Aviation ministry to hive off A-I, IA divisions

Mumbai: The ministry of civil aviation is planning to hive off the maintenance and engineering divisions of Air-India (A-I) and Indian Airlines (IA) and has invited bids from airline consultants for preparing a business plan.

The ministry is also looking at outsourcing the non-core activities of both A-I and IA. It will focus its energies on the core function of flying passengers. According to the tender asking for bids from consultants, the ministry has said the consultant will be needed to conduct a benchmarking analysis of A-I and IA in various areas of airline performance.

The scope of work by the consultant requires analysis of detailed steps required for hiving off into separate companies in areas like major maintenance, engine overhaul and avionics overhaul and cost benefit analysis of outsourcing in non-core activities like medical, security, internal auditing, catering and official language in A-I and IA.

Industry observers say outsourcing of non-core activities is the norm for most airlines worldwide. Outsourcing will help the airlines to reduce costs and also keep the manpower on its rolls at a minimum. It will also help the airlines to focus more on flying passengers and related functions, says an analyst.

Both the airlines have huge workforces. A-I has around 16,612 personnel on its rolls, while IA has about 22,000. The consultant will also be asked to prepare a report on manpower rationalisation and its optimal utilisation.

The civil aviation ministry has invited expressions of interest from consultants known to handle similar assignments for the airline industry by 18 September 2002. The consultant is required to submit an interim report of various stages at different intervals. For instance, a report on benchmarking analysis is to be submitted within 60 days from the date of go-ahead, while the report on outsourcing and hiving off should be submitted within 120 days.