National carrier Air India, surviving on government largesse for long, must generate revenue in every “possible manner” if it has to stay afloat in a fiercely competitive market, chairman and managing director Pradeep Singh Kharola has said. In a message to over 20,000 employees in the latest edition of the airline’s monthly in-house magazine, he also called for optimal utilization of resources amid “critical” fiscal situation.
“We all have to tighten our belt, adopt strong fiscal discipline and streamline our functioning without compromising on our operational efficiency. At the same time, we need to generate revenue in every possible manner to stay afloat,” Kharola said.
He said the path towards turnaround becomes more “difficult” with the market throwing fresh challenges arising from rising fuel costs, a volatile currency and an overall increase in operational cost besides fierce competition which doesn’t allow airlines to increase fares.
While the average jet fuel prices increased around 35 percent during April-November this year, the rupee fell 7.8 percent against the dollar during this period, according to recent report by rating agency Icra. This has resulted in an increase in the cost per available seat kms, not buttressed by an increase in yields, the report added. On top of it, the excess capacity has forced airlines to keep fares low amid cut-throat competition.
“We are also going through a critical fiscal situation and it is imperative for us to rationalise expenditure and optimally utilise available resources,” Kharola said in the new year message to the employees. Air India is sitting on debt of over Rs 55,000 crore, most of which was taken for aircraft purchases. The heavily loss-making airline is surviving on a Rs 30,231 crore bailout package extended by the previous government.
“We’ve to reset our system by trimming all unnecessary frills and keep improving our bottom-line otherwise our survival will be stake,” Kharola said. After failing miserably to get a buyer for Air India in its first privatisation attempt early this year, the government is now working on a new revival plan.
“We’ve prepared a revival plan for Air India that provides for a comprehensive financial package, differentiated strategies for each of its core businesses and robust organisational reforms,” junior aviation minister Jayant Sinha told the Lok Sabha Thursday.