CAG bares hiccups in AI's catering, frequent flyer plan

New Delhi: Ailing national carrier Air India has come in for sharp criticism from the Comptroller & Auditor General (CAG) of India on two counts.
In its report tabled in Parliament on Thursday, the CAG has pointed out the airline's inability to get the same rates for catering services on its flights out of Kerala which were negotiated by its own low-cost international subsidiary, Air India Charters. This led to extra expenditure of Rs 8.49 crore!
CAG has also pointed out glaring discrepancies in AI's frequent flyer programme (FFP) system, which could lead to fraudulent transactions and in turn, monetary losses. CAG's observations come at a time when Air India is in the midst of a financial crisis and the government is trying hard to put on place long-term measures to revive the airline, which has already run up losses of Rs 5,000 crore in 2008-09.
An audit done in February and April 2008 found that the rates agreed for identical menus/ancillary items for catering services of AI's own flights were higher, between Rs 7.09 and Rs 38.96 per plate/item compared with rates agreed for catering services for
AI Charter flights in respect of 10 items which were checked at Kozhikode. Similarly, the higher rates were paid by AI at Thiruvananthapuram also. "Though the MoUs for both, AI and AICL, were signed by the same committee on the same date with the same contractors, the higher rates for AI's flights were not negotiated," CAG said.
It also noted that since the quantum of meals required by AI was much higher than AICL, it should have got lesser rates purely on the basis of economies of scale. On the FFP programme, CAG said there were deficiencies in access controls, data backup procedures, input controls and validation checks, which led to absence of connectivity between the FFP system and passenger ticketing system.
10/07/09 Sindhu Bhattacharya/Daily News & Analysis

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Categories: NACIL Jul 2009