Legacy arms help Air India in cruising through steep financial headwinds

Airline able to meet operational expenses

At a time when Air India (AI) is striving to keep the operations going despite serious financial crunch, several of its arms are helping it stay afloat.

These institutions, namely its engineering division, now called Air India Engineering Services Ltd., that runs MRO services, its security department with 3,600 personnel as well as its Aviation Security Training Institute, in-house crew training institute and simulator facility are helping it to manage operations in a cost-effective manner.

In the recent past, the government has cut the financial lifeline to the loss-making national carrier which is being sold or dis-invested through a listing.

Currently, the airline, which operates flights to 42 international and 75 domestic destinations, has been left to fend for itself and is on a hand-to-mouth existence. It is paying cash to lift fuel on a daily basis.

The MRO arm, apart from catering to the airline’s requirement, earned ₹100 crore from other airlines.

The security department earned ₹23 crore from foreign and domestic airlines and even its headquarters at Nariman Point, with its unique fire department, is earning an annual rental income of over ₹100 crore.

All these may be small compared to the Maharaja’s daily losses, but they are helping in some way, officials said.

“Inherently, there are a lot of strengths in the company. The MRO and the security and crew training departments are unique to AI. Very few airlines in the world have such facilities. Since the expertise is available with AI, we are doing much of the work internally. It is a huge cost saving,” said Ravi Bodade, regional director (Western Region), Air India.

“AI is operationally profitable. We are meeting our operational expenses and to a certain extent, we are managing this because of the in-house organisations. When you cook at home, you save a lot on food. We are maintaining our aircraft on our own, we have our own security set up, our own ground handling department. If were to avail all these from outside, our expenses could have been much higher,” he said.

Officials said despite all odds, the airline started nine new international flights in the last six months, besides several new domestic flights. “Don’t evaluate AI on the [basis of] balance sheet only. There is lot of legacy. There is lot of inherent power in the company, in its employees. One has to look at the airline holistically,” said its spokesperson.

Officials said the mandate for the management is to operate the airline till it is disinvested and they were focussed on doing that. “Air India is a strong going concern. In this financial year so far, the airline has performed much better than last year in most parameters. In terms of — number of passengers, revenue and yield... barring on-time performance because of the issues we have are having with regard to non availability of some our aircraft,” Mr. Bodade said.

He said despite tremendous amount of anxiety in the organisation regarding the continuity, employees don’t display the fear on their faces and are engaged in their work with full dedication.

“This is an organisation that is dedicated to the task at hand. Disinvestment or not, our task is to continue the operations in the best possible manner and that work is happening,” he added.

Air Indians are committed to run this company, If it is sold off at some point, ownership can change but they will still love to work with the same dedication, he said.

(The writer visited several facilities of Air India in Mumbai at the invitation of the Ministry of Civil Aviation)

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Printable version | Feb 17, 2020 12:05:25 PM |

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