Some wings of national carrier Air India would soon be hived off to right-size its staff strength and monetise its assets for an early turn-around, Civil Aviation Minister Ajit Singh said Tuesday.
“As part of the Rs.30,000-crore ($5.5 billion) turn-around package, Air India’s engineering and ground support units will be hived off into separate entities to reduce its employee ratio per aircraft and make it more efficient and productive,” Ajit Singh told reporters here.
The debt-ridden and loss-making national carrier has about 27,000 employees, including 18,000 in ground-based operating units such as maintenance, repairs, baggage handling and allied services across the country.
The airline board has also approved an Rs.800 crore voluntary retirement service (VRS) offer to about 5,000 employees for right-sizing its massive staff strength.
“By hiving off the units, the airline will have a right employee ratio per aircraft that will be comparable with the best in the industry, especially international airlines. The technical staff will be absorbed in the proposed maintenance, repair and overhauling (MRO) facility,” said the minister.
Post merger with the domestic state-run Indian Airlines and its integration, the airline’s fleet strength increased to 124 aircraft of various types.
The company’s cumulative losses up to 2010-11 rose to a whopping Rs.22,165 crore and debt to Rs.22,000 crore, burdened with the purchase of new aircraft from global aerospace majors Boeing and Airbus.
“To make the airline profitable over the next seven-eight years with the turn-around plan, the airline will also monetise its multi-crore assets by renting out space in its iconic building at Nariman Point in southern suburb of Mumbai and other properties, including lands after revaluating the intrinsic value of its assets,” Ajit Singh said.
With the aviation turbine fuel (ATF) accounting for 40 percent of the operational cost, the government plans to make it (ATF) a notified product for availing it directly by the domestic private airlines from overseas suppliers and regulate its price fluctuation.
“Compared to rates in the neighbouring countries like Sri Lanka and Singapore, ATF in India is 60-70 percent higher, which is a drain on the operating cost all airlines. This is being addressed with the petroleum and finance ministries,” Ajit Singh added.