Plans to rake in Rs 900 crore from marketing engineering, cargo & training services.
Cash-strapped National Aviation Company (Nacil), which runs Air India, plans to offer some services like engineering, cargo handling and aviation training to other airlines in order to raise the much-needed cash.
With this in view, the state-owned airline plans to hive off its three business units — ground-handling, engineering, cargo and aviation training — into joint ventures or subsidiaries by the end of this financial year.
By marketing these services on commercial terms to other airlines, Nacil hopes to make up to Rs 900 crore a year — Rs 300 crore from each of the three. At the moment, it offers ground handling services to other players in the market. In fact, it already has a ground handling joint venture with Singapore Airport Terminal Services. However, it is still not operational.
This was a key element of the action plan submitted by Nacil to the high-level committee of secretaries set up to devise a revival strategy for the struggling airline, said a Nacil source. In addition, Nacil will generate additional revenue of Rs 1,800 crore annually and cut costs to Rs 1,300 crore through various measures.
These are the three key pillars of the airline’s gameplan to shore up its finances by Rs 4,000 crore a year. Nacil had incurred losses of Rs 5,000 crore in 2008-09. The airline did not have money to pay the July salaries to its employees. Senior officials of the airline did not take salary on a request from the airline’s chairman and managing director, Arvind Jadhav.
The committee of secretaries, which is headed by Cabinet Secretary KM Chandrasekhar and includes Aviation Secretary MM Nambiar, Finance Secretary Ashok Chawla and Principal Secretary to the Prime Minister TKA Nair, was formed to look into the revival plan of Air India on a monthly basis.
The committee allowed the airline to rework wages and also set up a committee overseen by additional secretary (expenditure) Vilasini Ramachandran and key finance ministry officials to work out a financial package for Nacil.
Jadhav, in his first official press briefing recently, said the airline planned to start earning profits within 24 to 36 months.
He also announced that 54 flights a day would become low-cost services under the brand name Air India Express, its international no-frills arm. Air India currently operates about 300 flights a day, which means one-sixth of the flights will become low-cost services.
The airline will initially shift 10 aircraft, which now provide full services, on domestic routes to Air India Express. The airline’s target is to shift 150 flights a day, or about half of Air India’s domestic flights, in the near future to the low-cost arm.
It could be a new thing for AI CMD who joined some months back but not a new strategy for airline. Earlier also airline sold its services to other domestic / intl airlines but endedup in benefiting the rivals most for which it is yet to recover huge amount from Kingfisher & Jet. Recently as per news Raghu Menon had to resign from post of CMD, AI because he objected to highly baised agreement with Singapore Airport Terminal Services for its ground services joint venture. Because of this airline endup in paying for ground services instead of erning from it. All its need a commitment of non-interference from ministry and stick to commercial decisions. Without these basic commitments no well thought strategy can work.
Posted by: bkramchandra
August 10 , 2009, 20:02 IST
I fully endorse the views many CMD's came and went they all were interested in making their pockets full. If minister wanted to do something he could have done earlier.The earlier CMD'S were appointed by the minister and also they had worked in Ministry of Civil Aviation was he not aware of mismanagement in AI.Mr.Raghu Menon was sacked by the minister as he refused to dance to his tunes,AI giving up Ground Handling to SATS is the brainchild of the ministry wherein JV to be made with SATS subsidary company which is 2$ company.The then CMD objected to this so he was sacked.The govt asked SATS to make it a half a million $ company.A push back tractor costs appx costs the same AI and IC jointly own many equipments which are valued in millions of $. AI is allowing SATS to take half the revenue earned without any investment.This is purely at the cost of Tax Payers money and CMD should stop this and do the ground handling by SBU Ground Handling .
Content Guide
