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Air India may vacate Nariman Point HQ

BS Reporters  |  New Delhi 

Praful Patel

Global search for COO to start in a week, says Patel.

Civil Aviation Minister Praful Patel has asked the management of loss-making state-owned airline Air India, which covers both domestic and international operations, to consider shifting out of its iconic headquarters in Nariman Point in Mumbai to monetise its expensive real estate.

“I have already asked them to start looking for other options. They will come back with a plan,” Patel told Business Standard.

The Air India building has 22 floors overlooking the Arabian Sea. Many floors are already leased out to other and it represents one of the costliest commercial real estate in both the city and the country. Air India made losses of Rs 5,000 crore in 2008-09.

Patel also said Air India would be launching a global search for a chief operating officer (COO) for the airline in about a week and hopes to complete the process in two months.

“We will put out an advertisement for a COO in a week's time and may even consider bypassing government norms in our search. There are a lot of good Indians working globally and there are people in India, too. Our preference, of course, would be to have an Indian as the COO,” Patel said.

* Air India management to shift from iconic headquarters in Mumbai to monetise its assets
* To appoint a chief operating officer in two months
* Asked for $800 million compensation from Boeing because of delay in the delivery of the Dreamliner
* Does not have to pay compensation if Air India decides to defer aircraft deliveries
* Integration of the two airlines to be completed by March 2010

On aircraft purchases, Patel said it is up to the Air India management whether it wants to defer delivery and contrary to perception, it does not have to pay any hefty compensation for doing so. "We will work it out in a way that there is no cost involved in cancelling or deferring the aircraft order made by Air India,” Patel said.

Air India had ordered around 111 aircraft for both domestic and international operations, of which it has taken delivery of over 50 planes.

Air India has also approached Boeing for $800 million as compensation for delays in the delivery of the 787 Dreamliner.

Patel also said the airline has been set a deadline of March 2010 to complete the merger between domestic carrier Indian Airlines and international carrier Air India, which would include integrating two different IT systems. The merger was announced in 2006.

Air India officials did not reply to queries from Business Standard.

On the impasse in implementing the new ground-handling policy at airports, Patel said a compromise is being worked out by his ministry that could include partly conceding to private carriers' demand to undertake their own handling in the ramp side.

“The ground-handling decision has to come after discussions with the ministries but our ministry’s view is that the airlines should be allowed to do handling in the ramp side,” said Patel.

Private carriers have opposed a government move to outsource their ground-handling to designated appointed by the airport operators which also would include Air India. Their contention is that the new players will charge rates that are double current costs and will limit their ability to offer customers better service.

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First Published: Thu, August 20 2009. 00:45 IST