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Air India cost saving plans to add over Rs 700 crore per annum, as govt readies plan to divest stake

While one initiative of moving to one ticket booking software for domestic flight bookings would save about Rs 519 crore in 2020, the other initiative of putting a bigger aircraft on Delhi-London route and smaller Dreamliner on Delhi-Washington route would add about Rs 100 crore to airline’s bottom line.

, ET Bureau|
Last Updated: Jan 16, 2020, 04.24 PM IST
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Air India cost saving plans to add over Rs 700 crore per annum, as govt readies plan to divest stake
Air India has launched new flights to Nairobi, Dubai, Kuwait, Toronto, Standsted and converted the flight to Seoul to direct.
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NEW DELHI: As government puts Air India on the block, the management has brought in a slew of cost cutting or rationalisation initiatives to strengthen airline’s financial before the sale.

While one initiative of moving to one ticket booking software for domestic flight bookings would save about Rs 519 crore in 2020, the other initiative of putting a bigger aircraft on Delhi-London route and smaller Dreamliner on Delhi-Washington route would add about Rs 100 crore to airline’s bottom line, said senior Air India officials.

The airline also expects to add over Rs 120 crore with the launch of new destinations strengthening network on the existing ones.

“These initiatives are set to add to our balance sheet and we expect our numbers to improve further with launch new flights to London from Mumbai and upgrade of equipment to flights to London from Delhi,” said Vinod Hejmadi, director (finance) at Air India.

Air India has launched new flights to Nairobi, Dubai, Kuwait, Toronto, Standsted and converted the flight to Seoul to direct.

“We have added 9 new flights, 3 additional flights on existing routes and converted one stopover flights to direct. All these new flights have been launched with the same fleet, only by utilising them more and bringing them back from flying from being on-ground,” Hejmadi further said.

Air India, which had about 9 long-haul aircraft (Boeing 777, 787 and 747) on ground due to want of spares, have brought all of them to flying.

However, the airline still had about 12 narrow body aircraft on ground due to want of spares but the airline does not have funds to bring them back to flying.

The other initiative that is set to save a substantial amount for the national carrier is shifting to single ticket booking system called the GDS or Global Distribution System.

Starting January 1, 2020, the airline has shifted to Travelport’s booking system exclusively. This is estimated to save over Rs 500 crore in the first year itself.

“Our decision to shift to single GDS was purely financial and intended to save money on booking cost. We have not just shifted to new GDS but also got a better deal, which saves a lot of cost for us,” said Meenakshi Malik, commercial director at Air India.

She added that the company has not lost any revenues on account of moving to Travelport.

“There is always that risk of loss of booking, when the airline moves to single GDS, which means restricting our flights to lesser number of agents. But we have been working with the agents and there is not decline in booking during the first ten days of shifting to single GDS,” Malik further said.’

According to the data shared by Air India, there has been a single digit increase in domestic booking on flights during the first ten of 2020, as compared to the same period last year.

The government plans to divest 100% in Air India and is the process of deciding on bidding documents, which might come this week or early next week.

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