Wings of change at Air India – Viral News

This interview is part of the Inside the Mind of the CEO series, which explores a wide range of critical decisions faced by chief executives around the world.

Since it took to the skies in 1932, India’s oldest airline has had a circuitous flight. Founded by J.R.D. Tata, the first Indian to earn a commercial pilot license, the former Tata Airlines was rechristened Air India in 1946, the same year it became a public company. Nationalization followed in 1953, accompanied by a monopoly on domestic air travel that lasted until the early 1990s. In 2021, amid mounting financial losses, came privatization and a homecoming: the US$2.3 billion acquisition by Tata Group.

After more than 70 years of government ownership, the task of turning Air India into a modern, competitive business has fallen to Campbell Wilson. The 53-year-old New Zealander joined as CEO shortly after privatization, following a career with Singapore Airlines that included founding Scoot, its low-cost carrier, and serving a stint as group senior vice president of sales and marketing.

Two years into Wilson’s tenure, the airline’s reinvention is taking shape. Air India has delivered 2.5 times revenue growth in this period, and revenue at low-cost subsidiary Air India Connect is up almost 1.5 times. A recruitment drive has lowered the average age of non-flying staff by 20 years—without layoffs—and overdue investments being made in aircraft and information technology present an opportunity to leapfrog competitors after years of falling behind.

Tata Group has also moved strategically to reshape the competitive landscape by combining its airline holdings, first in the low-cost segment through the merger of AirAsia India into Air India Express, and then in the full-service segment through the proposed merger of Air India with Vistara, its joint venture with Singapore Airlines.

Wilson recently talked with strategy+business about Air India’s reinvention, how its business model is changing, and its future growth path.

S+B: India’s economic growth remains strong by global standards, and the government has pledged US$12 billion to boost regional connectivity and position the country as an aviation hub. What’s your perspective on the outlook for the country’s aviation sector?

WILSON: India is probably the most exciting place to be. It is the third-largest aviation market in the world. Air travel typically grows at 1.5 times the rate of economic growth, so we are looking at a compound growth of well over 10% for the next few decades. 

In a sense, Air India had been holding back the Indian aviation industry. Under government ownership, it was constrained in terms of capital and capability. Business practices were not necessarily aimed at providing contemporary world-class operations, service, or financial returns. A privatized, well-capitalized Air India puts the industry on a more stable and professional footing.

The consolidation now underway reflects the path we’ve seen in other markets around the world. It will create a healthier and more profitable industry. A profitable industry will beget more investors and a more competitive but financially sustainable market. 

S+B: Coming into the CEO role, what were your biggest priorities?

WILSON: Prior to privatization, the airline was on a terminal, unsustainable course. It was focused on survival and wasn’t exposed to the best practices of other carriers globally. Air India may have been among the best in the world in the ’60s and ’70s, but it hadn’t kept pace with changing times and everything it takes to be on a par with the best airlines today. It lacked a private sector–performance mentality. Consumer focus was missing, and so was the pursuit of excellence.

There had been a lack of investment in people. The company last recruited IT and other non-flying staff nearly 15 years ago. The average age in the organization was 54, with a retirement age of 58. The culture was not conducive to innovation or a performance orientation, and exposure to external thinking was quite low. Now that we have recruited literally thousands of staff, the average age is down to 34—and with that comes a mindset change. 

Training will be a big enabler for the airline’s future success. We’ve built a 600,000-square-foot training academy and launched a new cadet pilot program with the latest technology and equipment. In periods when we’re not using 100% of the academy’s training capacity, we will market it to others in India or abroad.

The good news is that everyone who’s part of the Air India brand is high on passion, high on energy, and excited about the opportunities. Even under the prior ownership, many of our employees were recruited from the best universities. They are very capable. With the Tata Group as the new owner, with clear objectives, and with the right support, [our employees] have risen to the occasion—even though this has been the fastest and most extreme turnaround in their careers. 

S+B: Aside from people, what are the other strategic investment priorities?

