A five-member panel headed by IIM professor RH Dholakia has asked Air India, the Indian national air carrier, to take a cue from no-frill airline model and cut costs. This includes reducing 26,000-strong staff. The suggestion comes at a time while the country’s aviation sector waits for the entry of foreign airlines like Air Asia, Air India may become a no-frills low cost operator.
The Dholakia committee, set up in January to recommend measures to cut Air India’s costs and increase savings, studied ways to reduce its daily operational loss of Rs 14 crore. Among the 46 recommendations made by the panel include tax-free bonds of Rs 10,000 crore to enable it retire its high-cost debt.
It has suggested scrapping of flights to economically unviable routes that do not recover the costs and save Rs 600 crore per year. Further, fuel efficiency measures could also result in a saving of Rs 400 crore. The Dholakia panel also wants the ‘zero commission’ norm as per global practice and asked agents to charge a service fee from passengers. The report was presented to Civil Aviation Minister Ajit Singh on March 28.
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