Air India asks Booz to cut fees for cost reduction consultancy

Mumbai: National Aviation Co. of India Ltd (Nacil), which runs national carrier Air India, has issued an ultimatum to management consulting firm Booz and Co. Inc. to lower its fee for advising the ailing carrier on cost reduction and revenue maximization techniques.
Air India may go with its own cost restructuring measures in case Booz is not willing to lower its fees, according to a senior government official who did not want to be identified.
Booz is one of the three consultants that have been working with the national carrier.
Nacil had appointed Accenture Plc in 2007 to advise on the merger of Air India and Indian Airlines, and oversee the integration process. The cash-strapped airline continues to pay Accenture for its services.
Investment bank NM Rothschild and Sons Ltd, too, is advising the national carrier. Both Booz and NM Rothschild have been appointed recently, but the Nacil board has not yet cleared the financial terms of the appointments.
An Air India spokesperson clarified that different advisers are needed for different roles. According to him, the roles of these advisers do not overlap. The spokesperson declined to discuss the fees of the consultants, claiming this was an internal issue.
05/01/10 P.R. Sanjai/Live Mint

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Categories: NACIL Jan 2010