After asking its brass to forgo their July pay, India?s flag carrier Air India (AI) is now planning to take more steps to improve operational efficiencies and cut costs. Also, its CMD Arvind Jadhav is planning to speed up the process to introduce a ?no frill? service domestically on its low-cost subsidiary Air India Express, which is generally deployed on India-Gulf routes.
This is a part of a blueprint, which could help AI arrest losses of Rs 2 crore a day that has resulted in depletion of the airline?s equity base.
AI?s rival, Jet Airways, has recently introduced low-fare service Jet Konnect with fares 15% lower compared to an economy class on Jet on certain domestic routes.
The carrier, which is projected to post losses of Rs 4,000 crore for FY09, is finding it difficult to infuse equity and hence, its CMD had to take up the challenge of keeping the company afloat at a time when its cash reserves have almost diminished.
Currently, the only saving grace for the carrier is advance ticket sales that is roughly around Rs 50 crore from domestic and international travel and aircraft lease rentals.
Second, the CMD has already asked its senior executives to cut down capacity on loss-making domestic routes as well as international. AI connects over 93 destinations worldwide in 24 countries across Africa, Asia, Europe and North America etc. Domestically, the airline covers more then 50 destinations across India. Due to its robust network, it is considered the 16th largest airline in Asia
Although considered a harsh step, indications suggest that Jadhav is consistently in touch with the civil aviation ministry to downsize the workforce of 35,000 at Nacil (National Aviation Company of India Ltd) by 25%.
In the ensuing months, the employees might be given a salary cut of 20-30%. Jadhav, in a communication to employees, has given examples of how even international carriers have downsized their staff and have also offered pay cuts to its employees. He gave examples of airlines like Japan Airlines, which has announced plans to cut 1,200 jobs by March 2010. The airline is also minimising refilling of posts by improving productivity. He also gave instances of several other airlines like American Airlines which will cut up to 1,600 positions by August 2009 and reduce capacity by 7.5%. Delta Airlines is planning to eliminate jobs. He also gave example of Jet which put a freeze on recruitment and reduced benefit of executive and management salaries.