In a marked departure from its earlier policy, the Air India (AI) management has decided to stop taking recourse to debt to meet its fund needs. The company has decided to freeze all plans for new loans, airline sources said.
AI, which had run up debts of Rs 300 crore in the previous year, has decided to boost revenue generation to meet its fund requirments. In a bid to boost revenue generation, AI, in its new time schedule effective from October 26, has decided to lay emphasis on profitable and break-even routes, or potentially profitable routes, the sources said.
AI plans to make the routes making marginal losses profitable by increasing frequency, improving timings, and enhancing capacities, sources added. In keeping with this policy, the airline has introduced a third flight to Jakarta and Chicago. This has been done by redeploying aircraft from loss making routes, the sources added.
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The airline has also reconstituted the cost rationalisation committee for cost controls. The reconstituted committee which will now meet on a weekly basis will include director, commercial and director finance, besides the deputy managing directors of AI and director engineering and director engine overhaul, the sources said.
The new committee will look at a wider spectrum to economise costs without sacrificing quality, sources added.
In a bid to do away with credit purchases AI has also decided to pay cash to its vendors. The airline has also decided to do away with the two wet-leased aircraft from Jaunary 1. The airline plans to meet the capacity shortfall by its own aircraft, thereby increasing the flight time of AI to 10 hour per day from 6.9 hour per day.
Besides AI has stopped all fare discounts and special schemes, resorted to earlier in order to boost capacity. The fare hike too is expected to help boost the airlines bottom line, the sources added. In fact with December-February being traditionally good months, the companys turnover is expected to improve further, the sources added.
The airline has also decided to maintain its October 26 schedule for the next three time tables up to March 1999. This is expected to bring about greater stability in the airlines operations. There will be no curtailments of flights, only additions, AI sources said.
As announced earlier, the airline has also decided to acquire three A310s besides the MCLRs that it proposes to buy, as part of its flight expansion plans. AI plans to go it alone in the core sectors but in secondary sectors the airline is planning alliances with global majors, AI has already entered into an agreement with Air France, the airline will also be entering into three more similar alliances which are expected to be in place by march 1998, the sources said.
New time-table focuses on more profitable routes to increase internal revenue generation.