Ai Projects Rs 300-Cr Loss In 1998-99

The national carrier Air India has projected losses of close to Rs 300 crore in 1998-99 in its recent performance review presentation made to the ministry of civil aviation.

This will be higher than the losses reported in 1997-98 which had crossed Rs 200 crore.

Ministry sources said that they were keen that AI reduces or altogether withdraws its productivity linked incentives (Rs 150 crore per year) to minimise its losses.

Further, they said that the national carrier must also cut its revenue foregone through its "special promotional expenses" and thereby maximise its revenue. Sources said that for every Rs 1 spent by the airline, it was getting back less than 0.50 paise.

"Agency commission is at 8 per cent of total cost," said a Board member, "must be reduced".

(The carrier has also been asked by the civil aviation ministry and its board of directors to abolish night flying on domestic routes.)

Ministry sources said that this was resulting in further losses for the airline and was hence unnecessary.

Sources explained that plying on the domestic sector was unprofitable for the carrier since its aircraft fleet was not suited to these sectors and traffic was low.

For instance a flight may go from Delhi to Madras to Singapore and the first sector loses money. The Delhi-Mumbai sector at night also makes losses.

Further, since the timings of the flights are unsuitable for domestic passengers, the revenue is lower since the tickets are priced lower. The carrier totted up huge losses of over Rs 250 crore in 1997-98. However, AI has been arguing that till it acquires more fleet, it would like to continue with these operations, according to ministry sources.

A proposal to buy 3 additional A 310s (the airline has 8 already) is at an advanced stage while another plan to acquire 3 A 300s (buy back deal) is expected to materialise later this year.

Sources added that a sub committee of the Board was also going into the question of route rationalisation to see which routes should be operated by AI and which by IA and to work out a compromise formula between the two.

"The intention is to maximise yields while avoiding duplication" said a source.

The committee was set up following disputes between the two carriers over some international routes on which IA also flies. In particular, IA flies on some

Gulf routes and some other profitable Middle East routes profitably which has been questioned by AI. Ministry sources tended to agree that the two carriers should not duplicate routes in view of the eventual proposed merger of the carriers.