Cash-starved Air India shuts down booking offices to cut losses

National flag carrier Air India is pruning the number of its foreign and local offices and is reported to have already closed 23 booking offices in different parts of the country, the civil aviation ministry said today.

Cutting costs is necessary for the state-run carrier to stay afloat. The airline is sitting on huge losses and mounting debt caused by unpaid VVIP travel, the cost of which has mounted to Rs600 crore.

The Narendra Modi government alone has amassed Rs317 crore in air travel expenses in the first year of operation, Rs59 crore more than the Rs258 crore that the UPA-II government had incurred in its last year in office (2013-14).

Even as the civil aviation ministry has taken up the issue with various ministries regarding the pending amount related to the services of Air India aircraft availed for such VVIP travel, the airline is finding it increasingly difficult to operate without revenue coming in.

The alternative is to cut expenses and shrink its business and revenue, thereby leaving space for private operators to expand operations.

The decision to close booking offices has been taken with a view to controlling costs and reducing expenditure, minister of state for civil aviation Mahesh Sharma told the Lok Sabha in a written reply.

Air India has closed down 23 booking offices within the country as well, including those in Darjeeling, Surat, Allahabad, Agra, Kanpur, Leh, Mysore, Udaipur, Trichur, Amristar and Dehradun.

Business is low and whatever sales remain is being carried out by agents and the number of walk-in passengers at Air India's local offices are "negligible". Besides, Sharma said, passengers can make bookings through Air India's website.

At present, there are 54 local booking offices of the carrier that are functional.

Civil aviation minister Ashok Gajapathi Raju, meanwhile, said the carrier is in the process of closing or downsizing some of its overseas booking offices as well.

"The booking offices at offline stations at Zurich, Chittagong and Vienna have been shut down in FY 2013-14 with a view to cut down cost.

"So as to maximise revenue and promote code share flights, there is now only a small sales or representative set up at the airport at Zurich and the sales representative office at Vienna is operating from a small office space in a business centre," he said, adding that the offices at Cairo and Tehran also will be closed soon.

Air India is maintaining booking offices at Washington, Los Angeles and Amsterdam for diplomatic reasons, even though it does not operate any flights to these places, Raju added.