AI to go lightweight, shift staff

Air India (AI) has approved a plan to shift 7,400 employees to a proposed engineering strategic business unit (SBU). This will bring down its employee to aircraft ratio — one of the highest in the world — in line with other big international airlines.

The new unit will be spun off as a separate company. Air India wants to rope in a partner for this company and is in talks with a number of global airlines.

At present, Air India has 32,000 employees and operates 133 aircraft. This means an employee to aircraft ratio of 240. After the employees shift, the ratio will fall 23 per cent to 184.
 

LOOKING FOR AN EDGE
Airline	Employee/aircraft
Air India	240-184*
British Airways	178
Singapore Airlines	161
Malaysian Airlines	230
Virgin Atlantic	282
Jet Airways	150
* After shifting staff to engineering unit

“We plan to shift 7,400 employees to our engineering SBU, which is awaiting the Union cabinet’s approval. The SBU will start functioning as soon as we get the approval,” said a senior Air India official, who did not want to be identified.

The official said the terms and conditions of employment would not change.

“The perks and salaries of those shifting to the SBU will remain the same. However, fresh hiring will be on new terms and conditions,” said the official.

The employees were earlier reluctant to shift due to fear their job terms and conditions would change.

The SBU will be Air India’s second subsidiary. It already has a ground-handling subsidiary, Air India Singapore Airport Terminal Services (AISATS), a joint venture with Singapore-based SATS.

However, only 10 per cent AISATS staff is from Air India. This is because it offered fresh terms and conditions and hired on contract.

The SBU will look at getting business from the Rs 2,000-crore Indian maintenance, repair and overhaul (MRO) industry, which is expected to see fast growth in the coming years.

“We do not look for business outside and do maintenance work for only Air India. After becoming a subsidiary, we will look for business outside. We will aim at a revenue of Rs 2,000 crore in the next four-five years. We are also looking for a joint venture with an international MRO company,” said the official.

Earlier, Air India had a plan to set up three subsidiaries — for ground-handling, engineering and cargo. It dropped the plan to set up a cargo subsidiary.

Air India has accumulated losses of Rs 15,000 crore. It lost Rs 2,226 crore in 2007-08, Rs 7,189 crore in 2008-09 and Rs 5,551 crore in 2009-10. It got Rs 800 crore in 2009-10 and Rs 1,200 crore in 2010-11 from the government. A proposed infusion of another Rs 1,200 crore in the current financial year will take its equity base to Rs 3,345 crore.