New Delhi assures continued investment in Air India

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The Indian government has affirmed that it has no plans to stop investing in Air India, as the flag carrier works towards improving its operational and financial performance.

To cut costs, the carrier has put a freeze on employing staff in non-key functions, removed certain staff perks and overtime work, and also shut some overseas offices, says the country's minister of state for civil aviation K C Venugopal.

He adds that the carrier has taken steps to ensure fuel efficiency by conducting analysis of fuel consumption on all flights, and cutting loss making routes. It is also working to rationalise capacity on routes that previously overlapped with Indian Airlines, which merged with Air India in 2007.

The flag carrier has also inducted new aircraft including the Boeing 787, and enhanced utilisation of its fleet to raise its available seat kilometres.

Air India also has unrecovered dues of some Indian rupees (Rs) 3 billion ($55 million) from various ministries and institutions, says Venugopal.

"There is no plan for disinvestment in Air India. The government has approved the turnaround plan and financial restructuring plan [FRP] of Air India which focuses on cost reduction and improved operational performance. The government has also decided to infuse more equity into Air India under FRP," he adds.

Budget documents released last week also revealed that the government has allocated Rs50 billion to Air India in its 2013-14 budget.

The Indian government has received much criticism for its financial support of Air India, with players urging the government to invest in airport infrastructure rather than the flag carrier so as to support growth in the aviation industry.