Air India tinkers with operational costs to save money

Mumbai: Pilots may have hijacked Air India's plans to reduce staff costs by snipping their productivity-linked incentives (PLI) by up to 50%, but the state-owned carrier is continuing attempts to become leaner and meaner.
For example, the flag carrier has scrapped foreign travel privilege for its employees, so those seats are now generating revenues.
A senior AI executive, who did not want to be named, said the airline has also called back four executive directors who had been deputed to other countries, as part of the airline's cost saving measures.
It is aggressively renegotiating ground-handling contracts when they come up for renewal, taking advantage of its scale of operations -- having been merged with Indian Airlines -- to bargain for better deals and steep discounts.
AI is looking to save Rs 200 crore per month on passenger amenities, ground handling, consumables, etc. It plans to save Rs 100 crore a month on fuel costs by optimising aircraft utilisation.
The carrier is in the process of converting 10 twin-class Airbus 320s into single class -- all-economy -- aircraft for medium-haul international destinations. The converted aircrafts will be inducted into the fleet from October 25. when Air India launches its winter schedule.
02/10/09 Ramiya Bhas/Daily News & Analysis

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Categories: NACIL Oct 2009