Wednesday June 24, 05:11 PM
India asks struggling national carrier to cut costs
NEW DELHI (AFP) - India on Wednesday asked its loss-making national carrier to cut costs and warned the government would recruit new directors for the board of Air India to help its revival.
The comments came after a newspaper reported that the state-run airline was planning to seek a 150-billion-rupee (three-billion-dollar) bailout package to cope with its cash crunch.
"There is a lot of excess flab on the entire body of Air India and it does not only mean manpower but also it means various cost cutting measures that have to be looked at comprehensively," Civil Aviation Minister Praful Patel told reporters.
"Air India must shape up. It should become leaner and trimmer."
He met Prime Minister Manmohan Singh to discuss the fate of the national carrier, which on Monday said it planned to slash staff costs by more than 15 percent.
Air India said it was aiming for a reduction of more than 100 million dollars in annual employee salaries, from the 625 million dollars it currently spends.
Patel said Air India has to do more.
"The prime minister said 'Air India is (the) pride of the country and that we should do whatever is possible' but again with a rider that Air India also rises to the occasion and puts its best foot forward," he said.
"We will be strengthening Air India's board with directors of repute from various fields and we are also going to look at the restructuring of the top management of the airline."
High fuel costs, fewer passengers and the global economic turmoil have left the airline with an estimated 800 million dollars in losses for the past year and debt of four billion dollars, according to the Centre for Asia Pacific Aviation.
Last week the company asked its top managers to forgo one month's salary as part of efforts to survive the crisis, just days after delaying the payment of June salaries for regular employees.
The national carrier has an ageing fleet and has been plagued by a series of embarrassing delays and technical faults that have led passengers to turn to private carriers with state-of-the-art planes.
The minister said the government will also have to look closely at the plight of the domestic aviation sector hit by the global economic slowdown.
"The sector as a whole needs some kind of confidence building measures," he said, suggesting a review of sales tax on aviation fuel in particular.
Private airlines say higher fuel taxes are gobbling up their operational revenues.
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