Merger of state-owned airlines, erstwhile Indian Airlines into Air India, has come under the Comptroller and Auditor General's (CAG) scrutiny. In its final report, the auditor noted that till date Air India does not have any time bound plan to merge key activities. Further, Air India brand has taken a beating in the international arena due to “an indifferent sarkari attitude,” it noted.
CAG said Air India failed to control employee costs, reduce staff strength and rein interest costs. The airline has over 40,000 employees including those on contract with an annual wage bill of Rs. 3,000 crore. The auditor has recommended curtailing operations on loss-making routes and their regular monitoring to maximise revenues. The employee costs should be controlled and incentives be linked to company's productivity, CAG recommended. It said the airline should stop all free upgrades on business and first class, including those for its employees.
“Even more than three years after its formation, the company had no documentation giving a roadmap with time lines for merger of its key activities,” CAG said. As a result, the company has not been able to save costs that were envisaged to be saved due to merger, the report added. At the time of merger in 2007, former civil aviation minister Praful Patel had said the move will enable both the airlines to benefit from synergies. The merged entity, Air India, recently implemented a single ticketing system, phasing out the IC code used by Indian Airlines.
The report lambasted both the airlines for poor performance and lower passenger load factor despite cheaper fares than their rivals on key routes. In case of Air India, it said, all the ten routes operated by the airline during 2005-09 were incurring operational losses by 2008-09.
04/03/11 Smita Aggarwal/Indian Express
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