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Air India plans courier service to boost revenues

business Updated: Mar 14, 2013 22:02 IST
Tushar Srivastava
Tushar Srivastava
Hindustan Times
Tushar Srivastava

National carrier Air India has planned an aggressive strategy to increase ancillary business revenue, which would help the airline cut losses and reduce dependence on the Centre.

The airline plans to open a separate courier division within the company, which would cater to bulk government and corporate orders. AI also plans to let out space at its centrally located properties, lounge spaces and aircraft to advertisers.

The airline has hived off its maintenance, repair and overhaul (MRO) unit into a separate business entity. AI has a fleet of 111 planes and has 4,000 engineers on its rolls. "The aircraft-engineer ratio worldwide is 1:4 meaning we have over 3,000 excess engineers, who will now be utilised in a better way and would be an additional source of revenue," an official said.

AI is tying up with hotels, malls, restaurants as part of its frequent flyer program and has signed an agreement with a prominent hotel group.

AI would for the first time since its merger in 2007 be EBIDTA positive this year. "In the current fiscal we will have a cash surplus of Rs 25 crore and in the next fiscal the figure would be over Rs 1,000 crore," the official said. AI will get a discount of Rs 5,300-per-kilolitre of fuel bought from Indian Oil and HPCL to help cut down its fuel bill of Rs 8000 crore by 10%, the official added.

The airline is likely to make a loss of Rs 5,198 crore in the current fiscal, down from the Rs 7,559 crore loss it made the previous year. It plans to trim losses further to Rs 3,500 crore next year.