Independent directors prod Air India to cut loss-making flights

Mar 08 2014, 10:20 IST
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The independent directors also want Air India to reduce the number of routes making variable losses. The independent directors also want Air India to reduce the number of routes making variable losses.
SummaryAir India may discontinue a few of its domestic flights to decrease the number of flights making variable losses.

Air India may discontinue a few of its domestic flights to decrease the number of flights making variable losses. The airline is under pressure from the independent directors on its board to take this step.

The independent directors also want Air India to reduce the number of routes making variable losses.

The airline continues to make variable losses in around 19 routes — six of them international.

The airline has reduced a number of routes, which were not meeting jet fuel costs. The independent directors, however, were not convinced.

“The independent directors want the airline’s commercial department to do corporate tie-ups and ensure that these routes are converted into profitable ones in the course of time,” said a senior Air India official, adding that they might discontinue some domestic flights that are making variable losses.

The board meeting was held on February 28.

The 13-member Air India board has six independent directors, which includes RH Dholakia, professor, IIM-Ahmedabad; Renuka Ramnath, MD & CEO of Multiples Alternate Asset Management Pvt Ltd and Gurcharan Das, Ex-CEO & MD of Procter & Gamble India, among others.

The official further said that they have been working towards making routes profitable through various means of cost reduction.

“We have brought down the number of routes not meeting fuel cost to zero by a combination of measures that includes cost cutting, cancelling flights and changing the equipment to a Boeing 787,” he said.

Of the 19 routes that have not been able to meet the variable cost, the international route includes Delhi-Sydney. The domestic loss-making routes, includes metro routes of Mumbai-Kolkata and Bangalore-Delhi.

“Our Delhi-Tokyo flight has started making money after we changed the equipment to a Boeing 787 and other international flights can also be made profitable this way.

However, we have plans to cancel some of our domestic flights, which are making variable losses,” said a senior official.

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