Air India aims to trim losses by 75% in 18 months

In an ambitious turnaround plan Air India is looking to reduce losses by  75% over the next 18 months. The carrier reported net loss of Rs 5,400 crore in 2009-10, but due to various cost rationalisation and revenue generation measures, it is looking to bring down this figure to around Rs 1200 crore by the end of FY12.

Chairman and MD Arvind Jadhav said that losses will be paired by 75% and also indicated that by making Delhi a hub for international as well as domestic flights, the carrier is already looking at increase in passenger traffic.

Jadhav’s comment came at a time when the government is seeking a concrete turnaround plan from the ailing airline in return for further equity infusion.

To a question on debt restructuring Jadhav said that the July 16 deadline for bank bids to refinance $1.15 billion of debt has been extended to August. The airline is seeking to recast the loans, taken to purchase 21 airbus planes, to pair interest costs.

Meanwhile, Air India will now offer non-stop connections to Melbourne, Toronto, Chicago and New York from Delhi in the upcoming winter schedule.

In a comprehensive plan outlined Wednesday, the national carrier said it plans to increase flights out of Delhi by 25%, in a bid to use the Delhi International Airport as an international, as well as, national hub, while simultaneously expanding the domestic leg to provide seamless connectivity to passengers coming from other cities onto the international leg.

So Mumbaikars can fly to New York, Paris, Hong Kong and Seoul, Hong Kong and Osaka and Shanghai via Delhi on the international leg.

This plan would be implemented not only to increase connectivity to overseas destinations from Delhi, but also keeping the increasing congestion at Mumbai International Airport in mind. Airline officials indicated that the non-stop connection between Mumbai and New York may be stopped and an extra flight may be added to the Delhi leg. Also, the airline is evaluating a non-stop service to San Francisco too.

In all, seats offered by Air India on all its services from Delhi will be about 104000 per week in each direction against the current number of 82000 per week from this winter. International seat capacity would increase to 33000 per week from the current 22500 which is an increase of about 50 per cent.

On the domestic front, non-stop daily services are being introduced to Goa besides increase in frequencies such as 14 flights daily between Delhi-Mumbai, five a day from Delhi to Kolkata, Chennai, Bangalore, Hyderabad etc.

Total domestic services from Delhi will increase to 71 per day from 62 at present.

Chairman and MD Arvind Jadhav said that this expansion plan out of Delhi should provide the carrier with 8-% increase in passenger traffic immediately and upto 15% in the long run. He said that the hub and spoke model being created at Delhi would grow to its full potential over the next two seasons. With this plan, AI would serve 22 international destinations from Delhi besides the largest number of domestic destinations.

At present, Air India’s international hub is at Frankfurt. But officials said that once the Delhi hub plan is set in motion, the Frankfurt solution will fall away. “Flights to Frankfurt will continue, but many flights which now go through Frankfurt to destinations in Europe and the USA will not have to go through that port.”