Chennai: National carrier Air India that is surviving on government largesse for long must generate revenue in ‘every possible manner’ if it has to stay afloat, chairman of the airlines has stated.
Chairman and managing director of Air India, Pradeep Singh Kharola said in his message to employees of the airlines that in the fiercly competitive market, the method has to be done.
The message that was aimed at over 20,000 employees working for the carrier came in the latest edition of the airline’s monthly in-house magazine. Pradeep Singh also called for optimal utilization of resources amid “critical” fiscal situation.
“We all have to tighten our belt, adopt strong fiscal discipline and streamline our functioning without compromising on our operational efficiency. At the same time, we need to generate revenue in every possible manner to stay afloat,” Kharola said.
“We’ve to reset our system by trimming all unnecessary frills and keep improving our bottom-line otherwise our survival will be stake,” Kharola said.
He said the path towards turnaround becomes more ‘difficult’ with the market throwing fresh challenges arising from rising fuel costs, a volatile currency and an overall increase in operational cost besides fierce competition which doesn’t allow airlines to increase fares.
It must be noted that while the average jet fuel prices increased around 35 per cent during April-November this year, the rupee fell 7.8 per cent against the dollar during this period.
This resulted in an increase in the cost per available seat kms, not buttressed by an increase in yields. On top of it, the excess capacity has forced airlines to keep fares low amid cut-throat competition.
“We are also going through a critical fiscal situation and it is imperative for us to rationalise expenditure and optimally utilise available resources,” Kharola said.
| Revival plan |
| Air India is sitting on debt of over Rs 55,000 crore, most of which was taken for aircraft purchases. The heavily loss-making airline is surviving on a Rs 30,231 crore bailout package extended by the previous government.
After failing miserably to get a buyer for Air India in its first privatisation attempt early this year, the government is now working on a new revival plan. “We’ve prepared a revival plan for Air India that provides for a comprehensive financial package, differentiated strategies for each of its core businesses and robust organisational reforms,” Junior Aviation Minister Jayant Sinha told the Lok Sabha recently. |