Economy

Air India to begin low cost domestic flights

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Recent traffic data showed that the trend of air traffic was shifting towards low-cost carriers and Air India wanted to have a share in the market by taking on competition.

Air India on Friday announced launching of its low-cost domestic operations from September.

Addressing his first formal press conference here since he took over the reins of the carrier more than two months ago, Air India Chairman and Managing Director Arvind Jadhav said the no frill operations would be launched by Air India Express, the low-cost entity of the national carrier which already flies to destinations in the Gulf region.

“Out of 100 schedules, we have identified 27 schedules on which low cost flights can be operated. Ultimately, nearly 70 per cent of our total domestic flights will be of low-cost nature as we go along restructuring the airline,” he added.

He said that recent traffic data showed that the trend of air traffic was shifting towards low-cost carriers and Air India wanted to have a share in the market by taking on competition.

Adversely affected by rising costs of operations, low volumes of traffic and overcapacity in a falling market like other global carriers, Air India chief said the national carrier was also negotiating with banks to replace its high-cost debt with low-cost ones.

“We are now negotiating with banks to replace our high-cost debts with low-cost debts. We will need a letter of comfort from the government. Our high cost debt is around Rs. 10,000-11,000 crore,” Mr. Jadhav said.

The airline has also set up a cost management and audit team to look at the overall financial restructuring of the airline, which would deal with servicing of debt, risk management and other related issues.

Mr. Jadhav claimed that Air India had never asked for a bailout package from the government and expressed the hope that the national flag carrier would see a turnaround in the next three years.

A number of initiatives, including on-time performance, seamless connectivity and aggressive brand building would help Air India to tide over the current crisis. He said that National Aviation Company of India Ltd. (NACIL), the holding company of Air India, would have to change the “way it does its business.”

Giving a road map to recovery in the next 36 months, Mr. Jadhav said the management would focus on increased revenue generation through allied businesses like cargo, engineering and ground handling. He said Air India’s financial restructuring plan had already been submitted to the government which would advise the carrier on going about implementing it.

Another key area, he said, was manpower rationalisation as Air India had now nearly 32,000 employees on its rolls.

However, he ruled out handing over pink slips to the employees but stressed on reducing overheads on airline operations and creating new sources of long-term revenue generation. He said the airline was looking at cost reduction of about Rs. 4,000-5,000 crore a year.

Mr. Jadhav claimed that representatives of all the 14 major unions of employees had been nominated in the committees set up to address issues of turnaround. On joining the Star Alliance, he said the cut-off date was June 2010 and hoped that IT integration would be completed by March next and Air India and erstwhile Indian Airlines would have a single code.

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Printable version | Jan 24, 2020 5:47:43 AM | https://www.thehindu.com/business/Economy/Air-India-to-begin-low-cost-domestic-flights/article16874671.ece

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