Regional Round-Up
New resolve at Air India
October 1st 2014
State-owned Air India has said it plans to cut the number of unprofitable routes to 19% of its overall network at the end of the current financial year, after reducing flights by 38% in the last fiscal year and 60% two years ago, reports India’s Business Standard. “We have completely withdrawn flights not meeting ATF (aviation turbine fuel) costs. Read More » While there would be flights in which we would not be able to generate operational profits, we are looking at meeting cash costs on 81% of our network by the end of this financial year,” a senior official at the airline said.
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Air India has singled out 19 loss-making routes including Mumbai-Kolkata, Delhi-Bangalore, Sydney and Milan from Delhi. In September, the flag carrier sold five B777-200LRs to Etihad Airways for $67.3 million each after buying them for an average $127 million a plane seven years ago.
Vinod Rai, a former comptroller and auditor general at Air India, recently made the headlines when he revealed in an interview with The Times of India that the original order in 2004 was the brainchild of the civil aviation minister, Praful Patel, who wanted the airline to have direct flights from India to the U.S. and Canada. The upshot of this was virtually crippling for Air India.”When any purchase has a debt proportion of 97%, there’s no way it can be commercially profitable,” Rai offered.
