THE HINDU,17JAN2015
The Ministry of Civil Aviation has asked the airline to cut variable cost by about Rs.1,400 crore
Air India (AI), at the instruction of the Ministry of Civil Aviation, has embarked on an exercise to reduce its variable costs by 10 per cent to minimise losses. The airline’s total cost is estimated at Rs.24,000 crore, and out of this Rs.14,000 crore is variable cost. Going by the Ministry’s directive, AI has to reduce expenditure by Rs.1,400 crore in next financial year.
Air India Chairman and Managing Director Rohit Nandan has asked all departments to take action in this front.
As per the directive, no fresh post will be created except in operational areas. Surplus staff will be identified by mid-February and casual and contractual engagement would be frozen.
All domestic temporary postings will be withdrawn unless justified. Temporary postings in the engineering department will be discontinued.
There has been a ban on purchase of vehicles, including staff cars. Old vehicles will be scrapped.
Use of mobile phones other than for operational reasons while on roaming in foreign stations has been banned. Travel between stations has been regulated and employees must return the same day. Restriction has been imposed on training programmes abroad.
A 10 per cent cut on expenses incurred in organising or attending conferences has been imposed with immediate effect. There has been a complete ban on holding meetings in five star hotels except few events.
To take delivery of new aircraft, minimum number of engineers and crew will be sent. Officers have been asked to travel in the economy-class.
The scheduling department will ensure quick turnaround of flights. SOD (staff-on-duty) travel must be to the minimum and to be reduced by 10 per cent.
The commercial department will take steps to increase occupancy in flights. Flights, which are not meeting fuel cost, would be discontinued. Flights not meeting variable costs would be closely monitored.
Video conferencing and VOIP calls should be given priority to curtail SOD travel. The 10 per cent cut on fuel bill reimbursement will continue and most pool cars will be discontinued. The existing 10 per cent cut on TA/DA will be applied uniformly at all stations, as per the directive.
Wage increase at foreign locations will not be entertained unless mandated by local laws. There will be 50 per cent reduction in over time by March end.
Airport managers have been asked to reduce wastage of meals. Executive directors are required to surrender extra space at T3 Delhi and at Mumbai airport. Thrust will be given to increase bookings through the web and reduce distribution cost, and the CEO of Engineering Services has been asked to handle the maximum overhaul and maintenance work in-house.
“We are hopeful to achieve the target. Now that fuel prices are coming down, our fuel bill will be reduced by Rs.2,000 crore,” said a senior AI official.
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