Empty skies, DIAL airdashes to cost-cutting

COPING WITH THE SLOWDOWN

Hit by the recent economic downturn, Delhi International Airport Limited (DIAL), the consortium headed by infrastructure company GMR, is going in for major cost-cutting measures in areas like HR and consultancy.

The measures would be necessary since sources in DIAL said that its profits for the last quarter ended September had declined by 6 per cent, compared with the same period last year. According to experts, DIAL’s aeronautical revenues would have taken a direct hit last quarter due to the slowdown in aviation, which saw airlines cutting capacity by around 30 per cent (including ad-hoc cancellations).

According to the civil aviation ministry, around 70 daily flights (departures) were cancelled at the Delhi airport, bringing the total number of daily flights at the airport to a mere 230 per day. Passenger traffic has also seen less than expected growth. As a result, DIAL has revised its passenger traffic growth estimates for this winter season to 8 per cent from 18 per cent.

“We are looking at cost-cutting measures in whichever areas it is possible without compromising on the development project in,” said Andrew Harrison, Chief Operating Officer, DIAL.

Like other companies, one of the major areas for cost-cutting would be manpower. Even though DIAL is not looking at laying off staff or cutting salaries yet, there will be a deferment in a chunk of the additional recruitments.

“We are deferring recruitments for around 70 positions. Since these are non-critical positions, we will fill them later,” said Harrison. It is, however, not clear how this would quantify as a form of savings on the company’s costs.

DIAL is also cutting its operational costs by reducing the number of consultants engaged in various aspects of the airport development and functioning, by around 69 per cent.

“We are cutting the total number of consultants from 35 to 11. This will lead to savings of Rs 42 crore for us,” said Harrison.

Due to a slowdown in traffic, DIAL has actually had to defer some airport development projects. Since none of these are shelved, the delay would automatically lead to an increase in costs.

DIAL has pushed the deadline for completing the construction of the new domestic terminal, 1D, to the first quarter of next year. The deadline for opening the terminal, which was supposed to house private carriers, has already been postponed once from August to the end of this year.