Air India to rationalise routes, fleet size to cut costs
07 November 2009
New Delhi: Flag carrier, Air India, may ground up to 650 flights a week under a restructuring plan aimed at facilitating Rs5,000 crore equity into the debt-ridden company. The struggling carrier is looking at its route network, in particular, to slash costs.
The steps will form part of a civil aviation ministry restructuring plan that will be put up before a Group of Ministers (GoM) meeting next Thursday which is expected to clear a number of important decisions related to equity infusion and restructuring of the airline.
The steps being contemplated as part of the restructuring exercise would include scrapping 650 flights operating on non-essential routes. Such sectors, airline officials confess, cost the company Rs2,000 crore a year.
The airline has accumulated losses of Rs7,200 crore as of March 2009. Airline officials are now drawing up plans that would see the airline's monthly losses brought down from Rs400 crore, to Rs100-120 crore.
Officials said this would not be achieved without reducing fleet size and rationalising routes.
Among the routes that may get scrubbed are the newly launched non-stop service to New York from Mumbai and New Delhi. The route, according to airline officials, is projected to incur a loss of Rs450 crore on an annual basis.