Only Profitable Routes To Fly Ai Out Of Dire Straits

Air India has decided to restructure its services, discontinue many of its existing loss-making international flights and concentrate only on profit-making routes in a bid to overcome an acute financial crisis, said AI managing director M P Mascarenhas here yesterday.

Addressing a press conference, Mascarenhas said Air India would discontinue its services from Seoul (SKorea) where the company was incurring huge losses in the wake of the recent currency crisis afflicting South-East Asian countries.

Services would be disbanded in Japan from where traffic and earnings were going down because of the decrease in tourist traffic and fluctuations of the yen. Air India services to South Africa too would be discontinued as it was an uneconomic route, said Mascarenhas.

 

On the other hand, Air India would increase its services to the Gulf region, apart from flights to Chicago in the US and Manchester. Mascarenhas, however, said that there would be no change in Air Indias time-table till March 1999.

He said the Chicago-Mumbai-Delhi flight, likely to be thrice a week, would serve a large number of Indians, especially Gujaratis living in that part of the US, and help the companys hard currency earnings. Similarly, the flight to Manchester would serve the large number of Indians living in northern England, he said pointing out that there had been requests from many Indian associations in the UK for such a service.

The Air India chief said the currency crisis in South-East Asian countries and the airfare war unleashed by British Airways had adversely affected the working of the company, increasing its losses to Rs 102 crore. Some of the other factors affecting its profits were the increase in aviation fuel costs, higher operational costs and depreciation of the Indian rupee by as much as eleven per cent against the dollar. Owing to these factors, he said, AI has decided to rationalise its routes and concentrate only on those routes which were cost-effective and profitable.

Mascarenhas specially criticised the airfare war recently started by British Airways. Describing it as unprofessional and violative of the norms prepared by the DGCA (directorate general of civil aviation), he said the undercutting of air-tickets by BA by 45 per cent had brought down Air Indias earnings for nine weeks from January to March.

He said it was wrong on the part of BA to argue that it had discounted tickets because the India-Europe air route was being over-served.

He said Air India had decided to purchase five to seven medium class long range (MCLR) aircraft of 250-300 seats capacity. The process for this was underway and a final decision could be expected by the middle of the year, he added.