A committee was set up in January to suggest measures to lower the high costs of Air India’s operations and improve utilization of resources in line with the best global practices to help the state-run carrier achieve the goals of its turnaround and financial restructuring plans.
A five-member committee headed by IIM-Ahmedabad’s Prof Ravindra H Dholakia was set up by Civil Aviation Minister Ajit Singh after a review meeting of the ailing national carrier’s functioning.
Must Read: Urjit Patel Committee
The members of Five-member Committee are IIM-Ahmedabad’s Prof Ravindra H Dholakia – Head of Committee; Prabhat Kumar, Joint Secretary in Ministry; Rajesh Agrawal, Director Finance of ICRISAT; S Mukherjee, former Director Commercial and Inflight Services of Air India; Nasir Ali, Joint MD of the airline.
The Government has accepted the recommendations of Prof Dholakia Committee Report on Cost Cutting in Air India and sent to Air India for immediate implementation.
The Committee has made total 47 recommendations. Air India expects a saving of about 500 crores in next 6 months by implementing some of the recommendations of the Committee.
Air India has constituted a Committee comprising of the following to implement the recommendation of the Cost Cutting Committee at a time-bound manner: Shri Nasir Ali, Joint Managing Director;Shri Deepak Brara, Commercial Director; Shri S. Venkat, Director Finance.
Don’t Miss: The Narasimham Committee
The main recommendation which Air India is going to implement is to evolve a model based on an ideal mix of the best practices of the LCC (Low-Cost Carrier) model while retaining the core features of the full-service carrier. The main recommendations are as follows:
Charging for food in the domestic sector and rationalizing it in the international sector;
Unbundling of services to passengers and advertisement space;
0% commission and ticket booking through website;
Shift from full MRO to preventive maintenance and power by the hour concept –technical & efficiency audit of engineering;
Strict enforcement of simplified excess baggage charges;
Dynamic pricing and passenger upgrade; or surrendered; and underutilized assets like luxury lounges, time slots at
Flights not meeting variable costs need to be restructured or withdrawn to eliminate additional losses and point to point rather than multi-sector operations;
Idle aircraft to be used on most profitable sectors. Busy international airports, land, buildings, floors, hangar space and hotels to be leased out or sold;
Surplus crew to be relocated as per crew pattern requirements and SOD (Special Operations Division) movement curtailed;
As per DPE instructions, no encashment of SL and lapsable PL – also at foreign stations;
Temporary posting of employees should stop;
Transportation and hotels for pilots and crew and their layover pattern;
Excessive and unjustified allowances to pilots and crew to be stopped;
Extra reimbursements should be merged with allowances within limit of 50% of revised basic as per DPE guidelines: and training should be provided to those with more than three years of service left before retirement;
Free or subsidized transport facility to be stopped and extra transport allowance over and above the normal transport allowance not to be provided;
Canteen services at non-factory areas to be withdrawn and at factory areas to be outsourced with revised rates;
Closure of 18 off-line stations and recall of IBOs;
14 Flight Despatchers plus 10 EMS-QMS staff to be hired.
Strong accountability at all levels, efficiency audit and private investments in the long run.