AI independent directors monitor performance

The independent directors had in February asked the airline to close routes that are not able to meet the jet fuel costs and variable cost.

In an attempt to revive Air India, four of the five independent directors on the airline’s board have started monitoring financial performance of the national carrier across routes on a regular basis.

“The independent directors have asked the airline to prepare a list of all routes along with their profit or loss and load factors to ascertain the reasons behind their losses. All these will be discussed in the next board meeting of the airline,” said a senior Air India official, adding that the deliberations in the last two board meeting focussed on cutting losses and saving costs.

Prem Vrat, founder director of IIT, Roorkee; RH Dholakia, professor at IIM Ahmedabad; Gurcharan Das, ex-CEO & MD of Procter & Gamble India and Renuka Ramnath, ex-CEO, ICICI Venture are discussing issues like accountability, financials, cost cutting and resource utilisation, said the official.

The independent directors had in February asked the airline to close routes that are not able to meet the jet fuel costs and variable cost. The airline, however, has reduced its routes not meeting fuel costs to zero during the last fiscal.

Air India, which is estimated to have incurred losses of over Rs 5,000 crore in the last fiscal, have found that a large number of routes are not been able to meet the overall costs incurred in operating its flights. The Australia flight, which is being operated on a Boeing 787, is also losing around Rs 70 lakh a day and had lost Rs 80 crore in the last fiscal.

“These losses are despite the airline clocking as high as 70 per cent loads in many of these sectors. The losses could be due to high costs of operations in the sector. The independent directors are also focussing on maximum resource utilisation,” said the official.

One of the key findings in terms of resource utilisation is under-utilisation of cabin crew. An internal analysis shows that the airline would require 2,000 crew members, if they are utilised according to the DGCA norms of flying 840 hours annually. The airline, however, struggles to find crew for its flights despite crew strength of about 3,500.

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Another official explained that the national carrier deploys more number of cabin crew than required by DGCA guidelines. “The norms require an airline to deploy nine cabin crew members in a Delhi-London flight operated by Boeing 787 but the airline deploys 11 cabin crew members,” said an official.