Air India to adopt LCC model
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In a bid to improve its perilous financial position, Air India will adopt a low-cost carrier business model for some of its domestic flights from September, Anil Mathur reports. Twenty-seven of the carrier’s 100 domestic flights will go into the low cost mode, rising to up to 70% of the national carrier’s scheduled services later. Managing Director, Arvind Jadhav, said that the measure was being imposed as the trends all over showed that there was a greater preference now in India for no frills flights.
The carrier will also negotiate with banks to replace high-cost debt with low cost alternatives. In his first interaction with the media in Delhi on 7 August, Jadhav, revealed that the carrier would work with the government to deliver a structured, time-bound plan to meet its bailout requirements. He admitted that the National Aviation Company of India Ltd (NACIL) – the parent company of Air India – would have to ‘change the “way it does its business”, and predicted that Air India would see a turnaround in three years. Among the steps he listed were to focus on increased revenue generation through allied businesses like cargo, engineering and ground handling.
On the crucial question of cost cutting, the Jadhav said that the target was to reduce expenses by about INR50 billion (US$ 1.05 billion) a year.
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