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AIRLINES Flying Into Thin Air Taking off as a biz-class airline will remain a dream unless Sahara fixes operational flaws and brings in new funds. By Ashutosh Sinha
It isn't just a dismal PLF that should worry Roy. Sahara's cup of woes include weak financials, a bloated workforce, and a slew of operational problems. The core of Roy's restructuring strategy involves repositioning Sahara as a niche airline for business travelers and changing its name to Air Sahara. The airline's new Head of Operations, Vandana Bhargava, granted this correspondent an interview (after vacillating between 'never' and 'may be' for over a month-and-half), but she declined to share details on Sahara's comeback bid or talk about its problems in detail. Still, the emphasis on 'niche' and 'boutique', terms that come up often while discussing the airline's strategy with its executives seems more like an exercise in dissonance reduction (a marketing term where consumers create plausible explanations that help them accept the inevitable fact that they screwed up) than a sudden flash of strategic brilliance. Starboard Engine Failure
Alow PLF (lower than Jet's 73.1 per cent and Indian Airlines' 69 per cent) means poor cash flows. That is Sahara Airline's largest problem. The group's financial powerhouse is its financial services arm, which boasts an investor base of 60 million, predominantly in the rural hinterland. But with the Reserve Bank of India stipulating that non-banking financing companies cannot invest more than 10 per cent of the funds at their disposal in the operations of group companies, the airline is on its own. It would be an understatement to term Sahara Airlines workforce bloated. Its 1,600 employees -including 97 pilots and 194 crew members-oversee a fleet of a mere seven planes (the airline's spokesperson says eight), two of which have been grounded for months. And people problems continue to plague the airline: Chief Controller U.K. Bose was asked to leave in August, 2000, and Roy accused him of some fifth column work for a yet-to-go-on-air rival; the high-profile Parvez Damania no longer serves as its Executive Director; and Chief General Manager (Marketing), Kapil Kaul, also left in a huff. Damania is quick to distance himself from the operation of the airline: ''I am a non-executive director on the board of Sahara and have nothing to do with the operations.'' Port Engine Failure There's reason for Damania's desire to distance himself from the operations. OE (Operational Effectiveness as jargonauts term it) is Sahara's Achilles Heel. First, its fleet is down to five planes which are flying. In contrast, Jet has a fleet of 30. Second, Sahara has got the mix of its fleet horribly wrong. Of the seven aircraft in its fleet currently, one is a Boeing 737-200 (which has been cannibalised for spares), one, a 737-400 (in the hangar for routine maintenance for over a month), two are 737-800s, and three, 737-400s. This variety translates into a drain on resources: for instance, different pilots have to be trained to, well, pilot different aircraft. Bhargava, concedes the case: ''I agree that we got our mix wrong, and we are trying to correct that.'' She's also quick to point out that: ''What was done at that point in time must have been considered appropriate then.'' Still, that appropriateness cost Sahara close to Rs 20 crore in three months in the second half of 1999. The details are straight out of a Beckett play: the airline changes its mind (again) about what planes to lease and decides on Airbus; consequently, it wraps up a programme readying pilots for Boeing-737-800s; but can't find enough Airbus aircraft to lease and goes back to its original plan of leasing Boeings; three Boeings duly arrive; but there's no one to fly them. The reason: in all that changing of minds, some one forgot to re-start the training programme. Thus, the three Boeings stayed put at Santa Cruz airport in Mumbai for three months till the pilots were ready for them. Earlier this year, in the course of a routine inspection, the International Civil Aviation Organisation (ICAO), a global aviation industry watchdog discovered that two Sahara pilots, Sumit Kapoor and H.S. Kang, were over-flying their Flight Duty Time Limits (FDTL). A pilot who exceeds this, the ICAO believes, is not in a 'mentally alert state' to meet the rigours of piloting an aircraft. Worse, the fitness of pilots is a rider-clause in agreements between airlines and insurance firms. Says a Civil Aviation Ministry official: ''The airline runs a risk of being grounded and criminal action can be initiated against the pilots.'' Bhargava accepts that one pilot was over the FDTL, but dismisses this as a small matter that has been sorted out with the Directorate General Civil Aviation, the Indian aviation industry regulator. Charting A New Flight Path Despite the airline's reticence, it isn't difficult to identify the ingredients of its revival strategy: more aircraft, better marketing, and an emphasis on getting the operational bit right. Given its dispute with the International Leasing and Finance Corporation over a leased aircraft (since sorted out, claims a faxed response from the airline), even the bravest of lessors are certain to approach a transaction with the airline with a little trepidation. Says the country head of another airline: ''If the track record of a company is not good, lessors will either refrain from leasing the aircraft or ask for a higher lease rental.'' Marketing the airline's services won't be as tough. But to effectively position itself as the business person's airline, Sahara would need to have at least enough aircraft to fly routes between the major business centres (five, certainly, isn't enough). And upgrading its operations to business class won't be easy. Can Sahara weave a turnaround script that comprises these three threads? May be. But unless it does so, and does so quickly, Air Sahara is under threat of joining a long list of airlines that promised much, but failed to deliver. |
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Some time
in September, 2000, Subroto Roy, the Chairman (his card reads Chairman
& Managing Worker) of the Sahara Group-it of the para-banking, TV
channel, and Good Sahara (a term to be used instead of hello whenever two
group execs meet or talk over the phone) fame-flew out to Mumbai to review
a real estate project. Once there, the imperious Roy decided that he
wanted to discuss post-haste the details of the new route-plan for Sahara
Airlines-a key part of the group's effort to restructure its flailing
airline. And no, it couldn't wait till his return to Delhi the following
day. So three senior executives of the airline flew to Mumbai and back (on
Sahara of course) the same day. With an average Passenger Load Factor (PLF)
of between 43 per cent and 70 per cent (the airline's figures, though some
of the people BT spoke to said a more reasonable estimate would be between
28 per cent and 50 per cent), ferrying the executives didn't really pose a
problem to the airline.