Flight food and choice

The topic of outrage for the day on Twitter seems to be Air India’s decision to serve only vegetarian food on flights that last less than 90 minutes. Predictably, given the current government’s policies and track record so far, people are decrying this as some sort of a “brahminical conspiracy”. This was even quoted as  a reason to privatise Air India (while I don’t agree with this reason, I fully agree that there are several other reasons to privatise Air India).

While outragers will outrage (and they might have a pathological need to outrage), this decision of Air India actually has sound basis. I had touched upon this in an earlier  blog post about why I get irritated with Indigo’s in-flight service.

The problem is that the more the choice you give customers, the slower the overall service will be. While this may not affect people seated in rows where service begins, it can be an immense cause of frustration for passengers who are seated in rows that will be served last.

In longer duration flights, this matters less since people who are served last will have sufficient amount of time to finish their meals before the trays have to be cleared in time for the flight to land. On shorter flights, however, the time available for meal service is so short that it is possible that trays might have to be cleared barely after a section of the passengers have started eating.

Eliminating choice significantly speeds up the meal delivery process (refer to my post on Indigo’s food for more on this), and ensures that people who have been served last have sufficient time to finish their meals before trays have to be cleared. While it may not take much time for the steward to ask the customer her choice, considering the total cycle time (along with passengers asking details of the menu, etc.) and the number of passengers to be served, cutting choice is a sound decision indeed.

As for the vegetarian option, when there is no choice offered, it is natural to go with the option that satisfies the maximum number of people. Considering that Indians don’t eat much meat (while only a small proportion of Indians are vegetarian, overall meat consumption is very low), it is a rather obvious choice that only vegetarian food will be served.

This is a commendable decision by Air India and I hope they stick to it. I hope other airlines will also learn from this and cut choice in their inflight menus (Indigo, I’m looking at you) so that passengers can be served with the minimum uncertainty and minimum fuss.

Tailpiece The above linked NDTV Profit piece has a bizarre comment from an expert. Quoting:

However, according to travel industry expert Rajji Rai, the state-owned airline should have first carried out a passenger survey, which is an industry practice, before affecting any change in the menu.

“Airlines world over carry out customer surveys before taking such decisions. Unfortunately, Air India is very poor in such practices. This decision to discontinue non-vegetarian food on these non-metro flights is just one-sided,” he said.

Surveys are overrated in my opinion, and there is no reason Air India should have conducted a survey before making this decision – for they have access to significant amounts of actual customer preferences over a large number of schedules. The value of a survey in this case is at best marginal

Reforming Air India (yet again!!)

Being a PSU, Air India faces a unique set of constraints. In order to maximize its performance, the airline should take the most optimal decisions that satisfy these constraints. 

On Monday I had to go to Mumbai on some work and I flew Air India. Normally I prefer to fly either Jet or Indigo, but given the short notice at which I had to plan my trip, and the fare difference between Air India and the other two (leaving aside some airline I don’t trust), I decided to go for the national carrier. Overall it wasn’t an unpleasant experience – my onward flight was late by ten minutes or so, while my return flight was on time. There was plenty of leg space, the food was good and online check in was hassle free. Yet, it looked like there was plenty of scope for improvement.

Now for a digression. The difference between club football and international football is that in the latter you cannot buy players (not strictly true – Spain got Brazilian born Diego Costa to play for them on account of 1. his Spanish passport, 2. that he had never played for his native Brazil, but this is an extreme assumption). To use a cliched term, in international football you need to play the hand that you’re dealt. Thus, the job of a manager of an international football team is to organize his team’s strategy and tactics according to the personnel available to him, rather than the other way round. For example, Dutch manager Louis van Gaal is known to favour a possession based passing game. However, given the set of Dutch players available to him, he has set them out as a counterattacking side.

Given the lack of degrees of freedom in running PSUs, it can be argued that running a PSU is closer to managing a national football team than it is to managing a club team. Government ownership and consequent pay structures, combined with the lack of a good lateral entry system to the Indian public sector, mean that it is hard for a PSU to “buy” personnel like private companies can. On the other hand, sacking PSU employees is a politically charged activity, and not easy to administer, so it is hard to get rid of deadwood also.

The traditional argument is that given these restrictions that PSUs face, it is impossible for them to perform at the same level as comparable private sector units. While this argument is well taken, what we need to be careful is to not let this mask any degree of poor performance by a PSU. The question, instead, that we need to ask is if the PSU is actually making best use of the “hand it has been dealt”. What we need to check is if the PSU is optimizing correct given the resources and constraints at hand.

