The Hindu Business Line : Air India unveils further cost-cutting measures

Mumbai, Jan. 13 In an effort to cut costs and streamline operations, national carrier Air India had issued a further set of guidelines for its employees, effective January 1. The earlier guidelines were issued in August last year.

Some of the first measures stated in a 25-point circular sent to senior officers include - payment on fuel reimbursement strictly through “vouchers and not self certification”, abolition of children’s education allowance to India-based officers abroad, reduction in cost of furnishing of residences given to Executive Directors and General Managers by half and 25 per cent respectively, restriction on foreign travel by officers and requirement of prior approval in cases where they exceed four visits in a year.

Other important steps include collection of monthly transport charges from employees availing themselves of that facility, cancellation of subsidised meals in canteens throughout the airline’s network and re-negotiation of hotel contracts.

While transport charges for staff will be Rs 65 per month, for officers it will be Rs 150 per month. Circular states “There is immediate need to rationalise the transport subsidy having regard to the increase in the cost of operation of the transport fleet as well as hike in wage structure of the employees.”

Subsidy paid to the canteens would henceforth be recovered through increased price of meal services provided to the employees.

Interestingly, the EDs of respective regions including foreign stations have been directed to re-negotiate the existing rates on a long-term basis in order to achieve savings in hotel costs. “Critically examine all the existing hotel contracts for crew/staff in the light of the economic downturn and the low occupancy rates reported by the hotels due to the poor traffic,” said the circular.

On operations side, the senior officers have been advised to monitor the capacity deployment in line with the passenger loads available, on a daily basis as well as during different seasons. It is further advised that in case in a particular season, the capacity is over deployed then its reduction should be considered by “reducing the number of seats in the aircraft”. Commercial and Engineering departments have been asked to work jointly in this move.

The unions of National Aviation Company of India Ltd were also asked for their suggestions. A meeting was held here on Monday, where the unions expressed dissatisfaction with moves taken by the airline. A senior member from Aviation Industry Employees Guild (AIEG) told Business Line, “We understand the constraints of the company however; such decisions should be taken in consultation with the employees. There are areas where the cost cuttings would bring substantial savings rather the ones such as canteen rates, which have been increased three-fold, and others.” The unions will submit a comprehensive report for savings in three weeks and expect the management will consider it. “If not, employees should be informed on the reasons for rejection,” he said.