Air India looks at new revenue streams

New Delhi: Cash-strapped National Aviation Company (Nacil), which runs Air India, plans to offer some services like engineering, cargo handling and aviation training to other airlines in order to raise the much-needed cash.
With this in view, the state-owned airline plans to hive off its three business units — ground-handling, engineering, cargo and aviation training — into joint ventures or subsidiaries by the end of this financial year.
By marketing these services on commercial terms to other airlines, Nacil hopes to make up to Rs 900 crore a year — Rs 300 crore from each of the three. At the moment, it offers ground handling services to other players in the market. In fact, it already has a ground handling joint venture with Singapore Airport Terminal Services. However, it is still not operational.
This was a key element of the action plan submitted by Nacil to the high-level committee of secretaries set up to devise a revival strategy for the struggling airline, said a Nacil source. In addition, Nacil will generate additional revenue of Rs 1,800 crore annually and cut costs to Rs 1,300 crore through various measures.
These are the three key pillars of the airline’s gameplan to shore up its finances by Rs 4,000 crore a year. Nacil had incurred losses of Rs 5,000 crore in 2008-09. The airline did not have money to pay the July salaries to its employees. Senior officials of the airline did not take salary on a request from the airline’s chairman and managing director, Arvind Jadhav.
09/08/09 Mihir Mishra/Business Standard

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Categories: NACIL Aug 2009