View: Workforce woes at India's airlines signal a time for change

India's airlines have been dealing with a series of workforce challenges. Multiple actions across airlines by workgroups have led to reliability issues. This during July which is the start of the second quarter — traditionally the weakest quarter for Indian travel demand. Workgroups include pilots, cabin crew and technicians — all critical operational functions. These actions have resulted in cash-losses at a time when airlines can ill-afford any loss.

Even so, cash flow aside, these speak to a broader theme. Namely: an increasingly vocal and active workforce that is demanding engagement with management. It seems the industry has focused so much on cost, management has lost the "spirit to serve." A rethink may be required.

Much like global counterparts, India’s airlines have focused on costs. Costs do matter especially in a price-sensitive market like India. Price sensitivity is so high that it has been observed that a Rs 500 fare increase can lead to up to a 10 percent drop in demand. Yet, driving airlines totally on cost, and, losing the internal DNA of service excellence is a quick way to lose even more money.

And collective airline losses that will exceed $2 billion for the year point to just that. The pioneer of the low-cost vision, Michael Porter, was famous for saying back in the 80's that there can be only one cost leader. If that is not you, you are just stuck in the middle… This vision from Porter was adapted very well in WalMart — the largest and most successful low-cost supermarket group in the US. Wal-Mart's mantra said: the lowest food prices delivered in a store that feels like your home. Airlines have copied the first part of the mantra but forgotten the latter. Much to their own disadvantage.

In the intensely competitive Indian aviation landscape, India's airlines compete to have the lowest cost. But with the reality of only one low cost leader, other airlines are found wanting to cut expenses by any and every means possible. Flying in a sea of sameness, all are found wanting for differentiation. The market is a paradox anyway you look at it. On ticket prices, low-cost airlines are pricing at levels similar to a full-service airline and vice versa; on meals and services full-service airlines are offering tickets that come without meals or services; on the airport experience there is no difference whatsoever; and on all other parameters they are broadly similar. Most are stuck in the middle with neither the lowest costs nor a compelling proposition. And in doing so, they compete the profits away.

The workforce actions that have come to the forefront over the last few weeks, started with India’s strongest airline namely Indigo. Two key decisions that consistently come up in this context are the pay-cuts (and partial restoration) and the bonuses handed out to executives. Needless to say tensions were simmering. This first came to light after several pilots were held accountable for efforts towards a mass sick. This was followed by a similar action by another workgroup when a large number of cabin crew called in sick. The proof was in the numbers with only 45.5 percent of flights operating on-time and a consistent stream of comments by frustrated travellers across social media. This was followed by a salary correction for pilots and before that could trickle through another workgroup namely technicians had a coordinated sickout and started making demands. Workgroups at other airlines followed.

These workforce actions were amplified via social media clearly pointing to strife within the sector. The patterns are clear and the points that are repeatedly coming up across airlines include pay, engagement and stability. In addition, to pay-related challenges, perception is also a challenge. Indeed, one repeatedly hears the chant, "the flights are completely full" with lazy analysis that concludes that the airline must be doing well. Yet this is not the case. Load factors continue to be the most misunderstood metrics in Indian aviation and don’t quite factor in items such as yields, cancellations and overbookings. On the contrary, full flights often mean intense discounting where the airlines attempt to capture cash flow that otherwise would have been lost forever. But a lack of engagement means this nuance is not understood fully across organisations.

For airlines in India the events of the last few weeks should not be looked at lightly. Because these can have ripple effects and alter the nature of the airlines themselves. Especially given that the airline sector is about to see new capacity addition with the launch of the startup airline Akasa, the revival of erstwhile Jet Airways in its new avatar, and add to this Air India under the ownership of the Tata’s. Competitiveness in the future may just rest on an intangible. In addition to competitive costs, what may be needed is a return to the “Spirit to serve.”

This Spirit to serve phenomenon was first practiced in the hotel sector by Mariott, where, it was highlighted that engagement with customers made the difference. So, Marriott put thousands of front-line staff through programmes associated with some of the world’s best business schools, where, they were briefed on what a difference they can make. The training also focused on attitude to work and helped Mariott scale ever greater heights. Other than the outward engagement it also drove cohesiveness within teams which interestingly can help with lower costs. Unfortunately, a vision of this sort is summarily dismissed by airlines given that passengers always gravitate towards the lowest cost. Even so, the context has changed and post-pandemic consumer behaviour may also be at an inflexion point.

Employees and engagement may be the key to differentiation as opposed to extracting more from the passenger via fees, charges and exceedingly low levels of service. What may have worked in the Western world, may not necessarily work here. India focused solutions are the way forward.

Ask passengers today, what expectations they have of an airline and the answers are to the tune of, "well if it is an LCC, it is cheap, but, with very weak back-up services. If it is a legacy airline, they over-charge and under-deliver." But this need not be the case. Whether this will be tackled head-on with a strategy of engagement or a strategy of attack remains to be seen.