Tarun Shukla On Dec 22, 2015
Source: McClatchy   

Dec. 22--NEW DELHI -- AirAsia India Pvt. Ltd has lost a big chunk of its leadership team in just over a year that it has been operational, bringing into question the airline's operational strategy amid mounting losses.

In a rapidly expanding airline market, an exodus in its top management could make things difficult for the airline as rivals rapidly absorb talent, making new resources even more costly.

AirAsia India, a joint venture between Malaysia's AirAsia Group and Tata Sons, started operations in June last year.

In its proposal to the government in January 2014, the airline had furnished a list of more than 20 people as part of an organization chart who were to steer the start-up under managing director Mittu Chandilya.

More than a dozen of these executives, including the airline's top three officials manning financial, commercial and flight operations, have left the firm, according to a person aware of the situation who declined to be named. A new executive brought in to head the commercial department has also left, as recently as November.

"The style of management these people have may not be very conducive to the professionals who want to work with them," said a senior official of the airline who recently quit without a job in hand.

The official, who asked not to be named, said he disliked what he termed "a casual approach to work". "There was no accountability, no structure. There was nothing to look forward to basically," he added.

Director general of civil aviation (DGCA) M. Sathiyavathy said every airline had to have certain post-holders approved by the regulator and as long as those conditions are met, the DGCA does not go into reviewing manpower of an airline.

It is not clear if all the senior executives who exited have been replaced yet. The airline's group CEO Tony Fernandes and Chandilya did not respond to an email sent on 15 December.

AirAsia is already battling a court case filed by Bharatiya Janata Party leader Subramanian Swamy, who argues that the airline's control does not rest with Indian entities.

When the airline was seeking a permit in 2014, it had pitched an ambitious expansion plan that saw it adding an aircraft a month to its fleet. AirAsia had said it would change the way India flies by making it possible for more people to travel by air.

However, the airline has refrained from any such expansion. It has restricted its fleet to just five aircraft, which are key to retain an airline licence under the rules even as Vistara, which started flights six months later, has raced past it.

Vistara, also promoted by the Tatas (besides Singapore Airlines), already has a fleet of nine aircraft and will celebrate its first anniversary in January.

AirAsia, which celebrates its second anniversary in June, has already changed its base from Chennai to Bengaluru and has dropped its inaugural flight between the two cities.

"I don't think anything has gone according to their plan till date and a new thinking on the long-term future of AirAsia is required urgently," said Kapil Kaul, the South Asia CEO of consulting firm Capa.

Capa estimates that the airline has lost Rs.250 crore until September this year. It forecasts that it will lose Rs.150-175 crore this fiscal alone.

The airline needs a "very significant recapitalization" soon. The $30 million that was initially brought in was not enough, the consulting firm said.

To be sure, the airline has had a 70-80% occupancy level on its flights, a feat that Vistara is still trying to match.

The AirAsia group has also been hit by the crash last year of Flight 8501, off the coast of Indonesia, that killed all 162 people on board. Investigators blamed the crash on system malfunctions in the aircraft and improper pilot response.

Steve Forte, New York-based former CEO of Jet Airways and an independent analyst, said he hasn't seen such an "exodus" of employees in his career. He said there could be two reasons--one, they were "stolen" by others with more lucrative offers, or they could not stand the way that the top management acts.

"In my opinion this (the second) is a probable cause. Domineering, abrasive management does not work well and is bad for morale. Another cause could be that with all the losses and no growth, they lost faith. Whatever is the cause, it is not good," he said, adding, "I probably would have resigned due to such huge failure to manage people."

Copyright 2015 - Mint, New Delhi

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