Air India risks turbulence as it seeks to cut costs

Mumbai: State-run carrier Air India is set for dramatic cost-cutting in the months ahead as part of a government bailout that will test the willingness of workers to accept painful restructuring.
Last month, the Indian government approved an injection of 173 million dollars for the ailing company and Civil Aviation Minister Praful Patel has told the airline it must "shape up" to receive the funds.
The money is part of a phased planned government injection of 50 billion rupees (1.1 billion dollars) over three years for the carrier, which has reported massive losses in recent years.
But the government has insisted the money will only be handed over if the airline reduces costs -- partly by reducing its bloated fleet size by some 30 percent to 105 aircraft by March 2011, and also by cutting wages.
The group operates 435 flights to 117 destinations in India and overseas daily, with a fleet of 146 aircraft.
Average salaries at Air India, which employs more than 31,000 people, are 15 to 20 percent above those at private-sector rivals. It averages 230 employees per aircraft, compared with 105-120 at private airlines.
03/03/10 Economic Times

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