AI aims to save Rs 1000 cr; enhance marketshare

Buoyant over the prospects of getting a financial package of around Rs 4,300 crore from the new Government, Air India, in return, aims to save Rs 1,000 crore a year besides enhancing its marketshare substantially in the coming years, a top source said.

"If the Government gives us a financial package as we are confident it will, it is natural that it will also have some expectations from us. We aim to save Rs 1,000 crore a year, besides enhancing our marketshare and load-factor considerably," the source closely connected to the development said.

The airline also plans to improve its offerings in a bid to enhance its customer-base and regain its brand image in the face of a highly-competitive environment, the source said. "Before taking a final call on the issue (financial package), the Government wants to ensure that the package is utilised in a proper way and for this reason, it asked us to provide a blueprint on all these issues," the source said.

An Air India proposal seeking Rs 1300 crore additional equity and soft-loans worth Rs 3,000 crore is pending with the Government since last year and the national air-carrier now hopes that the new Government will fast-forward this proposal.

The state-run airline plans to utilise the financial package to augment its fleet and also complete the integration of Air India and Indian (erstwhile Indian Airlines) smoothly, the source said.

"The Government has sought information from Air India as to how it proposes to improve its services, on-time performance, load-factor, yield, revenues, profits and staff training, among others," the source said.

Staff training will rank high on Air India's priority list as the Government considers it critical for improving the productivity and efficiency of the air-carrier's workforce and also to enhance its brand image, the source informed. The Government has also sought details on Air India's plans to set up new stations as well as for closure of some of them, the source added.

The newly-appointed Chairman and Managing Director, Arvind Jadhav, is expected to meet the Civil Aviation Secretary, Madhavan Nambiar, on Monday and make a presentation to him on all these aspects, the source said.

Air India plans to acquire 111 aircraft at a cost of around Rs 44,000 crore in the next few years. This year alone, it would be inducting seven Boeing long-haul aircraft in its fleet.

Jadhav faces the tough challenge of integrating the huge operations as well as the 33,000 strong work force of the two airlines (Air India and Indian) into one.

The national air-carrier's losses for FY 09 are expected to rise to around Rs 4,000 crore as against Rs 2,226 crore in 2007-08. The airline's working capital borrowings have also touched the Rs 15,000 crore mark.