AIR INDIA CAN BE TURNED AROUND, SAYS CAPA

The national carrier, Air India, may be down in the dumps, but noted civil aviation consultancy Centre for Asia Pacific Aviation (CAPA) believes that it can make a turnaround based on the marked improvements in its domestic operations.

But the government must revamp the Maharaja’s board and management to achieve the desired objectives.

POSITIVE DIRECTION

“For the first time in several years, Air India’s domestic performance is headed in a positive direction which could become a trigger for an overall turnaround if the situation is capitalised. The national carrier needs to take advantage of the current domestic market conditions to focus on its restructuring by further reducing its cost base, improving productivity and solving its outstanding HR issues,” CAPA said in a report.

It said if Air India had a chance at achieving a successful turnaround, the time was now, but it needed a board and management that could seize the initiative.

“Air India’s domestic gross revenue per passenger increased by 46 per cent in the first quarter (April-June) resulting in top-line growth of $80 million, despite the impact of the pilots’ strike. Based on CAPA estimates, Air India’s average gross passenger revenue was the highest in the industry at Rs. 5,655.

As a result, domestic operations showed significant improvement and may have ended the quarter with a small surplus at the operating level, although CAPA estimates a net loss of Rs. 300-400 crore ($53.6-71.4 million),” CAPA said.

With no significant capacity induction expected in the overall domestic market, CAPA said that Air India should be in a position to maintain its improved yields and load factors.

The government-approved financial restructuring plan should help in significant reduction in interest costs, thereby reducing losses at the net level, the aviation think tank said.

25/08/2012  :  Lalatendru Mishra /  The Hindu

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