1. Air India to ask government to classify aviation as an infrastructure sector

Air India to ask government to classify aviation as an infrastructure sector

The board of directors of Air India are considering putting forward a proposal to the government...

By: | Mumbai | Published: November 8, 2014 7:14 PM
Air India’s OTP in the domestic and international routes has in the recent days taken a beating due to the grounding of eight aircraft as a result of engine failure. Reuters

Air India’s OTP in the domestic and international routes has in the recent days taken a beating due to the grounding of eight aircraft as a result of engine failure. Reuters

The board of directors  of  Air India are considering putting forward a proposal to the government to classify aviation as an infrastructure sector, which will allow the cash stripped sector to bring down their cost of borrowing, said Professor Ravindra Dholakia, a member of Air India’s board, at the sidelines of an event on Saturday.

“This will help Air India and the aviation sector as a whole,” he added.

Speaking at the sidelines of an event to commemorate  110th Birth Anniversary of JRD Tata, Dholakia said that the airlines is currently looking at a route rationalizing process and are currently monitoring its domestic and international routes.

“(We are looking at) whether all the current international and domestic routes are the ones that are required. There are social objectives, in terms of routes, we need to fulfill as a national carrier. But then profitability doesn’t always  go together with social obligations and one has to strike a balance (between the two),” he said.

“We have to ensure that tax payers money is well utilized.”

Professor Dholakia, who has been a part of the economics faculty at Indian Institute of Management (IIM) Ahmadabad since 1985, added that Air India’s dependence on Boeing 787 (Dreamliner) aircraft, will reap benefit in future.

“Boeing 787 aircraft will be a good game changer over time and will contribute significantly to the cost reduction initiative at the airline,” he said.

Air India’s On Time Performance (OTP) in the domestic and international routes has in the recent days taken a beating due to the grounding of eight aircraft as a result of engine failure.  At the same time the airline’s obligation to divert fleet for Haj operations further brought down their OTP performance.

“At present we have very few new aircraft (with new engine). While the old aircraft are causing us some problems, we are being able to overcome them gradually,” Dholakia added.

Underlining the fact that the airline unable to sell its properties as per the guidelines of the Turn Around Plan (TAP), Dholakia said that in case of several of its properties Air India hasn’t been able to establish its ownership over its properties, and as a result could only lease these properties and not sell them.

“We  being a public sector unit (PSU)  can’t take commercial decisions by ourselves and require at least three levels of approvals from different levels including the government,” Dholakia said.

In case of the airline’s iconic property at Nariman Point, which served as its headquarters until recently, Dholakia said that by the time the airline decided to sell the property, the real estate price of the area had already taken a beating as companies started moving to Bandra-Kurla Complex (BKC) from the financial hub of Nariman Point.

“The best we can do is to hook on to some other public sector enterprises  –that are making profit –and are in need for such kind of premises. We have no other options,” he added.

Tags: Air India
  1. No Comments.

Go to Top