No Govt Help till AI Cuts Cost by 800 Cr: Praful Patel

The government has made it clear to the Air India employees that no government help – in the form of equity infusion of Rs 5,000 crore – is possible unless they reduce costs to the tune of 800 crore.

“The government’s support comes with a condition that we (Air India) will cut costs,” civil aviation minister Praful Patel said.

Patel said that the airline was looking to cut overall costs by Rs 3,000 crore and also looking at increasing revenues by Rs 2,000 crore.

“We have to generate Rs 800 crore from employees’ costs and that is the only hurdle for the airline from getting the government’s help,” Patel told the union representatives at a meeting.

“You have to do it any which way and I am flexible if you come up with alternative measures,” he told union leaders.

Patel had a meeting with representatives of more than 14 employees unions from Air India who represent over 25,000 of the airline’s 31,000-strong workforce.

It is the first meeting between the minister and employees following last month’s strike by pilots against cuts in their performance linked incentives (PIL), which had jeopardised the airline’s operations for five days.

At a press meet called later in the evening, the minister said that the airline was looking to cut costs by Rs 3,000 crore and also looking at increasing revenues by Rs 2,000 crore.

“It is a well known fact that Air India’s load factor is less than other airlines and an increase of 6-7 per cent in load factor can lead to a substantial jump in revenues for which they (Air India) will have to improve their marketing and services,” Patel said.
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