Four months ago, Tata Group announced the consolidation of Air India and Vistara. Involving layers of approvals, the process has kickstarted and is expected to be completed before March next year. While Vistara’s staff will likely be absorbed into the larger Air India, Vinod Kannan, CEO, Vistara, is yet to decide about his own future. He also spoke about the integration process and pilot shortage plaguing the industry in an interview with Swaraj Baggonkar. Edited excerpts.
At what stage the whole Air India-Vistara integration process is right now?
We need approvals from the antitrust regulator not just in India but from similar authorities from places where we (Air India and Vistara) have operations. For instance, London and Frankfurt also need to give their green light. Whether we need to ask them depends on how much competition there is. In Dubai, for instance, there are so many airlines that operate and no approvals might be needed there. We need approvals from the NCLT, DGCA and MoCA as well. We expect to have the approvals by March 2024 but things are on track and hope to get these earlier.
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What processes and systems of Vistara can Air India benefit from?
There are multiple areas that Vistara has developed and one of which is the customer centricity. There are operational aspects such as airline functions and then there is the support function such as IT and finance. Aspects like our ‘customer-centric approach’ are competitively sensitive and cannot be shared until we have the required approvals in place. Aspects like safety and HR can be shared. Those are the things we learnt on the way as we built Vistara.
What happens to Vistara employees?
At least for the next 12 months nothing changes. We will continue to grow, add routes and induct new aircraft. We will need more staff and we are recruiting them. Beyond that the intention is to also have them absorbed into the integrated entity because the scale that we are looking at is almost 2.5-3 times than present.
What is the composition of Vistara’s staff?
Out of the 5,100+ staff at Vistara, 80% are operational staff made of pilots, cabin crew and engineers, without whom the aircraft cannot fly. For staff engaged in corporate functions, many of whom brought Vistara to its present level and it is acknowledged that they will be very valuable in the other entity as well. The working hypothesis is that everyone will have a role. There might be changes in the role but everyone will get a choice to express what they want to do and we will try and match.
You have been with the airline since 2019. What does the future hold for Vinod Kannan?
At this moment, I do not know. My own responsibility is to take care of the staff first and then we will see what’s in store for me. At this point in time, there is no decision yet (about my future).
How severe is the issue of pilot shortage?
All airlines have to make certain manpower projections. For back office roles, there is not much of an issue. Specifically, for pilots, it is an issue. Because the lead time to bring in the pilots is much longer. If you hire a fresh pilot then the person can only be contributing after training and everything else after two years. You can’t wait that long.
All airlines are adding capacity leading to surge in demand for pilots…
If you want to bring a pilot from another airline then the person has a six-month period to serve before he joins. The lead time required to hire new pilots is much higher. With more airlines starting and carriers in West Asia being more aggressive we have an issue.
ATF and the rupee have been stable. What is your assessment for the March quarter?
Demand is not as strong in the March quarter as it was in the December quarter but it is better than the year-ago period. The average ticket price in this quarter is lower although the load factors are strong. While fuel prices have remained benign, the US dollar has appreciated a bit. Each airline does an annual cost increase. This year, we expect it to be quite significant.
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You had earlier said that H2FY23 will be profitable at the operating level for you.
That’s what we hope but we will have to wait and see. The third quarter was profitable at the operating level and this quarter is a little bit more challenging.