Air India to adopt LCC practices to stem heavy losses

Singapore
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Air India will introduce a range of cost-cutting measures in the coming months as it seeks to stem heavy losses, including the adoption of low-cost carrier tactics.

In a media conference in New Delhi, the minister for civil aviation said he had accepted 47 recommendations from an external committee that should help the carrier save Indian rupees (Rs) 5 billion ($91.3 million) in the next six months.

Three senior directors have been named to implement the changes.

"The main recommendation which Air India is going to implement is to evolve a model based on an ideal mix of best practices of the LCC model while retaining the core features of a full service carrier," the ministry of civil aviation said in a statement.

The statement listed 19 key recommendations.

The carrier hopes to shift "from full MRO to preventative maintenance and power by the hour concept" and "idle aircraft will be used on the most profitable routes or surrendered."

In addition, routes that fail to meet variable costs will either be restructured or withdrawn to "eliminate additional losses".

Domestic passengers will have to pay for meals on domestic flights, and the carrier hopes to avoid travel agency commissions by generating more bookings through its website.

Other measures include revised employee allowances and subsidies.

In its fiscal year 2012-13 ended 31 March, Air India's net loss was Rs 52 billion, an improvement from Rs75 billion in FY2011-12.