To cut costs, AI looks to junk non-profitable routes | india | Hindustan Times
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To cut costs, AI looks to junk non-profitable routes

india Updated: May 29, 2012 00:43 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Air India (AI) could junk non-profitable routes and aircraft that bleed the airline heavily. Civil aviation minister Ajit Singh has to set up a committee to examine route profitability of AI and make its recommendations to rationalise the same keeping in view the overall objective of profitability.

In a clear indication, that the government means business, the committee has been given a week’s time to submit its report. As per a report prepared last year only two of the 175 odd routes that the airline operates are profit making.

The committee will identify routes not able to meet out various costs and reasons for not meeting out those costs, make route wise recommendations in terms of withdrawal or continuance of flights and making them profitable. It will also analyse criteria for withdrawal and inclusion of routes in the summer and winter schedule during last year and make an analysis of the economics of various routes.

AI will continue to operate on mandatory routes as per route dispersal guidelines. Singh had recently held a review of AI wherein a detailed presentation was made on flights that are not meeting even cost of fuel, flights which meet fuel cost but not meeting operational cost and flights meeting operational cost but not meeting the total cost.

AI’s total operational losses for 2012 were R1,734 crore. It lost R832 crore by operating flights to these seven long-haul routes.