Indian Airlines (IA) chairman P C Sen has threatened that the productivity-linked incentive for employees may have to be stopped if performance is not improved substantially.
In a special meeting with a cross-section of IA officers, Sen expressed serious concern over the airline's declining seat factor and market share. The seat factor of the national carrier, after having gone up to 68 per cent, has fallen to 60 per cent.
Sen also called for improvement in the quality of service. He suggested that in the first phase, major sectors like Mumbai-Delhi-Mumbai could be taken up as a project by regional directors to reinforce effort to bring about significant improvement.
Citing the service standards of competitors, Sen urged employees to brace up to face the winds of competition.
The high employee-aircraft ratio of IA could only be overcome with quality services to the passengers, sources said.
During the meeting, Sen reiterated the risk of the incentive being withdrawn if the desired change in attitude on quality improvement did not take place.
In the face of marginal growth in traffic and ever-increasing capacity, Indian aviation is passing through a critical period, the brunt of which is being faced by the national carrier. Moreover, the depreciation of the rupee and high inflation have also had an impact on the airline. IA earned a net profit of Rs 45 crore in 1997-98 after a lapse of eight years. It is addressing these areas of concern more actively to prop up its bottomline further this year.
In an MoUsigned between IA and the ministry of civil aviation for the year 1998-99, the national carrier has set itself the ambitious objectives of providing the highest level of safety in operations, optimising employees' productivity and achieving optimum aircraft utilisation.
Meanwhile, IA is gearing up for divestment, which would improve the company's balance sheet and its debt-equity ratio.
Its debt-equity ratio stands at 115:1 while the ideal ratio in the capital-intensive airline business is 4:1. Its projected profit for 1998-99 is Rs 100 crore.
