SME Times News Bureau | 18 Jul, 2012
Some wings of national carrier Air India would soon be hived
off to right-size its staff strength and monetise its assets for an early
turn-around, Civil Aviation Minister Ajit Singh said Tuesday.
"As part of the Rs.30,000-crore ($5.5 billion) turn-around package, Air
India's engineering and ground support units will be hived off into separate
entities to reduce its employee ratio per aircraft and make it more efficient
and productive," Ajit Singh told reporters here.
The debt-ridden and loss-making national carrier has about 27,000 employees,
including 18,000 in ground-based operating units such as maintenance, repairs,
baggage handling and allied services across the country.
The airline board has also approved an Rs.800 crore voluntary retirement
service (VRS) offer to about 5,000 employees for right-sizing its massive staff
"By hiving off the units, the airline will have a right employee ratio per
aircraft that will be comparable with the best in the industry, especially
international airlines. The technical staff will be absorbed in the proposed
maintenance, repair and overhauling (MRO) facility," said the minister.
Post merger with the domestic state-run Indian Airlines and its integration,
the airline's fleet strength increased to 124 aircraft of various types.
The company's cumulative losses up to 2010-11 rose to a whopping Rs.22,165
crore and debt to Rs.22,000 crore, burdened with the purchase of new aircraft
from global aerospace majors Boeing and Airbus.
"To make the airline profitable over the next seven-eight years with the
turn-around plan, the airline will also monetise its multi-crore assets by
renting out space in its iconic building at Nariman Point in southern suburb of
Mumbai and other properties, including lands after revaluating the intrinsic
value of its assets," Ajit Singh said.
With the aviation turbine fuel (ATF) accounting for 40 percent of the
operational cost, the government plans to make it (ATF) a notified product for
availing it directly by the domestic private airlines from overseas suppliers
and regulate its price fluctuation.
"Compared to rates in the neighbouring countries like Sri Lanka and
Singapore, ATF in India is 60-70 percent higher, which is a drain on the
operating cost all airlines. This is being addressed with the petroleum and
finance ministries," Ajit Singh added.