Maharaja loses flab, AI to have just 5,000 employees

Mumbai Mirror

By Bipin Kumar Singh, Mumbai Mirror | Oct 14, 2013, 10.20 AM IST

Air India, the state-owned lumbering, loss-making behemoth with 26,000 staff, is to be transformed into a slender company of just 5,000 employees in just a few months' time, following a business restructuring exercise that is vigorously under way to turn the airline around.

The urgency on the part of the civil aviation ministry to revamp the airline into a lean and mean flying outfit is evident from its already having selected CEOs for the two wholly-owned subsidiaries of Air India that will absorb the rest of the staff. 

The two subsidiaries are Air India Air Transport Services Limited (AIATSL) and Air India Engineering Services limited (AIESL). Formed in 2004 and 2005, respectively, they were mothballed away for various reasons, but are now going to be immediately operationalised. 

The first will be responsible for ground handling and will accommodate 12,000 of Air India's staff including airport, ramp-side and cargo workers; the second will function as a maintenance repair and overall (MRO) unit and absorb 9,000 engineers, mechanics and technicians from Air India. 

Sources said Air India, which will be left with just 5000 employees consisting of pilots, in-flight service crew, headquarter officials, and commercial (booking) staff, will exclusively focus on passenger growth. Fleet care and passenger acquisition and management will be Air India's baby. 

Civil aviation minister Ajit Singh confirmed the current development and said it was part of Air India's turnaround plan. "The interviews are already over. With few formalities left, these companies will be operational soon," Singh told Mirror. 

He also confirmed that these two companies will have to sculpt their own business fortunes. The ministry is ambitious for all three companies - Air India (whose net loss was over Rs. 5000 crore in 2012-2013), AIATSL and AIESL - to be profit-making entities in their own right. 

While the ministry is hopeful that Air India will slowly move back into the black with its new-found agility, the two subsidiaries will not only handle Air India work but must also create business opportunities for themselves by seeking assignments from other clients (read other airlines). 

"As the interviews for the post of CEOs are over, these two subsidiaries are all set to function as separate profit entities in the coming months," said a civil aviation ministry official. Officials also said future recruitments at Air India will be done on a contractual basis to improve work efficiency as well as to ensure that taxpayers' money is not wasted. "Air India lacks a work culture and is overstaffed as well. With these two subsidiaries the work culture will improve, as hiring will be done on contract," a civil aviation ministry official said. 

Cabinet approval for operationalising the two subsidiaries was obtained last year but the plan could not be pursued as Air India was making colossal losses (more than Rs. 7000 crore in 2011-2012). It was only when Air India managed to reduce its debt burden by a little that the plan was re-examined. The Justice Dharmadhikari Committee, which was appointed to study the wage-related issues of Air India, had also suggested the operationalising of the two subsidiaries. 

The CEO interviews for AIATSL and AIESL were conducted under the chairmanship of K N Srivastava who is also the civil aviation secretary. The ministry's hope is that Air India will now have a structure comparable with that of its more nimble-footed competitors. 

The newer airlines do not have the baggage of staff for ground handling and maintenance, which they have completely outsourced. The total number of employees in the aviation sector is 60,000, Air India alone accounting for 26,000. Airlines such as Indigo and Spicejet have roughly 5,000 employees each. 

Air India can also now concentrate on improving its international operations, said officials. Despite owning the biggest fleet in the country, of over 100 aircraft, Air India's presence in the international market is currently insignificant.