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Air India-1

Air India-1

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Published by ektagohil_162275

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Published by: ektagohil_162275 on Jan 20, 2010
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04/17/2014

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This is a tough time for several sectors, with one of those severely affected being theaviation sector.Air India, with the largest fleet in possession, is struggling. It posted aloss of over Rs4000 crore in the last financial year. It is said the airline is making a lossof Rs15 crore every day. The situation on cash front is so grim that the managementdelayed the salary of the staff in June. It has also appealed to staff to work one month for free - demand akin to whatBritish Airways made earlier this year.  No doubt the aviation sector is witnessing unprecedented dip in air traffic, and with itdips the revenues. Being so desperate Air India has sought a package of Rs14,000 formthe government to stay afloat. The government is considering the package, though thefinal aid is expected to be much less than demanded.But the government has asked the company to come up with a 5-year plan to turn thecompany into a profitable venture.Woes of the company are clear now. What are the solutions to these?First and foremost thing - NACIL, the company controlling Air India, must cut on the perks it provides to its employees in the form of free business class travel. It is assumedclose to 30 percent of Air India business class seats are filled by its own staff. Instead, if the company shows impressive results, it can give some bonuses or incentives, once ayear.Secondly, the company must consider trimming its employee size. With a fleet of around150, it has over 50,000 employees. Contrast this to British Airways, which maintains afleet size of 228, and yet has just over 40,000 employees. When British Airways ismaking loss despite leaner workforce, it is but obvious to expect the worse of Air India.Thirdly, the company must reassess the routes it flies on. If certain routes are provingreally burdensome, it must get rid off those. It should not buck under political pressure of maintaining social obligation. If there is pressure to carry on flights on these sectors, itshould deploy smaller planes, and that too procured on lease.MDLR andParamount Airwayshave succeeded in making profits plying on 'less lucrative' routes'.Most importantly, it should create more accountability in the system. If ticket sales arenot increasing, it must explore the reasons for it, rather than relax and look for government packages to be bailed out. Best of facilities at any airport in India is with Air India, and yetKingfisher and Jetmanages to sell more than Air India. The fifth step the company can take is to try raise resources from the market throughdisinvestment, either in the form of IPO or placement of equity with some investorswilling to invest.

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