Air India to become a low-fare carrier

New Delhi: The Maharaja will have to give up his full-service carrier status and transform into a commoner — low-fare airline — on most domestic
routes to survive.
On Wednesday, PM Manmohan Singh spent 90 minutes with aviation ministry honchos on the cash-strapped airline's woes and its demands for a bailout from the government. While he is learnt to have promised support to the national carrier, it was made abundantly clear that any bailout will come if — and only if — Air India is able to shed its flab, become competitive and completely transform itself. Otherwise, it's curtains for the airline.
After meeting the PM, aviation minister Praful Patel said the government has formed a four-member committee of secretaries — headed by the cabinet secretary and comprising of the finance, aviation secretaries and principal secretary to the PM.
"AI's restructuring plan along with the request for equity infusion-cum-loan has to be submitted to them within a month. Unless a series of measures are taken to improve the airline, it will not be possible for the government to keep supporting in unconditionally. This is one last chance Air India has got," Patel said.
This "radical restructuring" could mean Air India transforming into a low fare airline on almost all domestic routes except a few niche metro sectors where full service airlines get some business. In this downturn, only LCCs (low-cost carriers) have seen good load factors and both Jet and Kingfisher are increasingly using their domestic fleet for their budget arms.
The airline has lost about Rs 5,000 crore in 2008-09 and seen its working capital requirement increasing from Rs 2,369 crore in March this year to Rs 16,300 crore in May.
25/06/09 Times of India

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Categories: NACIL Jun 2009