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Aviation minister asks AI to cut costs

Civil aviation minister Ajit Singh has asked Air India to cut down its costs to become a cash positive carrier.

Civil aviation minister Ajit Singh has asked Air India to cut down its costs to become a cash positive carrier. AI has a shortfall of R404 crore per month. While its cash inflow is R1,348 crore every month, its expenditure comes to about R1,752 crore.

?Though there is an overall improvement in the performance of AI, it is important that the revenue generated should meet the costs incurred,? Singh told the airline officials at its review meeting on Thursday.

Singh has directed AI to go into the operational details to cut the costs incurred on overseas offices, salaries, fuel and also examine the overseas deputation of the staff to avoid extra expenditure.

AI in the recent months has managed to fly ahead of its closest competitor Jet Airways. In November, the airline carried 10.38 lakh domestic passengers with a market share of 20.7%. The growth in number of passengers has helped the airline to reduce its cash losses.

Singh said with the narrowing cash losses, the airline must fix a cut-off date for the regular payment of salaries to its employees. ?Out of R2,000 crore that AI is to receive next month in the form of equity as budgetary support, R500 crore must be utilised to clear all arrears of the employees,? he said.

Even on the latest entrant in the AI?s fleet ? Boeing 787 ? the minister has asked the airline to explore possibilities to fly these aircraft on routes like Bali, Istanbul etc. AI has already received three B-787 Dreamliner aircraft and is expected to get another five in the current financial year to fly to Sydney, Melbourne and Singapore.

?AI should think out of the box to change its image of being a public sector unit and transform it to a commercial organisation,? he said during the meeting.

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First published on: 21-12-2012 at 02:03 IST
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