Air India revival plan aims at Rs 2,000 crore benefits yearly
To revive Air Indias fortunes, a plan is being implemented by the Narendra Modi government that will result in annual financial benefits worth Rs 2,000 crore by way of cost cutting and revenue enhancement measures, a senior official said on Wednesday
To revive Air India's fortunes, a plan is being implemented by the Narendra Modi government that will result in annual financial benefits worth Rs 2,000 crore by way of cost cutting and revenue enhancement measures, a senior official said on Wednesday.
Civil Aviation Secretary R.N. Choubey said the plan was drawn up around 15 to 20 days ago and focuses on about "10 to 12 items" but did not divulge specific details.
The Modi government is working on efforts to turn around Air India, which has a debt burden of over Rs 50,000 crore.
Talking about the plan, Choubey said, "financial benefits" to Air India would be around Rs 2,000 crore per annum by way of cost cutting and revenue-enhancement measures.
The implementation of the plan for Air India, which has been prepared on the basis of recent levels of crude oil prices and rupee value, would be monitored by the civil aviation ministry, he added.
When asked whether the plan is being implemented, Choubey replied in the affirmative.
The civil aviation ministry would monitor the implementation of the plan and then report to the Air India-Specific Alternative Mechanism (AISAM).
Asserting that defaults by Air India would not be allowed, Choubey said financial support would be given to Air India on a "as you go basis".
Civil Aviation Minister Suresh Prabhu said Air India is facing a legacy problem.
"What are Air India's problems and we are addressing it by strategy... we will request the finance ministry to give us some more money (for Air India)," he said in response to a query on how the airline can improve amenities to passengers.
Regarding Air India, Prabhu said the civil aviation ministry and the finance ministry are on the same page. "There is no conflict... the question is that debt is so large and we have to work out something large," he added.
They were speaking on the sidelines of an event in New Delhi.
Emphasising that efforts are to ensure that Air India is "competitive and viable", Choubey said the airline has to work on efficiency improvements.
"We have told them, on one hand, work on efficiency improvements and on the other hand, we will ensure support for you if you are able to show efficiency improvements," he noted.
On Tuesday, the AISAM approved a proposal for strategic sale of Air India's ground handling subsidiary AIATSL.
The latest plan to sell AIATSL follows the decision by the ministerial panel in June to make Air India competitive, by way of cutting down debt and raising resources by selling land assets and other subsidiaries.
The ministerial grouping had decided to revive Air India after the Modi government's strategic stake sale offer failed to attract any bidders earlier this year.