Published in April 2016 issue
By Maurice Wickstead
In the late 1960s, JRD Tata faced stiff boardroom opposition to his planned purchase of new generation wide-body jets. However, he ultimately prevailed, and Air-India’s (AI) first Boeing 747-200, Emperor Ashoka (VT-EBD), arrived at Bombay on April 18, 1971. A little over a month later, the 747 began service to London on May 24, and then to New York on May 26, 1971. With subsequent deliveries, the larger Boeings took over responsibility for the prestige trunk routes, releasing their elder 707 sisters to develop other areas.
To counter the increasing competition from non-scheduled carriers, in September 1971, Air-India formed Air-India Charters and employed 707s on weekly discount fare services to Amsterdam and London. A major growth area was flying Indian workers to the Persian Gulf region. Muscat, Doha, Ras al-Khaimah and Sharjah all became ports-of-call, with some flights operated by Indian Airlines Corp. (IAC) aircraft under charter. The airline later extended service to key points in southern India, whence many of the Gulf workers originated.
Air-India made some further modest additions to its sphere of influence: it added Osaka to the Japan route, made Baghdad a new Middle East destination, and, in Africa, brought Dar-es-Salaam, Lusaka, Lagos, Accra, and Harare online. It also created the in-house Chefair catering organization and, in response to the growing demand for quality tourist accommodations, formed the Hotel Corporation of India as a subsidiary, its first project being the five-star Centaur Hotel adjacent to Bombay’s Santa Cruz airport.
On the technical front, in mid-1973, Air-India opened a new Boeing 747 hangar and engine test facility and, at the same time, it also linked to BOAC’s giant BOADICEA computer system for reservations, check-in, and load control in Europe and the United States. Toward the end of the decade, Air-India invested in its own Sperry Univac mainframe system, centralized at Bombay.
In April 1975, with the lease of a Boeing 707 freighter from Ethiopian Airlines, AI reintroduced pure freight service, which had been discontinued when the Constellations were retired. Initially flying between Bombay and London, in September 1979, the service extended to New York with the wet-lease of Douglas DC-8 Dash 60s from Cargolux and other contract freight carriers.
Without warning, early in 1978, after having spent more than 40 years as the undisputed leader of his country’s national airline, JRD Tata fell afoul of the political factionalism that periodically beset India. The instigator was Prime Minister Morarji Desai, whose Janata coalition was enjoying a brief taste of government in the wake of Indira Gandhi’s temporary fall from grace. Although he was subsequently reappointed to the Board of Air- India once Indira Gandhi had clawed her way back into power in 1980, JRD could no longer exercise his former influence. He eventually relinquished his position in 1991.
Air-India’s chairman was not the only casualty of this unsettling period. On New Year’s Day 1978, Boeing 747-200 Emperor Ashoka plunged into the sea shortly after takeoff, resulting in 213 fatalities. The accident is thought to have been the result of a malfunctioning attitude indicator that misled the Pilots into making excessive control inputs.
Despite losing control of his beloved airline, Air-India’s founding father had one more unique contribution to make. In October 1982, at the age of 78, JRD Tata undertook a 50th anniversary commemorative flight between Karachi and Bombay. Single-handedly flying a DH-85 Leopard Moth, he retraced the original route, even reuniting at Ahmedabad with the Shell representative who had refueled the original aircraft in 1932 from a bullock-cart. To commemorate this event, the Leopard Moth hung in Santa Cruz’s new international terminal building for a few years, before being permanently preserved by the Aeroclub of India at Delhi’s Safdarjung (now Indira Gandhi International) Airport.
With the loss of its guiding light, AI descended into a period of demoralization. Although it was still a major international carrier with an almost guaranteed market, standards of service, punctuality, and, above all, profitability, began to suffer. In 1979, this resulted in a financial loss, only the second annual deficit in the company’s history.
Many of the airline’s ‘new breed’ of managers were appointed as a reward for having supported Indira Gandhi’s political rehabilitation, rather than for any particular ability or experience in the complex world of airline operations. This resulted in a sharp decline in staff morale, leading to several serious bouts of industrial unrest.
Into this turmoil, in March 1980, 68-year old banker Raghu Raj took over as Chairman and Managing Director. He presided over a period of belt-tightening, including the withdrawal of a number of lesser routes to the Middle East and Africa. All this came at a time when it was becoming necessary to consider replacements for the aging 707s. The choice, directed by the government, ultimately fell on Airbus equipment and, having already taken delivery in 1982 of three A300s specifically for Gulf services, AI signed a contract in 1985 for six A310-300 aircraft at a total cost of US$393 million (US$876.3 million in 2015 figures).
