Air India has improved its passenger load by 10.1 per cent in the April-November 2009 period from the year-ago level and successfully cut costs by network and route rationalisation and deployment of new aircraft. Air India’s market share in November 2009 increased to 18.8 per cent from 16.6 per cent in August. The November share and the seat factor of 74.1 per cent were higher than all legacy carriers.
Addressing the media here on Saturday, Arvind Jadhav, Chairman and Managing Director, Air India, said the airline had initiated measures to meet the situation facing the aviation industry. Cost initiatives on the operational restructuring include network restructuring and route rationalisation and the airline expects a Rs. 378-crore benefit in terms of costs during the winter schedule and Rs. 563 crore for the entire year.
Air India has inducted 29 aircraft and phased out 11 older aircraft. In the winter schedule effective October 2009, it deployed Boeing 777s on all seven West-bound destinations. For domestic services, the airline is deploying more Airbus A319s and A321s to replace the A320s.
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Other cost cutting measures in areas such as hotel accommodation and transportation saw it achieve savings of Rs. 146 crore up to October 2009. Mr. Jadhav said, “We are looking at savings of around Rs. 600 crore annually in this area.”
The airline is operating 56 aircraft during the winter schedule against 67 earlier. By 2010-end, around 34 aircraft would be out of the system and deliveries of six A-320s and three B-777 would come in. “The crux of the issue is the effective utilisation of the aircraft.”
The airline’s Engineering MRO (maintenance, repair and overhaul) has tied up with Sharjah-based Aerostar Asset Management for marketing and they have created an Engine MRO brand, The A Team, which has started providing engine repair and management solutions to airline operators of the Gulf region.
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This team will use existing facilities at Mumbai and sell repair services for jet engines. “We are looking to hive off the Engineering MRO into a separate engineering services company,” said Mr. Jadhav adding that the Engineering MRO accounts for around 8,000 of the total employee strength of 32,000.
The airline is pushing to create separate units for its ground handling and cargo business. “In future, we will have new organisations with engineering services business of around Rs. 3,000 crore and ground handling of Rs. 1,000-1,500 crore. We plan to spin off the cargo handling business to logistics handling.”
On the difficulties faced with the merger of Indian Airlines, Mr. Jadhav said, “it is not an overnight issue. The front-end merger should be the criteria as in the back-end, there are several groups in different categories. The focus in 2010 will be for the front-end merger to take place completely and that we will push in the next three months.”
Although the airline had some success in 2009 in controlling costs, “these efforts have to be sustained in 2010 to successfully turn around the airline. The forecast for the year, particularly in the premium class would be sluggish. The International Air Transport Association (IATA) has projected a net loss of $5.6 billion for the global aviation industry in 2010 and hopefully, we will not be part of it,” said Mr. Jadhav.