The Air India management has presented to the government a turnaround plan that projects a monthly reduction of Rs 450 crore in costs and extra revenues of Rs 195 crore, along with a brand building exercise.
While some components of the cost reduction plan, like the cut in performance-linked bonus for executive pilots, had to be rolled back, the management expects to stand by the other measures.
The plan, outlined by the airlines? chairman & managing director Arvind Jadhav, to the civil aviation ministry includes a saving of Rs 100 crore in fuel cost and Rs 200 crore in ground handling and consumables charges (inventory costs).
Jadhav has projected a rise in passenger revenues by Rs 135 crore a month, in cargo by Rs 30 crore each month and another Rs 30 crore through hived off engineering services.
The cost-cutting exercise aims to shave off Rs 5,424 crore from the airline?s annual bill of Rs 22,000 crore. Simultaneously, the revenue raising measures will add Rs 2,340 crore to its revenue of Rs 17,000 crore.
For the national carrier, the measures can significantly clip its cumulative debt of over Rs 16,000 crore. This will also mean less of a headache for the government to finance a bailout, which will still be necessary.
But as the trouble with the pilots to run through the wage cuts show?the executive pilots went on a strike last month?it could be difficult to implement these plans too, since it involves the engineering crew this time.
The government has made it clear that any financial support for the airline will come about only after its management fulfills its commitment to arrest the mounting losses. The carrier, which posted a net loss of Rs 7,200 crore for the financial year 2008-09, is seeking an equity infusion of Rs 2,000 crore and a Rs 5,000 crore soft loan from the government.
The company has also projected to the committee of secretaries that the on-time performance of the carrier will be enhanced from the current levels of 90%. Also the older aircraft, which are fuel-guzzlers, are being replaced with newer fuel-efficient aircraft.
The brand building and makeover exercise for the carrier will involve tying up with major hospitality chains for service standards training, a makeover for the cabin crew, and better customer handling and sales functions. In his presentation, Jadhav specified,
?Aggressive brand harmonisation across key customer interfaces will be the prime directive to increase brand loyalty.?
The other elements of the roadmap laid for the airline, Jadhav has explained, include adopting best international practices in airline operations and sprucing up maintenance, repair & overhaul activity, airline terminal services and better corporate governance.