Thursday, October 18, 2018

Rising operational costs make Air India turnaround even more difficult: Top official

NATIONAL carrier Air India's revival efforts have become more difficult with overall increase in operational expenditure and fierce competition. It was stated by Air India the Chairman and Managing Director Pradeep Singh Kharola. He emphasised the need to generate revenues in every possible manner to stay afloat.
The government is also working on ways to bolster the national carrier, which is financially stressed and is estimated to have a debt burden of more than Rs 50,000 crore, reports PTI.
"Our path towards turnaround has become more difficult with the...
market throwing fresh challenges by way of rising fuel costs, a volatile currency and overall increase in operational expenditure - besides, of course, fierce competition," Kharola has told employees.
In a message on the October issue of 'Samvaad', a newsletter for employees, Kharola said airlines around the world are going all out to adopt strict control over expenditure and increase efficiencies.
Rising oil prices have been hurting the airlines industry and last week the government cut the excise duty on jet fuel to 11 per cent from 14 per cent. Fuel costs account for a major chunk of an airline's operational costs. "We are also going through a critical fiscal situation and it is imperative for us to rationalise expenditure and optimally utilise available resources. We will have to tighten our belt adopting strong fiscal discipline and streamlining of our functioning without compromising on our operational efficiency," Kharola said.
Further, he said the airline needs to focus on generating revenue in every possible manner to stay afloat.
The system of working has to be reset by way of trimming all unnecessary frills and reset by way of trimming all unnecessary frills and keep improving the bottom line "otherwise our survival will be at stake", Kharola said.
"We have to now stand on our own feet and learn to be self-reliant," he added.
On October 10, Civil Aviation Secretary R N Choubey said the government is likely to finalise a revival package for Air India in a month.
"Whenever there is a need for financial support to Air India, it will be examined on need basis and such financial support on need basis will be provided. I only wish to tell you that all support will be provided.
Earlier this year, the proposed strategic strategic disinvestment of the airline, which is surviving on taxpayers' money, failed to take off as it found no bidder.
Meanwhile, the government is working on a turnaround plan (TAP) for debt-ridden Air India that will include transfer of the national carrier's working capital debt of Rs 30,000 crore and non-core assets to a special purpose vehicle (SPV) as well as an additional Rs 2,056 crore capital support in FY19.

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