The last Boeing 707 revenue flight was undertaken by Dhaulagiri (VT-DPM) from Harare on October 29, 1986.
A little over 30 years after the loss of the Kashmir Princess (see Air-India, Part One, Airways, March
2016), Air-India once more fell victim to political terrorism, though, in this instance, the seeds were homegrown. At 0714 GMT on June 23, 1985, flight AI182, bound for London from Montreal, inexplicably disappeared from the radar screens some 90 miles off the Irish coast. Although they quickly reached the scene, the rescue vessels found only a debris field with no survivors among the 329 passengers and crew aboard. Prolonged salvage operations eventually raised the main wreckage from the ocean floor. The subsequent inquiry concluded that a bomb must have destroyed the aircraft. Following years of investigation, in February 2003, three suspected Sikh dissidents from a militant group were arraigned in Canada on terrorism charges, but only one person was ever convicted on counts of manslaughter.
AI’s reliance on wet-leased capacity for its mainline cargo services was largely brought in-house with the purchase of two 747 Combi aircraft. The first, VT-EPW, Shivaji, made its initial commercial flight between New York, London and Bombay in October 1988. Around this time, renewed cooperation with the USSR resulted in wet-leased Aeroflot IL-62Ms operating services between India and Moscow via Tashkent.
Later in 1988, the Tata name renewed its association with Air-India when JRD’s nephew, Ratan, became part-time chairman for the next two years.
In mid-October 1989, AI introduced a fresh corporate identity with a new color scheme for its fleet that incorporated a vibrant ‘Sun’ logo on the tailplane. This livery, however, was soon withdrawn, and the company reverted to its traditional Palace in the Sky’ paint scheme.
Air-India’s significant presence in the Gulf region came to an abrupt halt midway through January 1991. All services in the area were brought to a stop as combat operations against Iraq’s occupation of Kuwait got underway. In the two-month period leading up to the first Gulf War, Air-India, in conjunction with IAC, the Indian Air Force, and Aeroflot, evacuated over one million Indian nationals from the Gulf States, earning a place in the Guinness Book of Records for this achievement.
A little over a year after AI had celebrated its Golden Jubilee, the airline community was saddened to learn of the death of the airline’s founder. Late in November 1993, JRD Tata, aged 82 years, succumbed to on-going heart problems at his Geneva residence. During his lifetime, JRD had been frequently honored for his remarkable achievements in the field of international civil aviation. Moreover, his many civic and philanthropic accomplishments were recognized with the bestowing of the Bharat Ratna, India’s highest civilian acknowledgement for a lifetime’s contribution towards the nation’s development.
Almost two years to the day after AI had placed an order for Boeing 747-400s, the first one arrived at Delhi on August 14, 1993, following a nonstop flight from New York. Simultaneously, a state-of-the art flight simulator was installed at the headquarters training facility to support the new airliner. With six of the type in service by November 1996, Chicago became AI’s second US gateway, served twice weekly direct from Frankfurt.
During the intervening years, AI added or reinstated a number of other notable international cities to its network: Entebbe, Nairobi, Jakarta, Durban, Johannesburg, Perth (replacing Sydney), Tel Aviv and Seoul. For this expansion, the airline leased several additional A310s, together with two Lockheed L-1011 TriStars.
Following emerging trends, Air-India concluded code-share arrangements with a number of prominent international carriers; these included Air France, with which a global alliance was cemented in 1997. Joint operations with Indian Airlines were also well underway as its Boeing 737s and Airbus A320s operated AI flight numbers connecting Ahmedabad, Amritsar, and Hyderabad with Bombay and Delhi, as well as a Gulf service from Kozhikode (Calicut). Another strategic tie up saw Air-India marketing Indian Railways’ extensive network of services through its overseas sales offices.
With the gradual Indianization of geographical place names, Bombay’s old Santa Cruz Airport became Mumbai’s Chhatrapati Shivaji International, after the legendary 17th-century Maratha ruler, in March 1999. Considerable upgrading and investment in in-house engineering, simulator training, and IT facilities was accomplished, while a dedicated terminal (2C) for AI and the airlines that it handled was commissioned in September 1999. A few months later, AI began retiring its Boeing 747-200s in conjunction with the phased introduction of more 747-400 models and the long-term lease of additional Airbus A310- 300s, two of which came from Singapore Airlines (SIA).
