Air India charts out Rs1,000 cr savings route to offset rising costs

Mumbai: State-owned National Aviation Co. of India Ltd, or Nacil, which runs Air India, expects to save at least Rs1,000 crore in the year to end-March 2009 by introducing a slew of measures to trim its cost of operations.
These measures include curtailing domestic and international flights, surrendering leased planes, phasing out old ones, reducing inventory of spares, outsourcing jobs and eliminating perks to senior executives. “We are contemplating cutting 15-20% of domestic and international flights from the winter schedule,” said a senior Nacil executive. “Nacil will cut routes that are making cash losses or are unable to meet the basic cost of operations. These routes are mainly in the US, the UK, and West and South-East Asia. We will be able to save Rs900 crore a year by route restructuring.”
Mint has reviewed a 12-page circular issued by Nacil detailing these measures.
According to various industry estimates, domestic airlines are expected to post a combined loss of $2 billion (about Rs8,568 crore), up from $1 billion last fiscal year, primarily due to high jet fuel costs and overcapacity in the market.
Over the past few months, almost all domestic airlines have reduced capacity to bring about some balance. Growth in capacity is now expected to be flat or negative in some instances.
18/08/08 P.R. Sanjai/Livemint

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Categories: NACIL Aug 2008