Records show that what the airline really needs to tweak is its management processes rather than the meal menu. Illustration Subrata Dhar
If Air India is a white elephant lurching its way through hundreds of crores in losses, then the Rs 8-10 crore it hopes to save every year by not serving non-veg food in economy class on domestic sectors can be compared to, well, a hand of bananas.
At least, that’s what official figures show.
To put that “Rs 8-10 crore” in perspective, simply glance through the national carrier’s internal reports, and figures provided to the Directorate General of Civil Aviation (DGCA) and monitored by the Comptroller and Auditor General of India (CAG):
*In 2015-16, the airline reported a net loss of over Rs 3,800 crore, and an accumulated debt of over Rs 50,000 crore.
*In 2016, it shelled out Rs 10 crore as compensation to those denied boarding, for cancellations and for flights delayed by over two hours — for domestic flights.
* From 2012 to 2016, it spent Rs 119 crore for accommodating crew in five-star hotels for the Delhi station alone.
* It lost Rs 22.49 crore in 2015 for deferring delivery of three wide-bodied Boeing 777-300 ER aircraft.
* It paid Rs 70 crore as compensation to a lessor for two Airbus A319 aircraft because it could not comply with re-delivery conditions.
* It’s in the red for Rs 472 crore, which is payment pending for VVIP flights, as on March 31, 2016.
The company did not respond to an e-mail from The Indian Express seeking the exact amount it hopes to save by cutting non-vegetarian food from the economy menu on domestic flights. But company officials had clearly indicated last week that this would be in the region of Rs 8-10 crore.
However, records show that what the airline really needs to tweak is its management processes rather than the meal menu.
Consider these:
‘Under-utilising’ crew: Rs 48.89 crore
From April 2012 to March 2016, 20,399 Air India flights (domestic and international) were delayed, rescheduled, or cancelled due to non-availability of cockpit and/or cabin crew. As per the latest CAG report, the airline had to make an additional payment of Rs 48.89 crore for “under-utilising” its crew. This number is qualified by the fact that while most pilots of narrow-body aircraft flew less than the stipulated 72 hours in a month during the given period, some flew more than the mandated hours.
“Considering the very large quantum of un-utilised hours, vis-à-vis the hours for which payments have been made at a higher rate to pilots, there is a case for more appropriate allocation of work among the pilots to ensure their optimal utilisation which would have enabled the company to avoid excess payment of Rs 48.89 crore (paid over 2012-16) on flying allowance,” the CAG noted.
Delhi hotels for crew: Rs 119 cr
In 2012, a four-member committee headed by former Supreme Court judge Justice D M Dharmadhikari had submitted a report on the integration of about 29,000 employees of Air India, post the merger with Indian Airlines, which included pilots, cabin crew, and engineers. The report recommended a number of cost-reduction measures, for which Air India constituted a committee to ensure timely implementation.
One of the recommendations was for the airline to arrange accommodation of crew members at airports or in their vicinity by cooperating with the Airports Authority of India. However, the CAG audit discovered that Air India incurred an expenditure of Rs 119 crore for hotel accommodation of its crew in five-star hotels from 2012-13 to 2015-16 — for the Delhi station alone.
In its response to the CAG’s findings, Air India said that as far as possible, the recommendations were being followed, with the exception of “certain cases airport hotels could not be selected considering they may not fulfil the necessary conditions”, and as a result might affect safety of its operations.
Deferred delivery: Rs 22.49 cr
The airline had to bear an “avoidable additional expenditure” of Rs 22.49 crore, when it deferred the delivery of three wide-bodied Boeing 777-300 ER aircraft.
In 2006, Air India placed an order with French company Thales for purchase of in-flight entertainment equipment for the 777s. However, due to the deferment in delivery of aircraft, Thales served a termination notice to the airline for breach of contract in 2014. In 2015, Air India agreed to pay a lump sum as full and final settlement, the CAG stated in its report. In its response to the CAG, Air India management said that an agreement with Thales had been signed, according to which it would reimburse the amount, if Air India took delivery of the three balance aircraft.
Additionally, at the time of re-delivering two Airbus A319 aircraft leased by Air India, it could not comply with the re-delivery conditions, and paid up close to Rs 70 crore in compensation to the lessor in exchange for waiving off associated liabilities. This incident further burdened Air India, when the lessor raised objections over the condition of the engines of one of the aircraft, for which the airline incurred a repair expense of Rs 62.68 crore.
Govt dues: Rs 472 cr
For a company that has for long been kept airborne with taxpayer money, the Government, too, hasn’t cleared its dues to the airline. Air India had earmarked three Boeing 747-400 aircraft for VVIP operations, which include flying the President and the Prime Minister. The CAG audit shows that as on March 31, 2016, dues towards operations of VVIP flights worth Rs 472.09 crore were pending.
‘We are rationalising costs’
When Air India announced its decision to suspend non-veg meals on economy class in the domestic sector, the move was criticised by travellers, taken potshots at by competitors, and supported by animal rights organisation PETA. But the airline believes that this move should not be seen in isolation, and is a part of the company’s overall exercise of rationalising costs.
On July 10, responding to questions on the meal move, Air India spokesperson G Prasad Rao had said: “The process of rationalising costs has been going on at Air India for the last few years. The decision is taken as and when required. When so much of food is being wasted, you have to take a call. Earlier, we used to have offices in different places, it was all streamlined. We vacated the Mumbai Nariman Point office. Wherever disposable assets are there, we are taking care of that. We are also generating ancillary revenues such as advertising on boarding passes, baggage tags, etc.”
