AI might scrap free meals on board

Free on board meals on Air India flights could soon be history. A five-member committee, headed by Indian Institute of Management-Ahmedabad professor Ravindra Dholakia, has recommended doing away with free meals on domestic flights.

“None of the other airlines serve free meals. If Air India stops free meals, it can save Rs 100 crore. Uplifiting meals increases aircraft weight and this will also help reduce the fuel burden,” said an official said. The committee, however, has suggested tea, coffee or biscuits could be given free of charge.

The committee, set up to suggest ways to improve the carrier’s financial health, has also recommended other steps such as Rs 10,000-crore bonds, and closure of offices in offline stations. These measures are estimated to a saving of about Rs 3,200 crore.

Civil Aviation Minister Ajit Singh said he was examining the report and would take a decision soon.

Last year, the government had approved a Rs 30,000-crore bailout plan for Air India, which involved a mix of equity infusion and debt restructuring.

The airline has a total debt of about Rs 42,000 crore including both working capital loans and long-term aircraft acquisition debt. Under debt restructuring, a short-term loan of Rs 10,000 crore has been converted into a long-term one and working capital loans of Rs 7,400 crore have been converted into convertible debentures, lowering interest burden by Rs 70 crore.

However, Air India is making daily losses to the tune of Rs 12-13 crore. According to a government official, the turnaround plan had assumed the airline’s interest burden at the rate of Rs 45 a dollar, while the current exchange rate is about Rs 54. Also, the airline received less than the promised government equity support in the first year. While Air India was expecting Rs 10,000 crore in equity, it received Rs 6,000 crore. The report suggests that tax-free bonds could be raised to refinance the existing high-cost debt. Some of the committee’s suggestions could meet labour protest as it has suggested reducing transport and canteen allowances of staff. "Some Air India employees have company-owned vehicles at their disposal and are getting transport allowance, too,” said a source.

The committee also called for increasing web bookings and raising collection from excess baggage.. Apart from Dholakia, the committee included joint secretary (civil aviation) Prabhat Kumar, Air India's deputy managing director Syed Nasir Ali, airline's retired commercial director S Mukherjee and  Rajesh Aggarwal of ICRISAT.