"If the company plans to remove non-performing employees by offering them attractive one-time-settlement through VRS, it is not certain whether they will opt for it," sources said. This could also spawn the risk of losing competent staff as seen a few years ago when the airline had introduced a VRS.

Even if PSU employees do not get as attractive a financial package as their counterparts in the private sector do, they are entitled to perks such as medical allowance for family, free or concessional travel and accommodation benefits.

According to sources, this is unlike private companies where the financial package and perks are based on individual performance and reviewed continuously. Hence, a competent public-sectorofficial often finds a more lucrative market outside. The airline also needs to spend a lot of money to train its employees which only adds to its expenditure, insiders said.According to sources, the planned increase in fleet utilisation will require manpower support, forcing the airline to redeploy its staff. IA urgently needs to replace its fleet to improve productivity, they added.

It is learnt that the civil aviation ministry is examining the VRS issue. Indian Airlines, in the meantime, has initiated a number of cost-cutting measures such as curtailment of uneconomical flights and trimming down its booking office network. It has also stopped foreign travel by staff for seminar and conferences and sponsorship of such events while imposing a clamp on over-time, except in an emergency.

The airline is under a lot of financial pressure, said officials adding that a mere increase in tariff will not be sufficient. There has been a steep increase in fixed costs owing to several factors such as a steep fall inthe rupee, increase in landing and navigation charges, high import duty and fuel surcharge.

Besides, the high wage bill, cost of inflight services and maintenance has compounded costs. All this has resulted in fixed costs going up by around 20 per cent, sources said.

Tabloid explains tale of woe

NEW DELHI, OCT 18: Faced with growing competition in the domestic sector, Indian Airlines has, for the first time, initiated direct communication with the passengers to explain them its problems.

On the occasion of Diwali, the airline has brought out a tabloid titled Welcome Aboard to provide travellers basic information about its working as well as to tell them of the difficulties being faced by the public sector airline, which till recently held a market monopoly in the country.

The four-page glossy publication tells the passengers, through direct interviews with a pilot, an air-hostess and an engineer--representing the three main operational departments--the day-to-day problems being faced by it while keeping the 52-aircraft fleet flying-fit to carry 22,000 passengers daily to 59 domestic and 17 international destinations. Through an intimate letter, the official spokesman explains the reasons behind the recent fare hike by 11.2 per cent.

It had become necessary to meet the growing inputcosts, many of which, he says, "are beyond the control of the airlines."

"Perhaps you are aware that over 87 per cent of the costs of the airlines are on account of prices fixed by other agencies," the letter says. The cost of domestic operations had gone up by Rs 214 crore this year. But the fare increase "is expected to yield only around Rs 195 crore," the spokesman adds.