A major restructuring at Air India has cut loss-making routes to 25 percent of its network in the fiscal year ending March 2013, down from 69 percent in the previous year. The airline attributes the improvement to a series of steps taken to cut costs, restructure loans, strengthen management and liquidate assets, including the spin-off of engineering and ground handling as independent profit centers.
Air India has also started the process of changing its business model to a “hybrid” one, said chairman and managing director Rohit Nandan. Following a recent approval by the ministry of civil aviation to allow for charging of extras, or “unbundling,” the airline has reduced its free baggage allowance on domestic flights to 15 kg from 20 kg.
Meanwhile, the airline has launched efforts to sell or lease five of eight money-losing Boeing 777-200LRs placed into service between 2007 and 2010. “If we are unable to do that, we will fly them on an all-economy configuration of 311 seats on international routes,” said Nandan. “The [present] 238 seats [eight in first class, 35 in business class and 195 economy] make no sense.” However, he acknowledged to AIN that even though first class proved difficult to fill, the cost of reconfiguration, at $2.25 million each, makes for a challenging economic case.
20/05/13 Neelam Mathews/AINonline
