Civil aviation minister Ajit Singh has
constituted a five-member Committee, headed by Prof. Ravindra H Dholakia,
Professor of Economics and Public Systems, IIM, Ahmedabad, to suggest various
measures for cost cutting and optimal utilisation of resources in Air India.
Other members
of
the committee are Dr. Prabhat Kumar, joint secretary, ministry of civil
aviation, Rajesh Agrawal, director finance, ICRISAT, Hyderabad, S Mukherjee,
ex-director commercial and inflight services, Air India, Nasir Ali, joint managing
director, Air India. Nasir Ali will also act as a member secretary of the
committee.
Although, the committee has
been asked to submit its report in two months, it has also been asked to give
immediate/interim recommendations without waiting for final report, so that
these can be implemented in Air India immediately without any loss of time.
The committee's terms of
reference include analysis of all 'Heads of Expenses' of Air India in the light
of best practices adopted by various other airlines in the world
examination and analysis of various measures, including cost-cutting, adopted
by other 'turned around' airlines in the past and identification of
various loopholes in the existing structure and functioning of Air India
leading to wasteful expenditure, and also to suggest measures for plugging such
loopholes.
Further, the committee will
analyse various cost components and identify those expenses and costs, which
can be abolished immediately, or reduced in phases or curtailed after sometime
in future.
It will also analyse the
inventories of spare-parts and suggest a system of Optimal Inventory Management
and disposal of obsolete/ excess inventories. It will critically review the
expenses on overseas offices including the manpower deployment and suggest
measures to reduce such expenses, will analyse the ATF utilisation by Air India
and suggest measures to reduce/optimize ATF utilisation in the background of
best practices followed by other airlines.
The committee will also
analyse all other factors, which are adversely affecting the financial health
of Air India and suggest plan for removing such factors. The chairman &
managing director and other officers of Air India have been directed to provide
all assistance to the Committee.
Recently, while reviewing
the functioning of Air India, Ajit Singh expressed his grave concern on the
projected net shortfall of Rs. 404 crores per month by Air India.
Singh told Air India that
without cutting redundant costs and optimally utilizing resources, it will be
difficult to meet this shortfall, and year wise financial projections which are
envisaged in the Financial Restructuring Plan (FRP), approved by the Cabinet.
As per FRP, Air India is supposed to be EBITDA positive by the end of the
financial year.
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