Govt working on efforts to turn around AI; cost cutting, revenue augmentation measures to fetch Rs 2,000-cr benefits

New Delhi: To revive Air India's (AI) fortunes, a plan is being implemented that will result in annual financial benefits worth Rs 2,000 crore by way of cost cutting and revenue enhancement measures, a senior official said on Wednesday.

Civil aviation secretary R N Choubey said the plan was drawn up around 15 to 20 days ago and focuses on about "10 to 12 items" but did not divulge specific details.

The government is working on efforts to turn around the national carrier, which has a debt burden of over Rs 50,000 crore.  Talking about the plan, Choubey said, "financial benefits" to Air India woud be around Rs 2,000 crore per annum by way of cost cutting and revenue enhancement measures.

 Govt working on efforts to turn around AI; cost cutting, revenue augmentation measures to fetch Rs 2,000-cr benefits

Representational image. Reuters

The implementation of the plan, which has been prepared on the basis of recent levels of crude oil prices and rupee value, would be monitored by the ministry, he added. When asked whether the plan is being implemented, Choubey replied in the affirmative.Aidan Turner,

The ministry would monitor the implementation of the plan and then report to the Air India Specific Alternative Mechanism (AISAM). Asserting that defaults by Air India would not be allowed, Choubey said financial support would be given to the airline on "as you go basis".

Civil Aviation Minister Suresh Prabhu said Air India is facing a legacy problem.

"What is Air India's problems and we are addressing it by strategy... we will request the Finance Ministry to give us some more money (for Air India)," he said in response to a query on how the airline can improve amenities to passengers.

Regarding AI, Prabhu said the civil aviation ministry and the finance ministry are on the same page. "There is no conflict... the question is that debt is so large and we have to work out something large," he added.

They were speaking on the sidelines of an event here.

Emphasising that efforts are to ensure that Air India is "competitive and viable," Choubey said the airline has to work on efficiency improvements.

"We have told them, on one hand, work on efficiency improvements and on the other hand, we will ensure support for you if you are able to show efficiency improvements," he noted.

On Tuesday, the AISAM approved a proposal for strategic sale of Air India's ground handling subsidiary AIATSL.

The latest plan to sell AIATSL follows the decision by the ministerial panel in June to make Air India competitive, by way of cutting down debt and raising resources by selling land assets and other subsidiaries.

The ministerial grouping had decided to revive Air India after the government's strategic stake sale offer failed to attract any bidders earlier this year.

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Updated Date: Nov 29, 2018 10:48:09 IST