As part of its plan to have a positive balance sheet by 2014-15, Air India will be rationalising its manpower, without any pay cuts, said Chairman and Managing Director Arvind Jadhav. He was speaking at a press conference after a discussion with Civil Aviation Minister Praful Patel on the turnaround plan.
“There may be fine-tuning of wage agreements, but no wage cuts. In the process of rationalisation, manpower may be shifted to different jobs and is likely to be rationalised into core and non-core activities,” said the CMD. Amit Mitra, secretary-general of the Federation of Indian Chambers of Commerce & Industry, an independent director on the board, said: “The response from the unions has been great. Human capital and management capability will drive the growth of Air India. All 14 unions unanimously said they take the responsibility to deliver.”
Said Patel: “Fuel prices are up by 33 per cent and that is an area of concern. However, there has been an overall strong rebound in the sector. If the current trends continue, then that along with operational efficiency, cutting costs and route rationalisation will result in firm recovery for Air India.”
Some of the operational goals the carrier has set for itself are 25 million domestic and 15 million international passengers by 2015, on-time punctuality of 93 per cent, a 75 per cent load factor, covering the market with different business models, and moving to a hub carrier, according to a formal statement.
Chief Operating Officer Gustav Baldauf said, “The Low Cost Carrier arm will play a major role in the business model of the carrier. The LCC will be introduced on the domestic routes in a phased manner. Overall domestic operations will have to be consolidated before any expansion on the foreign routes takes place.”
Patel said, “The turnaround plan looks at feeder routes to smaller cities and improving connectivity to underconnected cities. As part of operational restructuring goals, Air India may also look at Delhi and Mumbai hubs, supported with smaller hubs, within and outside India.”
Jadhav added, “Plans for a hub in Europe are under consideration. On the question of our offices across the world, some are cost centres, while others are revenue centres. If the revenues weren’t good enough, the offices have been closed down. Some offices are taking longer to close, due to certain statutory requirements of those countries, but the process has started.”
The airline is expected to join the Star Alliance, the world’s largest airline network, between December 2010 and March 2011. Star Alliance has 28 member-airlines and AI would be the first Indian one. Patel was also asked a question on the proposed Navi Mumbai airport. He said: “The site at Navi Mumbai is the final site, according to the Ministry of Civil Aviation. If the issue of the second airport isn’t resolved soon, Chhatrapati Shivaji International Airport (CSIA, at Mumbai) will not be able to fulfill the traffic needs for a long time. ”
Restructuring plan
In a statement, the carrier said, “As part of business process and organisation, a new governance structure with a supervisory and executive board will be introduced. MRO and groundhandling will be shifted to subsidiary companies, while catering, hospitality and an independent training centre will be Separate Business Units.”
