Air India mulls route cuts to reduce losses

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New Delhi, Jul 23 : Air India is working on a plan to cut losses by around Rs 1,000 crore every year by cutting capacity through rationalisation of routes and removal of loss-making routes, highly placed sources in the ministry of civil aviation said.

The national carrier is expected to save around Rs 600 crore in this fiscal itself. “The national carrier will start these saving measures next month and is at present planning for the implementation,” the official said.

On the equity infusion and soft loans needed by the carrier for its operating and other expenses, the official said that senior officials from Air India are working with the officials in the ministry of civil aviation on this proposal. “The minister of civil aviation has already met the Prime Minister and has got approval from the government on the concept but the amount and the process of implementation is still being worked out,” the official said.

“The proposal should be ready in another 10 to 15 days though the component amount of equity and soft loan is yet unknown,” he added.

On the fresh order for aircrafts by the national carrier, the official said that it was completely “off the radar” as the carrier was now plagued with over capacity and if need it may give some of its aircrafts in lease to some international carriers at a later stage.

On the effect that new dynamics of the government at the center will have without the Left as a part of the ruling alliance, the official said that if it had been earlier, then many new initiatives could have been pushed and finished faster referring to the delay in Kolkata and Chennai airports. Other initiatives like a friendlier foreign direct investment regime and matters pertaining to Air India could also have been taken up. But with only ten months left, it does not make any sense, starting something that cannot be finished in time, the official said.

“Instead the ministry and the government will push to make sure that the already existing policies work properly and the aviation industry with so much future potential does not get derailed,” the official said.

As far as norms for international flights go, the ministry official said that at present the international market is more competitive than the domestic one and it does not make sense to make it easier for younger carriers. “They would make bigger losses on international routes,” he said.

On Aviation Turbine Fuel (ATF), the official said that the ministry of civil aviation was going to go all out to bring down the taxes on ATF. “We could not put much pressure on the government in past couple of months as they had enough pressure due to the nuclear deal,” the official said. “Now the air is clear and confidence vote is a thing of the past. We will try to make sure that something is dome about the taxes on ATF in the next couple of months,” he added.