India civil aviation head optimistic about Air India turnaround

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Indian civil aviation minister Ajit Singh says Air India is making progress with its turnaround plan, with the carrier’s performance against certain benchmarks “improving constantly".

Speaking to the consultative committee for the Ministry of Civil Aviation, Singh said that Air India is performing well in areas such as passenger load factors and yields.

When the carrier released its results for FY2012/13 ended 31 March 2013, it said that its load factor was 72.7% during the period. In his speech, Singh said that the carrier’s target load factor for the period was 69.5%.

He added that the carrier’s yield per revenue kilometre was Indian rupees (Rs) 4.31 in the year to 31 March, compared with the target of Rs3.53.

The carrier’s on-time performance, however, has yet to hit its target. In 2012-2013, the carrier’s on-time performance was just 77%, compared with the target of 85%. Singh added that aircraft utilisation is also strong.

“Air India has recorded appreciable cost savings through the freezing of recruitment in non-essential areas, saving in interest costs due to restructuring of working capital loans, reduction of booking agency commissions and grounding of an ageing fleet,” he added.

“The operating loss and cash loss have also declined significantly in the last financial year due to restructuring of routes. As a part of this exercise, Air India has rationalised its loss-making routes as a result of which, more number of routes are meeting the cash cost of operations.”

He added that the government has infused Rs122 billion in the last three years, but he feels that this amount and the timing have been neither “timely, nor adequate".

This has resulted in a shortfall of Rs35.7 billion, which Air India has had to make up for with short-term, high-cost loans from banks.

He added that the government has added five “high level, independent directors” to the Air India board. The directors come from academia, the corporate world and the military.

“The ultimate goal is to put the national carrier on the road to profitability so that the carrier can regain its pristine glory independent of government support,” said Singh.