Air India’s Treasury Team Propels Global Ambitions

Privatisation marked a turning point for Air India, requiring a comprehensive treasury upgrade to streamline its banking infrastructure, enhance transparency, manage risk and bolster controls, efficiencies, and security across its overseas operations.

To achieve these huge goals, the company implemented a streamlined treasury framework, optimising liquidity, and adopting industry-standard processes. Here’s how it managed this root-and- branch overhaul.

Following its acquisition by Tata Group in 2022, Air India began a new chapter. With international flights to 35 destinations, across 26 countries at the time of acquisition, the airline’s transformation was deemed essential to support its ambitious growth plans both domestically and internationally.

Previously, Air India had operated a highly decentralised treasury infrastructure, with hundreds of bank accounts across many locations and cumbersome manual processes reliant on local teams. This fragmented system hindered efficiency, control and visibility.

The challenges were compounded by the airline’s reliance on multiple banking partners including local banks in several countries, which reduced its negotiating power and led to excessive transaction fees.

With plans to expand internationally and acquire new aircraft, treasury modernisation was urgently needed to support the next chapter of the company’s journey. And to thrive in a fiercely competitive global market, it was clear that Air India needed a bold transformation – and a treasury fit for the future. As such, the team began looking for a banking partner to help them on their journey.

A mission-critical overhaul

Following a comprehensive RFP process, Air India appointed HSBC as its overseas cash management partner in Asia Pacific, the Middle East, and the UK. And together, they set about an enormous overhaul of the legacy set-up.

The transformation of such a large-scale operation, particularly for a national flag carrier, presented an overwhelming task. The treasury team achieved success through a carefully structured approach that began with defining clear goals and objectives, ensuring input from all team members to maintain alignment.

A detailed implementation plan followed, with comprehensive timelines and resource allocation. And the team established regular meetings and open communication channels to address issues promptly, while leveraging the latest technical expertise and tools. Extensive training programmes also helped team members adapt to new systems, and continuous monitoring enabled necessary adjustments throughout the transformation journey.

By December 2023, the first phase of the transformation had been successfully completed and delivered measurable results.

The company streamlined its banking operations by reducing bank  accounts to just 16 across 15 markets. This rationalisation was supported by HSBC’s ability to facilitate multiple payment types – vendor payments, payroll, and statutory obligations – through a single banking partner.

Connectivity was significantly improved by leveraging Air India’s existing HSBCnet and host-to-host profile, enabling the airline’s treasury team to manage overseas accounts at headquarters centrally. Adopting bank-agnostic XML V3 file formats and MT940 end-of-day statements further automated the reconciliation processes, enhancing control and reducing manual workloads.

The airline also implemented HSBC’s Evolve platform for seamless cross-currency exchanges, eliminating the inefficiencies of manual rate bookings.

HSBC’s liquidity management dashboard now provides treasury with a unified view of cash positions across markets. Corporate cards also played their part, being introduced across multiple locations to facilitate emergency payments, such as hotel bookings and taxi fares.

The transformation has significantly enhanced Air India’s treasury operations on multiple fronts. To start with, the rationalisation of bank accounts has reduced complexity and the associated fees, while the centralisation of processes has enabled STP for payments. In addition, improved visibility into cash positions enables the airline’s treasury to optimise liquidity and reduce reliance on external borrowing, resulting in additional cost savings. Adopting automated and standardised processes has also released treasury resources to focus on strategic initiatives, including acquiring 470 new aircraft for Air India’s fleet.

Throughout this journey, the team faced several significant challenges. For example, ensuring seamless collaboration between different departments proved complex, while maintaining day-to-day operations alongside the transformation required careful balance. The need to adapt to local regulations across multiple countries added another layer of complexity to the process.

Landmark achievement

In under a year, Air India has carried out an incredible job of modernising its treasury infrastructure while navigating the complexities of transitioning from a government entity to a privately held business. The airline has become the first in India to establish a financing leasing company in the Gujarat International Finance Tec-City – known as GIFT City – further aligning with its global rebranding efforts. The transformation has introduced centralisation, standardisation, and automation into Air India’s treasury operations, delivering improved visibility, efficiency, and security.

By consolidating bank accounts into just 16 and centralising control through a single banking partner, Air India has optimised liquidity management and empowered its treasury team to support critical airline operations. The seamless implementation ensured minimal disruption to day-to-day activities while laying the groundwork for future growth, all of which has earned it the TMI Award for Treasury Team of the Year.

For the members of the team, this recognition serves as a testament to their exceptional performance and innovative approach in transforming Air India’s treasury operations. The Award has not only boosted team morale but also validated their dedication to excellence and continuous improvement.

Looking ahead, Air India is enthusiastic about several future developments, with the next phase of the treasury transformation scheduled to be completed within a year. The team is particularly focused on integrating advanced technologies, including AI and analytics, to further enhance operational efficiency.

The airline also plans to initiate customer-claim payments in more than 130 currencies through HSBC’s Global Disbursements solution. This will eliminate manual file uploads and ensure seamless local payments. Additional plans include enabling cash and point-of-sale collection handling at airport counters and scaling the solution to new locations as Air India expands its operations.

Soaring ahead

As Air India continues its global expansion, the team is preparing to manage increasingly complex financial operations across new markets while developing more sophisticated risk- management strategies. Investment in continuous training and development remains a priority to ensure the team stays ahead of industry trends and maintains agility in response to evolving regulatory requirements.

With the upcoming second phase of transformation, Air India is poised to elevate its treasury capabilities even further, enabling the airline to capitalise on new opportunities and solidify its position as a world-class carrier.

In under a year, Air India has carried out an incredible job of modernising its  treasury infrastructure while navigating the complexities of transitioning from a government entity to a privately held business.