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Air India to renegotiate lease, hotel agreements; push cargo sales to maximise revenue

On Thursday, the government announced that no incoming scheduled international commercial passenger aircraft shall be allowed to disembark passengers on Indian soil after 1:31 am of March 23 till March 2

Written by Pranav Mukul | New Delhi | Updated: March 21, 2020 4:48:13 am
air india air india lease, air india debt, air india routes, air india booking, air india news On a daily basis, around 300 international flights fly to airports across India, a number reduced to almost 100 due to curtailment of schedules over the past three weeks. (File Photo)

The government’s decision to put a blanket ban on international commercial scheduled flights is expected to severely hurt national carrier Air India, which sees nearly 60-70 per cent of its revenues from foreign operations. This has made Air India take a series of measures to mitigate the stress arising from the Covid-19 crisis, including beginning renegotiation of lease contracts, renegotiation of hotel agreements, reduction in salaries, and an aggressive push to increase cargo sales at a time when passenger loads are minimal.

“In the wake of recent global developments and the serious impact of COVID-19 pandemic, which has adversely impacted aviation industry both in the domestic as well in the international front there is an insurmountable dip in the revenue which calls for stringent measures to reduce our costs. All airlines have taken drastic steps to survive the current crisis and an urgent need is felt to take steps to curtail costs to mitigate the current financial crisis,” an Air India office order, listing 21 financial and personnel measures, noted.

On Thursday, the government announced that no incoming scheduled international commercial passenger aircraft shall be allowed to disembark passengers on Indian soil after 1:31 am of March 23 till March 29. The move will result in full cancellation of international flights to and from India.

On a daily basis, around 300 international flights fly to airports across India, a number reduced to almost 100 due to curtailment of schedules over the past three weeks.

“In view of reduction in passenger load due to COVID19, cargo sale to be aggressively taken up for optimal utilisation of available space/load to ensure maximum revenue,” the Air India order said.

Further, with the international flight ban, India’s air cargo segment is also expected to be severely hit. According to aviation industry sources, nearly 60 per cent of international cargo volumes come from underbelly cargo space, while the remaining comes from freighter aircraft. While freighter aircraft will continue to operate, cargo volumes are expected to plummet.

Suspension of foreign operations has deeply affected ground-handling players like Celebi Aviation, which is almost entirely dependent on international flights for revenues. The company has, so far, seen almost 80 per cent of its revenues compromised.

“There has been a steep fall in the number of flights being handled. It’s almost negligible now. With a work force of over 8,000, we might have to take up some extreme decisions like ‘leave without pay’ and other measures as an alternative to try and secure our market viability,” said Murali Ramachandran, CEO-India, Celebi Aviation.

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