Air India in crisis? It doles out free air tickets to staff

Air India is doling out free air tickets to its 24,000 employees, even as it expects to incur a loss of Rs 3,900 crore (Rs 39 billion) this financial year and has a debt burden of Rs 35,000 crore (Rs 350 billion).

While its top officers like functional directors and joint managing directors are entitled to get 24 free tickets each year, deputy general managers and above get 20 passages under a scheme called Passage Entitlement-Vacation Travel.

Those in the category of assistant general managers and senior AGMs having less than 20 years of service can avail 12 such tickets and those above 20 years can get 16.

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The remaining staff, who have put in between one and 20 years of service, are entitled to eight free tickets and 12 for those beyond 20 years.

Half of these tickets can be used for international travel, according to the scheme which also makes it clear that the number of such staff-on-leave passage would be determined by the airline's commercial department.

The scheme comes at a time when the national carrier is estimating a loss of Rs 3,900 crore (Rs 39 billion) in 2013-14, though it is down from Rs 5,200 crore (Rs 52 billion) reported in 2012-13 and Rs 7,560 crore (Rs 75.6 billion) posted the year before.

The airline is also faced with a whopping debt burden of Rs 35,000 crore (Rs 350 billion).

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While retired employees can avail this facility on par with what they were getting at the time of superannuation, the scheme also provides that ‘in exceptional circumstances’ an employee could use a maximum of four of his or her own passages for travel of brothers, sisters, son-in-law and daughter-in-law.

Prior to their 2007 merger, senior officials of the two erstwhile carriers used to enjoy unlimited domestic travel, which has now been discontinued.

When contacted, Air India officials said the new scheme had been brought to put a cap on the free passage given to the employees, which was unlimited earlier.

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The scheme, they said, was a substitute for the leave travel concession scheme for government employees which Air India employees do not get.

While the free passage scheme was based on the accepted market practices followed by airlines across the globe and in India, the tickets were subject to load factors on each flight, they said.

The national carrier has been dependent on equity infusion by the government, which has so far given it a total of Rs 12,200 crore (Rs 122 billion) primarily for paying off loans because of aircraft acquisition.

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Equity infusion was being carried out on the basis of the airline achieving set financial and operational targets as part of the Turnaround Plan.

Civil Aviation Minister Ajit Singh had told a parliamentary panel in December that ‘equity infusion by the government (in Air India) has neither been timely, nor adequate.’

He had also said there was ‘a shortfall in equity infusion to the tune of Rs 3,574 crore (Rs 35.74 billion), leading to a liquidity crunch’ for the airline.

In the last financial year, the entire airline staff was about 24,000.

But after 6,600 were transferred to its two new subsidiaries Air India Engineering Services Ltd and 5,300 to the Air India Air Transport Services Ltd, the airline has over 12,000 on its role.

The subsidiaries were floated as part of the turnaround plan.

Because of this, the aircraft-to-employee ratio is expected to come down to 1:179 in 2015-16 from a peak of 1:301 in 2011-12.

The ratios includes the employees in the two new subsidiaries.

If only the staff strength in the airline is considered, the ratio would improve to 1:82, probably the best globally, the officials said.