Published on : Tuesday, January 20, 2015
Air-India, the loss making airlines received a jolt from the government which has asked the airline to improve its finances. There will be a cut in its cost by Rs 14 billion ($227 million) about 6 per cent of its total outlays in the next financial year.
The airline has been running at a loss for years. It controls close to fifth of India’s domestic air travel market, but unable to deliver as per expectations, it has been criticised for its high cost. The company was bailed out by the government in 2012 with a $5.8 billion bailout package.
The airline is determined to do cost cutting and has said that it would identify surplous staff; freeze contractual hiring and will discontinue flights that do not meet fuel cost targets. These steps will help to reduce its variable spending of Rs. 140 billion by a tenth. There will be restriction on staff travelling said an airlines spokesperson.
High operating costs are making major carriers of India lose money while carriers with lowest fare prices are challenging the cost of these airlines the world over.
According to a Press Trust of India report citing anonymous sources, Air-India plans to move a little over half of its 22,500 staff to subsidiaries dealing with engineering and ground-handling services. This move is expected to generate significant savings for the airline in payroll costs.
The cost cutting measures will help speed returns and bring the carrier to a break even status. Cost cutting heads by 10 percent under all controllable accounts feel airline officials.
Tags: air india
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