The revolving centaur atop the Air-India (A-I) building is one of South Mumbai's most famous landmarks, lit up a bright red and visible for miles and acting as a marker for Nariman Point, the city's main business district. Only that the Centaur hasn't been revolving for some time. V. Thulasidas, Chairman and MD, A-I, smiles and says, "That is because the Centaur is being changed." The Centaur, emblem of 47 years for the 73-year-old carrier (the oldest continuously operating Asian airline), is being changed for the first time. The Centaur now points skywards-as against pointing straight forward earlier-seemingly aiming for the stars.

That it doubtless has to do. Once upon a time, when the legendary J.R.D. Tata was at the helm, Air- India boasted impeccable service standards. By the eighties, it had bloated into an inefficient, delay-prone airline where customer service was non-existent, even as it found itself caught between an aggressive union and the Ministry of Civil Aviation, which considered the carrier its personal fiefdom. Praful Patel, the current minister for civil aviation, may not agree with that last statement-rightfully so-for he's been doing his bit to put India on the global aviation map. And, courtesy Patel's game plan, A-I may finally get the attention it so badly deserves. Revamped menus (more choice and better alcohol) and an improved in-flight product (flat beds, personal TV sets) may be just two of the more superficial changes on A-I flights in the new regime. But there's plenty more that is being done, and as Thulasidas readily admits, the carrier doesn't have a choice but to get its act together. The previous government had set the ball rolling by allowing carriers such as Jet and Sahara to operate abroad, and the current government has the given the ball a nice big whack by allowing foreign carriers even more access to India; Patel tore to shreds the restrictive old Air Service Agreements (ASA) by which any foreign carrier wishing to increase frequency into India could only do so by paying A-I thousands of dollars in compensation for using its unutilised frequencies. Result? The number of services every week between Mumbai and Heathrow has gone up from 14, 18 months ago, to 46. Delhi recently added two non-stop services to the US.

"We have been more aggressive with our marketing so that we get higher load factors on our aircraft" V. Thulasidas CMD, Air-India

Patel was duly accused of ignoring the national carrier (he is considered a close friend of Naresh Goyal, Chairman of Jet Airways), but it wasn't long before the government announced it was on the verge of placing a huge Rs 40,000-crore order for A-I with Boeing for 50 new 777/787 jets. As per the delivery schedule, the 50th new Boeing will arrive some time in 2012, but Thulasidas clearly isn't waiting till the new aircraft arrive to begin the revamp of A-I (Thulasidas' three-year term gets over in end-2006). Realising that A-I was facing a capacity crunch, owning a fleet of only 16 aircraft, the former Chief Secretary of Tripura initiated an aggressive process of leasing aircraft. Today, Air India has a fleet of 41 aircraft of which 25 are leased (another Boeing 777-200er joins the fleet later this month).

Thulasidas scored once again with the idea of Air India Express, pioneering the concept of international low-cost travel in India. "There is a huge demand for low-cost seats from expatriate Indians who work in the Gulf and South-East Asia; our tickets are always 25 per cent lower than the cheapest economy class fares on a full-service carrier", explains Thulasidas. Rohit Ramachandran, Country GM (India), Air Arabia, a Sharjah-based low-cost carrier, agrees with Thulasidas: "Thanks to low-cost services, traffic between India and the Gulf has shot up manifold."

Ramping up: The Maharaja's army

However, Air India Express has faced a couple of hiccups along the way. The first was when a large number of pilots hired from Air Sahara walked back to their previous jobs. Air India Express was forced to ground one of its planes and cancel flights because of the shortage of pilots. The Civil Aviation Ministry promptly introduced a rule compelling pilots to serve out a six-month notice period before they could quit one carrier for another in pilot-hungry India. And then there is the prickly issue of oil prices: Prices of refined Jet-A (a pure form of kerosene used by jet turbine engines) crossed $100 or Rs 4,500 a gallon at large international airports, up from a $50 or Rs 2,250 average price in 2004. As a result, fuel costs for A-I have gone up from 20-22 per cent to 30-35 per cent of total costs. "We have reduced using our inefficient old planes and we have been more aggressive with our marketing so that we get higher load factors on our aircraft. And our new aircraft will have efficient new GE engines, GEnx on the new 787 Dreamliner," says Thulasidas.

But what does Thulasidas do with the excess workforce he's saddled with-15,700 at last count? Counters a senior A-I official: "In 2002, we only had 26 aircraft and around 16,000 employees. Today, we operate 42 aircraft with a similar number of employees." Even though the number of employees per aircraft has dropped significantly from 615 to 373, it's still way above the industry norm. Jet Airways, for instance, has around 150 employees per aircraft. "Even though we might appear overstaffed you have to keep in mind that we derive significant revenues from our 'extra staff', is how Thulasidas prefers to see it. He may have a point there. Between 2001-02 and 2003-04, a-i has actually made an operating loss-if you consider passenger and cargo revenues-but the airline made a net profit all three years because revenues from other sources, namely ground handling (A-I handles ground operations for several large international carriers, including Singapore Airlines), engineering services and the compensation it got from foreign carriers for its unutilised capacity, seemingly rewarding the carrier for its inefficency (that tap has been shut now).

The employee-battalion might also come in handy for the international operations, which are being beefed up with leased aircraft. Los Angeles, Seoul-Incheon, Shanghai-Pudong and Birmingham are the new dots on A-I's map, services to Frankfurt and Toronto have been restarted and frequencies to Chicago, New York, London-Heathrow, Japan and the Gulf increased. Yet, if A-I is losing traffic-that too, high-yield business and first-class-it's because most of its operations are via Mumbai. In a bid to grab market share, Air-India is establishing a second base in Delhi, complete with engineering facilities and a crew base. "Currently we base two Boeing 777 aircraft in Delhi which operate to Birmingham and Heathrow; we will add a third aircraft in Delhi shortly", says V.K. Mehra, ED (Engineering), A-I.

Till the new aircraft arrive, Thulasidas will be spending Rs 400 crore on refurbishing the existing fleet-new in-flight entertainment consoles, new seats and new upholstery are being fitted. The aircraft will have mood lighting so that passengers don't feel the length of the 15-16 hour flight. "We are creating an updated and modern Air-India," signs of Thulasidas. Will consumers believe him?