PMO green light for return of leased AI planes,closure of disused stations

The PMO,which has already asked the airline to submit a detailed restructuring plan within a month,wants milestones identified for 6,12 and 18 months. Sources said the Prime Minister has given Civil Aviation Minister Praful Patel a free hand to take all steps needed to effect a turnaround in the airline.

Of late,the Ministry too has been surprised by the fact that the airline employs nearly 1,000 people to run its canteens. After the merger,there are as many as 43 Executive Directors in the airline and outflow towards productivity-linked incentives is quite a bit. The PMO,in fact,has asked the airline to examine its PLI scheme and link it to company performance.

The airline will no doubt manage to save a large amount of money if it returns leased planes but insiders said they would have to weigh the costs of ending a contract before time. While the airline may save operational costs on the planes,the owners will not give relief on the leasing amounts. Air India will have to enter into negotiations with leasing companies to get the best “exit deals”,said sources.

The other area of concern is the huge loses Air India has made on some of the important routes. Consider this:

• The airline withdrew its Mumbai-Hong Kong flight last August after estimating annual losses of Rs 235 crore on the route.

• It rerouted its Delhi-New York flight to start from Kolkata after it estimated annual loss to the tune of Rs 236 crore.

• Delhi-London-New York flight was making Rs 224 crore loss,so New York was dropped last September to make this a Delhi-London flight in the hope that Rs 155 crore will be saved. Instead,a Delhi-Kathmandu flight was launched in February to make some gains.

• The airline withdrew Mumbai-London-Chicago service after an estimated Rs 128-crore loss,re-routed via Frankfurt now.

• Delhi-Frankfurt-Los Angeles flight was withdrawn last September after an estimated Rs 114-crore loss.

On the domestic front,the airline is making losses of about Rs 20 crore annually on the Mumbai-Kochi-Trivandrum route and about Rs 18.5 crore on the Mumbai-Raipur-Bhubaneswar flight. It withdrew flights on the Chennai-Mumbai and Chennai-Kolkata routes last year.