Air India declared Transformation by Implementation of Cost Cutting Measures

Air India on 10 May 2013 declared a set of transformations by implementing certain cost cutting measures. The airlines will soon start charging passengers travelling in economy class on domestic sectors for food. The recommendations on transformation suggested by the committee constituted to suggest cost-cutting measures for the bleeding national carrier were accepted by the Union Ministry of Civil Aviation.

The constituted committee has suggested a set of 46 recommendations, which when implemented will save an estimated annual expenditure of 3240 crore rupees. One of the major recommendations suggested by the committee is serving tea, cold drinks, coffee, peanuts and biscuits, free of cost by doing away the meal. The complete meal on an Air India flight costs 175 rupees which will come down to 25 rupees, with the implementation of recommendation and help in saving about 100 crore rupees annually to Air India.  
 
The Union Ministry of Civil Aviation has recommended to Air India to implement the recommendations and provide a schedule on implementation to it within a week’s time. The Ministry of Civil Aviation on 29 April 2013 allowed airlines to unbundle charges for services like preferential seating, meals, snacks, drinks (doesn’t include water) and use of lounges and baggage.

The free baggage allowance was reduced to 15 kg from previous 20 kg by Air India and Jet Airways, following the announcement from the Ministry of Civil Aviation. For baggage above 15 kg, 250 rupees per kg extra will be charged by the passengers. The decision from the Aviation Ministry came up in wake up of the nod given to Air Asia to launch a local airline by the Union Ministry of Finance.

The constituted committee that suggested the recommendations on the cost cutting measures and Optimal Utilisation of Resources in Air India was a five-member Committee, headed by Ravindra H. Dholakia, Professor of Economics and Public Systems, IIM, Ahmedabad to suggest various measures for cost cutting and optimal utilisation of resources in Air India.