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The involvement of SIA was to loom large in the affairs of India’s state airline corporations for the next few years. Back in 1989, the government had announced an ‘open skies’ policy, allowing private operators to compete with IAC on domestic scheduled routes, later extended to take in limited overseas operations. Five years later, the Tata Group re-entered the field with a proposal to re-create Tata Airlines in conjunction with SIA. Nothing came of the venture, as the official view was that such a company would have undermined IAC’s status.
Towards the end of the 1980s, the incumbent government embarked on a program aimed at divesting itself of nationalized industries. In Air-India’s case, it proposed placing 40% of the airline’s equity into the private sector, including foreign investors. A number of interested parties surfaced, including code-share partners Air France, Emirates, Virgin, and Delta, but all interest fell by the wayside, leaving the $300 million Tata/SIA consortium as the only serious contender. This too foundered, hastened by the events of September 11, 2001, which led SIA to its first ever financial loss. Furthermore, it was suspected that Singapore Airlines was only interested in Air India as a conduit by which it could funnel traffic into its own network. Having failed to find a satisfactory partner, in February 2003, the Indian government removed both state airlines from the market. This was a bitter blow, coming at a time at which a capital-rich investor was needed to renew the aging fleet and reinvigorate the airline after six years of consecutive losses.
In May 2004, Air India (the hyphen now permanently removed) launched Air India Express as a wholly-owned subsidiary to provide low-cost direct services from the southern Indian states, initially to the Gulf region, targeting the construction worker traffic. The airline now serves 24 destinations, including Kuala Lumpur and Singapore, with a fleet of 17 Boeing 737-800s.
By the middle of the first decade of the new millennium, both state carriers were in dire straits with combined debts and losses totaling around US$530 million. Among the contributing factors that had led to this sorry state of affairs was a December 2005 US$11 billion order for 68 new Boeing aircraft. On top of this, the carriers had steadily lost market share to a rising new breed of Indian private carriers (IndiGo, Jet Airways, and Kingfisher) and due to a government liberalization policy that had opened the door to foreign competitors.
The government’s solution to this looming crisis was to announce that AI and IAC, together with their low-cost subsidiaries, would be merged into a single entity that would retain the Air India title. On paper, this would create a giant carrier with over 30,000 employees and 140 aircraft flying to 120 destinations. However, the integration process, not completed until February 2011, proved particularly painful and the anticipated synergies and economies of scale have been very slow in coming. Contingent on fulfilling the terms of the carrier’s revived four-year recovery plan, the government has begun injecting huge sums (estimated to top $6.6 billion by 2020) to stabilize the airline’s finances.
After a decade of struggles, there are some signs of a corner being turned. Thanks to falling fuel costs and rising passenger uplift, revenue has increased 6.5%, resulting in a modest operating profit for the first time in a decade.
Overall, the Indian airline industry is in a sorry state, with combined losses of around US$1.2 billion in 2014-2015 alone, which are not exactly conducive to Air India’s recovery. However, throughout its 83-year history, India’s premier airline has overcome many challenges. Its survival is perhaps best exemplified by the cheeky little Maharajah publicity symbol that has endured since it was created, back in 1946, by long-serving Commercial Director S.K ‘Bobby’ Kooka. The Maharajah was recently given a makeover; now sans turban with spiky hair, it wears jeans and sneakers to reflect modern times.
Air India’s acceptance into the Star Alliance on July 11, 2014, will hopefully help bring it back to long-term stability and to better times ahead.
INDIAN AIRLINES CORPORATION (IAC)
Responding to the challenge of integrating eight, largely lossmaking, post-war domestic carriers into one airline, within two years of its 1953 inception, Indian Airlines Corporation (IAC) managed to create a fully coordinated network that operated around 300 flights a week to 50 domestic and nearby regional destinations.
In 1955, the company tentatively began modernizing its fleet by acquiring a small number of DH Herons to serve the shorter and lower traffic sectors. Two years later, IAC acquired five Vickers Viscounts for its trunk routes and, late in 1967, it began the long-awaited replacement of its aging DC-3s by bringing online the first of a substantial fleet of twin-engine Avro 748s, license-built by Hindustan Aircraft. In the interim, from 1961, the carrier acquired a number of Fokker F-27s, and retired the last of its DC-3s from service in 1974.
