National air-carrier, Air India, is contemplating a slew of cost-cutting measures aimed at overcoming mounting losses due to high operating costs.
Several austerity measures are believed to have been discussed by the management in a recently-held board meeting with a view to cutting losses, now exarberated by surging international crude prices.
Belt-tightening measures believed to have been discussed include a 25 per cent cut in wages and variable productivity link incentives, a 25 per cent cut in fuel reimbursement, driver salary and car maintenance, discontinuation of clothing allowance and a 25 per cent cut in the sales promotion budget.
In its presentation before the board, Air India's finance department has also suggested discontinuation of payment to the Indira Gandhi Rashtriya Udaan Academy as part of controlling costs.
The same presentation has been given to Minister of State for Civil Aviation Praful Patel.
The academy, which is located in Rae Bareilly (Uttar Pradesh), is the only government-managed institute for training civil pilots in the country.
Maintenance of buildings and residential apartments to be taken up only once in three years, especially internal painting, it said.
It has also been suggested to set revenue targets for each region and in case of non-attainment of these targets, Executive Director to be recalled from these stations.
According to analyst, the collective losses of the now combined entity of Air India and Indian Airlines, are understood to be in the range of Rs 1,500 crore (Rs 15 billion) last fiscal.
No festival advance nor any subsidised loans and advances until further orders, monitoring of call centres to cut down unproductive hours, and curtailing of booking office expenses in the wake of implementation of e-ticketing from May have also been suggested as a means to leash expenses.
It was felt that distribution costs needed a relook in view of the commercial department offering various types of discounts/commissions.
A scheme-wise analysis has been recommended in respect of all such discounts in order to evaluate the effectiveness of such schemes, it said.
Call centre expenses should be critically looked at as expenses on dial-a-ticket, which is approximately 18-19 per cent of the average basic fare of the ticket, the presentation pointed out.
Reduction in subsidised transport and canteen to the extent of 25 per cent of the cost and reduction in in-flight catering in those flights which are of less than one hour has also been suggested to curb the losses.
A critical review of the procurement of spares by the purchase committee has also been suggested, by taking into consideration time factor for procurement of spares.