WILSON: We have been lucky to have steadfast support from our shareholders and from the government, and all the companies in the Tata ecosystem are contributing to the transformation. Our agreement to acquire 470 aircraft from Airbus and Boeing was a turning point. This was one of the largest aircraft orders in civil aviation history—worth about US$70 billion. It underlined that we meant serious business, that we were into transformation to unlock growth opportunities.

We’re also creating in-house line maintenance and repair capabilities to reduce our dependency on third-party or foreign MRO [maintenance, repair, and overhaul] providers, and support our effort to nurture a robust MRO ecosystem in India.

Similarly, we see huge potential in air cargo, which the Indian government plans to grow to 10 million metric tons by 2030. With the addition of new wide-body aircraft to our fleet, our belly capacity will grow significantly. We can contribute to the development of an efficient air cargo supply chain to complement India’s manufacturing growth.

We’ve also invested US$200 million in IT infrastructure, which will give us one of the most modern IT backbones of any airline in the world. It is now incumbent on us to use these capabilities effectively, so we can leapfrog, freed from the burden of legacy.

Stepping back, I’d say that over the past two years we have been focused on developing our capabilities for safe, accelerated growth. We are now shifting gears to focus on efficiency and unit cost, in a delivery and deployment phase.  

S+B: You also invested US$400 million upgrading seats and in-flight entertainment. How do you see customer expectations changing? 

WILSON: We have a heterogeneous customer base with different expectations across our low-cost and full-service carriers. However, within each business model, it is important to give customers a consistent experience so that delivery meets expectation. Consistency is the secret sauce of a successful world-class airline. Admittedly, we are not yet as consistent as we would like to be in terms of the physical product or the service proposition. But that will happen in due course with clear processes and training, discipline and focus, and rewards and recognition for our people. 

Aviation is a mass transportation business, and there are over a thousand touch points around the world for any airline—they are reliant on machines, on third parties, on the vagaries of weather, [and] on air traffic control, among dozens of other variables. Today, we carry over 150,000 people daily, and we have an ambition to triple in size. So it is about training, processes, systems, culture, and sometimes a little bit of luck. That is the fundamental thing that airlines strive for—tightening everything together such that we are consistent in our performance and in our delivery.

S+B: How do you view the impending mergers of Tata Group airlines, and how are you trying to realize synergies?

WILSON: With the merger of the two low-cost carriers and two full-service carriers, we hope to have a more integrated and efficient operations structure. Air India Express will focus more on leisure markets and Tier Two and Three cities. It’s a synergistic merger in the sense that AirAsia was principally a domestic operator and Air India Express was primarily international.

Merging Air India and Vistara is more complex, because they are both domestic and international, operating both wide-body and narrow-body aircraft, in a full-service model. Planning is complete, and we are clear about what we want to do and how we want to do it. The merger is expected to be completed soon.

From a staff perspective, we have done a culture survey of the different businesses. Despite Vistara being a relatively new organization and Air India being steeped in heritage, the culture mapping is almost identical. However, Air India’s practices are perhaps more dated. Vistara’s expertise will be critical in catalyzing and accelerating change to redefine the Air India experience.

S+B: International Air Transport Association (IATA) has pledged to reach its net-zero-carbon emissions target by 2050. What does the industry need to do to enable a shift to sustainable aviation?

WILSON: We subscribe to the IATA’s “net zero by 2050” commitment. The aircraft Air India is buying—Airbus A350s, for example—are capable of operating on blended sustainable aviation fuel (SAF). However, for SAF to be a meaningful part of the solution, it needs to be produced and delivered at a much greater scale and become cost-competitive. Presently, SAF is four times the price of regular fuel. Achieving net zero will be a multipronged effort spanning SAF, technology, carbon offsets, and more.

Also, when you look at sustainability through an ESG [environmental, social, and governance] lens, it goes beyond environmental sustainability. It is also a question of how we connect remote markets, and how we connect India to the world to support international relations and facilitate business. Clearly, there is a profit motive, but business goes hand in hand with social responsibility.