From early 1964, Sud Aviation Caravelles began taking over trunk route duties from the Viscounts. Despite the loss of two of the new jets in accidents during their first two years, the planes proved so popular that demand quickly outstripped capacity. Three years later, the company placed a substantial order for Boeing 737-300s to be delivered in 1971.
The early 1970s were not particularly kind to IAC. The combination of a burdensome logistical involvement in the military skirmishes with Pakistan and China, unsubsidized social obligation routes, high fuel costs, frequent strikes, and a 1971 cholera epidemic all contributed to a 1972 fiscal deficit of Rs 45 million (US$600,000). Adding to the difficulties, the airline suffered nine accidents, several involving F-27s, between 1970 and 1973.
The transformation of the airline into something akin to a regional trunk carrier began in the mid-1970s with the opening of routes to Kabul and to the Andaman and Maldive Islands. A decade later, the network had expanded to Bangkok, Singapore, and several points in the Gulf. This process was aided by the acquisition of three Airbus A300Bs, which had superseded the Caravelles after the disastrous crash of flight 171 in October 1976. To reduce its obligations to serve some of the more remote communities, in 1981, IAC joined with Air- India (AI) to form Vayudoot (PF), which, at its peak, served over 100 minor destinations with a fleet of Dornier 228 light airliners.
In September 1985, to solve its ongoing capacity deficit, Indian Airlines (IA), as it had become known from 1979, signed a $952 million order for 19 Airbus A320s. Now carrying 10 million passengers annually, IA addressed its major remaining handicap: the automation of its creaking card-based manual reservations system, which made it virtually impossible to obtain advanced seat confirmation. The first A320 went into service on July 1, 1989; however, in February 1990, one of these aircraft crashed on final approach to Bangalore. 88 passengers and four crew members were killed and 54 survived. This ultimately led to the grounding of the entire fleet for eight months, imposing a reliance on leased aircraft to make up the shortfall.
Despite a reputation for indifferent service, delays and cancellations, IA’s virtual monopoly enabled the airline to retain a degree of complacency. Indeed, IA’s only significant competitor was the vast Indian railway network, then responsible for a staggering 15 millionplus individual journeys each day. But this situation subtly began to change in the early 1990s, with a fresh wave of deregulation that saw the launch of nine new independent airlines. All but two soon failed but, into the early 2000s, the survivors, together with several new entrants, shrank Indian’s market share to around 44%.
In April 1996, Indian Airlines formed its own budget-fare subsidiary, Alliance Air, which flew a small fleet of Boeing 737s leased from its parent company. However, some questioned the safety of these elderly aircraft, and there were maintenance and training issues. These concerns were borne out in July 2000, when a 737 crashed into a housing estate while on approach to Patna. IA’s unenviable safety record had seen the loss of a dozen aircraft and almost 400 lives in the preceding two decades. Adding to its woes, IA was also the victim of a number of hijacks, five in 1993 and 1994 alone, resulting from unrest in the Sikh community and from the dispute over the territory of Kashmir.
Though the airline was frequently criticized for its service, its speedy response to the region’s natural disasters was often overlooked. Reacting quickly to Assam’s devastating floods in July 2003, IA airlifted more than 16,000 tons of relief supplies to the area. During the Indian Ocean tsunami disaster of December 2004, IA rapidly mounted over 30 humanitarian aid flights to Madras and provided lifeline services to the stricken Andaman Islands—skillfully operating B737s from the surviving half of Port Blair’s 10,990ft (3,350m) runway.
One of the major inhibitors hampering IA’s ability to effectively deal with the competition brought by its privately owned counterparts (principally Jet Airways) was its aging and expensively high-maintenance fleet. Despite flying several leased A319s and ATR-42s in low traffic sectors, IA also had to contend with local government meddling that often forced it to use larger, sub-optimal aircraft, leading to vast over capacity and many unfilled seats.
Between 1989 and 2002, passenger carriage almost halved, going down to 5.5 million. After four years of prevarication, the government finally approved the purchase of more than 40 new Airbus A320 family aircraft, at a cost of $2 billion, with deliveries commencing winter 2005.
Despite its problems, through much of this period, IA remained profitable, reaching a 10-year high in 2004-2005, when the company was re-titled, simply, ‘Indian’.