August 15 and Delhi-Madrid from December as part of our growth plan,” Air India Chairman and Managing Director (CMD) Ashwini Lohani said in Bhopal. Mr. Lohani arrived in Bhopal to take part in a programme on the occasion of opening of AI area manager’s office, which was inaugurated by Madhya Pradesh Chief Secretary Antony DeSa.

“We have launched a number of new flights. We have already launched flights from Delhi for San Francisco and Vienna. Next year we are planning to launch five-six more flights, including Washington, Scandinavian countries and Africa. We are heading towards growth,” Mr. Lohani said, replying to a question on the issue of profitability.

The objective is to connect more global destinations.

Air India also plans to expand its fleet size in next four years. The CMD said at present there were 133 aircraft in the Air India group. “In next four years we will have 232 planes,” he said.

Air India has ordered for 27 Dreamliners and has so far received 21 planes and six more are in the pipeline. Referring to the issues related to Dreamliner planes, he said there were some problems in its design since the beginning, but it was sorted out.

On the issue of connectivity with Bhopal, Mr. Lohani said Air India would make its hub in the State so that more flights will originate from here.

When asked if it will be in Bhopal or Indore, he replied at present Air India had more contact with the State capital.

The CMD welcomed the relaxation in 5/20 rule for launching international operations. He said that ultimately it will benefit the passengers as competition will increase.

“It is a good decision as it will enhance competition and will ultimately benefit air passengers. Now any airline having 20 aircraft can launch international operations straightaway,” he said. On the issue of launching international flights from Bhopal or Indore, he said it will not be available for Bhopal, but it may start for Dubai from Indore in near future.