Coming back to Air India, one of the stated causes of its poor performance is that it is overstaffed – it far exceeds its global peers in terms of the number of employees per aircraft (normally assumed to be a good metric of staff size). This was fully visible at the boarding gate on Monday, for there were four personnel with the task of barcode scanning the boarding passes. Most other airlines have two staff doing this. A clear case of overstaffing. While it may not be under the management’s control to downsize (see constraints listed above), what irked me was that they were not being put to best use.

Just to take a simple example, if you have twice the number of required staff at the boarding counter, all you need to do is to put in an additional barcode scanner and run two boarding lines instead of one – which results in doubling the pace at which the plane is boarded. This doubling of boarding pace means planes can have a much faster turnaround time at each airport – which means the number of flights that Air India can run given its stock of aircraft can increase significantly!

To take another example, Air India probably has the best leg space in the economy class among all Indian carriers – this is probably driven by the fact that a large number of government officers and ministers travel mostly by Air India, and holy cows mean that they are forced to travel  “cattle class”, the airline offers some comfort. Now, while this means each plane has one or two rows of seats less than that of other carriers, it constitutes a massive marketing opportunity for the airline! Given the leg space and comfort and meals (!!), Air India can very well position itself as a premium carrier and try to charge a premium on tickets!

On an absolute basis, the recommendations above may not be optimal – it might be well possible to make more money by sacking boarding gate employees than by cutting boarding time, or it may make more business sense to add an extra row of seats than try to enhance legspace. However, given the constraints the carrier faces, these are possibly the “second best decisions” that the carrier can take. And by not taking these decisions, the carrier is not making as much money as it can make!

Government finances versus public interest

In an op-ed in Business Standard (I think) yesterday, Praveen Chakravarti (he’s with Anand Rathi now, used to be with UIDAI when I met him at the Takshashila Conclave last year) argues that fixed price allocation of telecom spectrum wasn’t such a bad thing since it kept prices for customers low and reasonable. As part of his argument, he mentions that due to the auction of 3G spectrum and licenses, prices of 3G services have been really high, way over the reach of the common man. Similarly, after the auction of the 4th telecom license in 2001, mobile telephony prices remained high, and came down only after the backdoor entry of Reliance and Tata Teleservices a couple of years later.

One of the points that the CAG mentioned in his report on Air India a few days back was about the granting of “sixth freedom” rights to international carriers flying from India. For example, twice this year I flew west (once to the US, once to Europe) from Bangalore, stopping over at Dubai. For both trips, Emirates sold me a single ticket (i.e. I purchased a Bangalore-New York ticket, not separate tickets for Bangalore-Dubai and Dubai-New York). The granting of this sixth freedom to carriers such as Emirates, points out the CAG, has resulted in substantial loss to Air India since no one flies Air India for international flights anymore. I didn’t believe it when I read it but one of the recommendations for the CAG was to cancel sixth freedom licenses to carriers such as Emirates. Another report around the same time recommended that “interior markets” (Bangalore, Hyderabad, Ahmedabad, etc.) be made Air India monopolies in order to protect its finances.

Now, there is a fine balance that needs to be achieved between government revenues through grant of licenses, and the economic impact on the general public because of the grant of such licenses. For example, the government (through Air India) may have lost significant amounts of money thanks to the grant of sixth freedom licenses to carriers such as Emirates. That has been counterbalanced with lower fares and easier flying options for travelers from hitherto less connected sources like Bangalore or Hyderabad. The government may have lost significant revenue by granting backdoor entry to Reliance and Tata Teleservices, but that was compensated by sudden drop in charges for mobile telephony, and the subsequent growth of the sector.

Given Air India’s history and performance, the government could have never invested enough to make Bangalore and Hyderabad as well connected with the rest of the world as, say, Bombay or Delhi. In that sense, granting of sixth freedom rights to Emirates was a cheap way for the government to provide international connectivity to these cities. Similarly, it would have been hard for the government to invest in MTNL or BSNL in order to take mobile telephony to the masses. Backdoor entry to two operators was a “cheaper option” to achieve this objective.

So what was the problem with what Raja did, you ask. The problem there was the creation of a playing field that was not level. He blatantly favoured certain players against others, and made hefty kickbacks from the process. That is the real tragedy of a non-auction process – in that there is “consumer surplus” left over with some of the companies after they’ve paid the fixed price for the resource, and some of this consumer surplus can be channeled in the form of kickbacks to government officials. I don’t know the parallel for this in the aviation space so I’m not able to comment on that.