New Delhi:  The management of flag carrier Air India has issued a circular, intended for all employees, that lays down cost control measures. Whilst different cost-saving proposals relate to different levels of the organisation, of interest to employees would be issues related to hotel stay overseas, travel in economy class and free use of pool vehicles.

At a policy level other cost-cutting proposals relate to fleet repairs and lease of aircraft. The circular says that repair of planes/engines overseas ought to be avoided as far as possible as they involve huge expenditures. This can only be done after approval is granted by the board.

The circular also advises against bulk order of inventory and opting for just-in-time orders. The carrier will conduct a review of inventory stock in hand, consumption patterns and lead-time in procuring spares.

Use of casual labour will be restricted as well.

According to Jitender Bhargava, ED, corporate communications, AI, "We expect substantial savings from each of these measures. People must realise that airlines are going through bad times and even the work culture has to change. We are in an expansion mode and these measures will be ongoing."

According to NACIL executives, the carrier is also contemplating slashing 15-20 per cent of domestic and international flights from its winter schedule. The carrier will cut routes that are making cash losses or are unable to meet the basic cost of operations. Mainly located in the US, the UK, West Asia and South-East Asia doing away with or restructuring of these routes would result in savings of Rs900 crore a year.

Aircraft lease would also have to be optimised in terms of flying hours, routes, crew availability, etc. Care needs to be taken that there is minimum breakage when these planes are returned.

The announcement of cost-cutting measures takes place even as the National Aviation Company of India Ltd, the holding company for the merged entity of AI and IA, is set to ask the government for a bailout package amounting to Rs2,300 crore.

The merged entity's net loss for 2007-08 is pegged at Rs2,144 crore.