Flight to nowhere

New Delhi: A few months after he took over as Air India (AI) chairman, Arvind Jadhav’s plan to turn the financially crippled state-owned airline around was contingent upon his saving Rs 2,000 crore in 2009-10 — only then would the government inject fresh equity of a similar amount into the airline. Of this, Rs 800 crore were to come from halving the Performance-Linked Incentive (PLI) part of the airline’s Rs 3,100-crore wage bill. With the unions up in arms, the airline’s board, which includes independent directors like Ficci’s Amit Mitra, Mahindra&Mahindra’s Anand Mahindra, has jettisoned the plan to cut costs (Air India achieved a cost reduction of just Rs 800 crore last year and didn’t touch the PLI).
Instead, while announcing the new plans, Air India said if traffic continued to increase, it might even need to expand the fleet from the current 130 planes to around 250 (no date was mentioned for this, but it would be a significant addition to the 111 planes that were ordered in 2006 — of these, around 60 have already been delivered). The plans included increasing efficiency by launching more flights and achieving higher passenger load factor (PLF) of 75 per cent in the domestic market. A plan to start a low-cost carrier (LCC) is still on the cards, though no explanation has been asked for as to why the airline was unable to do this by September last year as had been planned— Jadhav’s original plan was to have 27 pairs of daily domestic flights by moving 10 aircraft to the new Air India Express low-cost carrier.
Civil Aviation Minister Praful Patel has already justified the new thrust on expansion, and on not touching the unions, by arguing that the market has improved and that AI will now need the staff as well as extra planes. The passenger growth in the year’s first quarter, he said, was up by 18 per cent.
07/08/10 Surajeet Das Gupta/Business Standard

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Categories: NACIL Aug 2010