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Business Commentary/ Pritish Nandy

The Great Comeback

Let me admit at the outset that though I have met Anil Baijal twice, I can barely claim to know him. The only time I spoke to him I mentioned a senior officer in Indian Airlines against whom serious charges of corruption had reached me. He brushed it aside to tell more about his plans for the airline. But he did it so elegantly that I did not protest. Instead, I listened to what he had to say. What amazed me was that within a month of taking charge of Indian Airlines he knew so much about the industry. Not in the usual fluffy manner that civil servants know everything. He spoke in detail and the facts were on his finger tips.

He looked like a typical no-nonsense private sector manager who actually knew his organisation from the bottom up. I was also surprised by his sharp marketing acumen given the fact that he had been working in government which is not exactly the best place to learn marketing skills. But what I was totally unprepared for were amazing results he has shown in the past few months. He has metamorphosed a moribund national carrier which was hurtling itself into bankruptcy into a tough, aggressive trendsetter for the entire domestic aviation business.

Indian Airlines no longer limps behind the rest. It sets the agenda.

Mind you, this was never an impossible task. Indian Airlines was always the biggest player on the scene. It had the largest fleet. It also had the maximum number of flights; the best pilots; the finest maintenance crew. It networked India better than any other airline and even though its rivals had prettier cabin crew in smarter uniforms, it still carried more passengers than all of them put together. But a slew of perverse political decisions and prejudicial policies that (cunningly) benefitted the private airlines and their political benefactors worked towards destroying its winning edge as well as the morale of its workforce.

It also ensured that the national domestic carrier kept losing market share over the years and, what is worse, mind share of the travelling elite. Frequent flyers switched loyalty to Damania and Jet Airways, who positioned themselves as the younger, sassier, better run airlines while price sensitive travellers were lured by the cut-rate tickets and freebies offered by Sahara, East West and NEPC.

Eventually three of them pulled their shutters down. Damania, NEPC and East West. While Jet has defied the trend and grown stronger, bigger, more cocky than it ever was. Sahara, after sputtering along for a while, has suddenly swung back into the game by hiring Parvez Damania, whose own airline went bankrupt and had to be sold off to NEPC before NEPC itself went bankrupt in turn. So the war is now between Indian Airlines, Jet and Sahara with the national carrier struggling to grow back its market share, Jet striving to sustain its gains and Sahara playing the role of a spoiler, who believes that by creating chaos in the market place it can (over a period of time) enhance its own share.

Jet is quite clear in its policy. Or so it seems. It wants the creamy layer. The richie rich who travel business class and yield the best profit margins for that flash of leg and a little bit of extra pampering. That is why all its added value services are honed to attract more custom for the front of the aircraft. Sahara, on the other hand, appeals to bargain hunters. While Indian Airlines, till Baijal came on the scene, floundered between the two, not knowing which one to target. So it did what it was best at. Nothing.

To cover up its lack of strategy, it kept launching one maudlin advertising campaign after the other. These were accompanied by a series of childish contests and a frequent flyer scheme that never worked. Customer after customer complained but no one listened. Meanwhile, service deteriorated. Morale collapsed. So did market share.

While Jet crossed 30 per cent, the national carrier struggled to stay at 60. Despite a fleet double the size and at least thrice the number of flights. A eunuch of a communication strategy coupled with sleepwalk management and rotten service left what was once India's pride of an airline in complete shambles. While a strong political lobby (secretly aligned with its rivals) worked overtime to ensure that it stayed that way.

In this dark and gloomy scenario, Baijal lit his first idea. The Metro Shuttle. It seemed the maddest idea in the world. To announce hourly flights on the Mumbai-Delhi sector, five in the morning and five in the evening, when passenger load was falling, competition had increased, fares were at an all time low, and market share was swiftly dwindling. But, surprise surprise, it worked!

Within weeks, the results were dramatic. The Metro Shuttle not only grew traffic on the most profitable sector but it also succeeded in spawning a series of equally aggressive marketing schemes. One free international ticket for every seven boarding passes. A one way ticket at Rs 3,800, which is lower than comparable railway travel. Within weeks, the competition was on its knees. Baijal had won round one and Indian Airlines was back in business.

In two months, the Metro Shuttle has driven up the load factor on Indian Airlines. The daily passenger count is up from 800 to 1,000. Checking in is easier, quicker. The temptation of a free ticket if a seat is not available on a flight and the next one has wooed many middle class passengers back. In fact, so swift has been the reverse traffic back to Indian Airlines that snooty Jet Airways is now having to match Sahara with its rate cuts.

The mood in Indian Airlines is now upbeat. Service has improved. Officers are bending backwards to be customer friendly and, all of a sudden, there is spring in the air and a new spirit of hope sweeping the musty, old corridors of Airline House.

Actually Baijal has done what any clever manager would have done. He seized on one clever idea (the Metro Shuttle) and then used all the inherent strengths of the airline (size, load, reach, international network, ability to sustain a price cut for a length of time) to drive his pint-sized rivals into a corner. Now all he has to do is deliver that one swift upper cut to the jaw that will kayo them. The question is: Will he be allowed to do so? Or will those shadowy and corrupt politicians who drove Indian Airlines into the red step in to stymie him?

If newspaper reports are to be believed, there is already a great deal of pressure on Indian Airlines to buy a clutch of useless, small aircraft that it does not need and certainly does not want. This is nothing new. Everyone knows how politicians in power make huge money on buying aircraft and, this being election time, no one is surprised that the heat has been switched on. But it would be sad if the finest airline in the country, our national carrier, is forced into terminal sickness all over again just for a few pieces of silver. It will reverse the entire success story of Indian Airlines and unleash a scam that India (and the BJP) can afford to do without.

Indian Airlines must be allowed to define its own destiny. In fact, so must other public undertakings. That is what liberalisation actually means. That business must be run by professional managers and politics by politicians. For too long has business interfered in politics. And for too long have politicians interfered in matters of business, holding back India from reaching its true potential. It is time they left each other alone. To pursue their own independent agenda.

Pritish Nandy

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