Honestly, I don't like publicity," says Jatindra Narayan Gogoi, looking more like a seasoned professor in his light blue full-sleeve shirt than the Managing Director of Air India. That's the 57-year-old's way of explaining why he stays away from the limelight, although the national carrier he's been piloting for 17 months has finally started pulling its nose up after six consecutive years of drop. The interview to BT, he claims, is only his third ever.

But novelty, be it a media interview or his new job, is apparently not one of Gogoi's problems. The man, who joined the carrier way back in 1969 as an engineer, is said to be a quiet, details-man, who's happy doing things behind the scenes than under the media spotlight. To be sure, part of Air India's turnaround work was started by Gogoi's predecessor, Michael Prem Mascarenhas (the pro-disinvestment man was charged with corruption and dismissed by the Ministry). But the credit for giving it a greater thrust goes to Gogoi, who as Director (Finance), initiated sweeping cost-cutting. The result: A profit of Rs 15.44 crore finally showed up on the bottomline last year.

Reducing Drag

But this, he says, is just the beginning. The target for this year is Rs 24 crore, although Civil Aviation Minister, Shahnawaz Hussain, who takes a lot of interest in the carrier (he often does surprise checking of aircraft cockpit and lavatories) wants the figure to be higher-Rs 50 crore, at least. "We must dream big," he told BT.

The building blocks of that dream are, not so surprisingly, mundane. In the last financial year, AI has closed 13 off-line stations around the world. Commission to agents has been reduced from 9 per cent to 7 per cent, and complimentary tickets are now issued only in return for commercial gains. The airline has also been sprucing up its service. Five A-310 aircraft have been taken on dry lease. These have replaced the B747-200s, which are bigger and cost more to fly. The 747-200s were attracting only a small load, all of which can be carried in A310s. Thus, AI is earning the same amount of revenue while spending less on operations. A twice-weekly service has started between Guwahati and Bangkok, which also connects to Mumbai and Calcutta, making Guwahati a new international gateway to the North-East. Another service has commenced between Kozhikode and Al-Ain in the United Arab Emirates.

With the new services, the utilisation of the A310 aircraft now stands at 9.5 hours a day, which Gogoi claims is the highest in the world. Besides, the arrival of these enabled AI to deploy a 747-200, a 747-400 and an A310 on the Haj route, carrying 30,000 Hajjis from across 10 cities in the country this year. It had given up carrying the Haj traffic five years ago because that needed pulling aircraft out of other routes. That was not needed this year. At $750 (Rs 36,348) a passenger, the cash margin worked out to a neat Rs 35 crore.

But the real test is in getting those passengers who've left Air India by the droves over the last two decades. How is Gogoi, an alumnus of Air Technical Training Institute in Dumdum near Kolkata, planning to do that?

For starters, the airline is benchmarking itself against international carriers for in-flight services and on-time performance. Fortunately for Gogoi, the political leadership has been supportive. At a recent management meeting, when the minister was told that other carriers had better business class and first class cabins, the minister's reply was characteristically simple: Make AI's as good as theirs, whatever it takes. No doubt inspired by the carte blanche, the airline plans to install flat beds in first class and slumberettes in business class on long-haul flights, starting this winter. What's more, a la Virgin Atlantic, in-flight massages could soon go up on the menu, as will individual DVD players. "We had to change the perception of AI from that of a dying airline to a high-flying one," says Hussain. "People are now coming back to AI."

Getting Its Act Together

The perception does seem to be improving somewhat. Notes Subhash Goyal, Chairman, Stic Travels, and head of Assocham's expert committee on aviation and tourism: "They have embarked on an yield management programme which has reduced bogus booking and made inventory control more strict. Overall, they seem to be getting their act together." Sure, but airline passengers are going to need a lot more convincing. The ministry didn't provide BT with details of its financials for 2001-02, but numbers procured from other, equally reliable, sources raise some questions over the sustainability of Air India's turnaround.

