New Delhi: Air India has decided to cut costs by reducing overseas staff posting by 10%, stopping foreign travel and effecting 10% cuts in fuel and other allowances to employees.
“It has been decided that following expenditure rationalization measures will be implemented on a priority basis,” chairman and managing director Rohit Nandan wrote on 21 September after taking over charge in August from Arvind Jadhav. Mint has reviewed the note.
The government is infusing funds into the distressed flag carrier, which has already defaulted on payments to staff, oil companies and airports. The state-owned firm has lost at least $2 billion in the previous two financial years.
A group of ministers is likely to meet in the first two weeks of October to decide on further equity infusion in this financial year and approve a turnaround plan being prepared by a group of finance ministry officials.
Air India will make a mandatory 10% cut on all voucher payments and reimbursement of entitlements to officers and executives across the company from 1 October, besides a 10% cut in petrol and fuel entitlements.
Employees will also need to cut outstation travel and daily allowances for both domestic and international travel will be cut 10%.
The airline has also “abolished” lunch and meal allowances and compensatory off for working on Saturdays, Sundays and holidays for all chief managers, assistant general managers and above.
“All foreign duty travel for attending conference, workshops and meetings stands withdrawn,” Nandan said in the order, adding travel will only be allowed for operations and technical personnel for flight operations and technical requirement.
The company, which employs 30,000 people, will also reduce overseas posting by 10% immediately.
Last week, after a review by aviation minister Vayalar Ravi, the airline said it will follow a multi-pronged approach to resolve issues plaguing it.
This would include improvement in on-time performance and connectivity to small cities, better crew rostering to reduce under-utilization at various lay-over points, and appointment of independent food tasters to frequently monitor and enhance the quality of the food served on board.
Nandan, in an another missive, has said he will host an open house on Wednesday afternoons for employees to talk about their problems, thrice in Mumbai and once in Delhi every month.
“Any saving that can be achieved in today’s context is welcome. However, to reduce losses much more in terms of scope and speed will need to be done on the cost control and revenue generation fronts,” said Jitender Bhargava, retired executive director of Air India. “This 10% may perhaps be the beginning of bigger steps in the offing.”
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