Having survived its worst financial crisis, Air India has set into motion a restructuring exercise to generate additional revenue of Rs 6,500 crore and to re-deploy excess manpower into productive use. The carrier has managed to save more than Rs 1, 000 crore through a host of cost saving measures.
The airline has decided to put into operation three of its dormant Strategic Business Units (SBUs) — engineering, ground handling and cargo into three separate subsidiary companies in next three months.
From April 1, Air India Engineering Services, Air India Air Transport Service and Alliance Air would take over the engine maintenance, repair and overhaul, ground handling and cargo units, which would be spun off from the mainline airline operations.
“We already have three registered companies that will operate the three SBUs separately from the beginning of coming financial year,” Arvind Jadhav, CMD, Air India said.
The engineering company with 8,000 people will cater to airlines from India and abroad. “We have the capability to service 200 aircraft per year including our 100. This will generate additional revenue of Rs 3,000 crore,” Jadhav said.
The ground handling company will provide pan India service and will earn Rs 1,500 crore. Alliance Air would take over the cargo business and will also offer logistics services for end-to-end delivery of consignment. It will generate additional revenue of Rs 2,000 crore, Jadhav said.
He said route rationalisation and fuel-efficient new planes helped. He said though cost cutting would continue, emphasis would be given for revenue enhancement.