"The seats we get through bilateral commercial arrangements have to be sold by us. This revenue come to us because of our efforts" J.N. Gogoi/Managing Director/Air India

The carrier's share of outbound traffic has declined to 20 per cent from 33 per cent in the 1980s. Fewer passengers flew last year than the year before, and the passenger load factor-the number of passengers as a proportion of the available seats on a flight- has fallen to 66.6 per cent from 71 per cent in 2000-01. Freight has dropped to 359 tonne per kilometre from 396 TPK the previous year. In fact, the airline made an operating loss of $11 million (Rs 53.9 crore). The profits, then, came from revenues it earned four years ago and added as other income this year. Nothing irregular, just a quirk of the accounting practice it follows.

Not Enough Thrust

In other words, Air India has cut costs, but may be not enough of the right kind. "Improving productivity will what help profits in the long run," says Cyrus Guzder, who heads the CII's committee on aviation. Besides, there is a limit to how much the costs can be brought down, given that 80 per cent of the operational costs is accounted for by ground handling, landing rights, insurance, and fuel.

A large part of AI's revenue comes through code-sharing arrangements, under which it gets money for giving away its flight entitlements to other airlines, and ground handling. Gogoi says that's a misconceived notion. "The seats we get through bilateral arrangements have to be sold by us. This revenue comes to us because of our efforts," he says, but admits that "it is better if you can fly your own aircraft." Nevertheless, the fact remains that AI makes this money due to the rights of the government and not because of its operational efficiency. An executive from a global airline points out: "AI benefits from being a government airline. We don't give away our flying rights through code-sharing."

To be fair, AI doesn't have much choice. Its fleet consists of 27 aircraft, compared to 360 of British Airways and 500-plus of United Airlines. That keeps AI from providing seamless connectivity across the globe the way the big boys do. Aircraft acquisition is not a simple process for AI. In a September 18 board meeting, the management did decide to acquire more aircraft-17 long-range aircraft, in fact. It also set up a technical committee to finalise short-haul aircraft (of 160-plus seats).

"We had to change the perception of AI from that of a dying airline to a high-flying one. People are now coming back to AI" Shahnawaz Hussain/Union Minister for Civil Aviation

But the decision needs to be cleared by the Public Investment Board and the Cabinet. And Gogoi, who has six months to go before retirement unless given an extension, may not be there to welcome the all-new fleet. He is, therefore, going ahead with plans to take five more aircraft on dry lease-four A310s and one 747-400.

These will help AI resume servicing some of the 12 routes that were given up in 1997-98, a year marked by shrinking operations and losses totalling Rs 300 crore. Beginning December 3 this year, AI plans to fly state-of-the-art B747-400s three times a week from Mumbai to New Jersey via Paris, with feeds from Ahmedabad and Kochi. The second week of the month will also see AI start thrice-weekly flights to Frankfurt. It is in talks to get traffic rights at London's Heathrow airport, and with the national carriers of Canada, Turkey, and CIS and African countries for partnerships. Efforts are also on to join the global alliance, One World.

With the long-drawn nature of aircraft acquisition, there is only so much Gogoi can do. Dry-lease is a constraint since the company can acquire only those aircraft types that are already part of its fleet and not of a new make. Even without the constraints, it would be difficult for Gogoi to go on an aircraft acquisition binge, simply because at the core of AI's problem is the lack of a clear investment plan, which is imperative for sustained profits.

Aircraft buyers can avail of credit arranged by manufacturers, but that covers only 80 per cent of the cost. And AI, although it has never defaulted on loan repayment, may have a tough time raising debt. Its debt-equity ratio stands at 7, primarily due to its small equity base of Rs 150 crore. Minister Hussain talks of Kelkar committee's recommendation to give AI Rs 325 crore, and a promise from the Finance Ministry to do so. But if AI's disinvestment gathers pace, further loans may be put on hold.

The divestment plan had got grounded following the September 11 attacks and the resulting airline spiral. The scenario seems to be improving and Hussain is perparing to meet Disinvestment Minister Arun Shourie to discuss the issue. However, as N.M. Rothschild Managing Director Munesh Khanna says: "Privatisation depends on restructuring, which hinges upon sustainable operational efficiencies over the long term."

Last year, while bidding for AI, Tata Group Chief Ratan Tata had observed that he flew the airline never out of choice-a telling comment from someone who had served as its chairman for three years, and whose predecessor had started the airline. It is debatable whether Gogoi will be able to change that. Instead, he could well be watching Air India become what many think it already is: an ethnic carrier.