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Air-India to rethink destinations

Michael Mascarenhas, in his first press conference in Bombay after being confirmed as Air-India's managing director, today frankly admitted that the national carrier was facing difficult times.

So much so that the airline was only expecting to acquire five to seven medium capacity long range aircraft in the first phase. A decision on which aircraft, and exactly how many, would be taken latest by June, Mascarenhas announced.

He said the airline, which had been conducting a close profitability profile of its routes, was dropping some with a view to concentrate its resources on limited points where it was doing well.

It was pulling out of Seoul because of the currency fluctuations, dropping flights to Amsterdam and Zurich and was considering whether it should continue flying to Geneva since Swiss Air had a daily flight from India. It had dropped South Africa and was thinking of restructuring its seat factor from Japan where business for Air India had declined significantly.

Mascarenhas said Air-India wanted to increase its frequency-to-station ratio. ''Seasonal, directional service is now history. Starting daily services to places where we are doing well is our objective,'' he said adding that it was hoping to do that for its highly successful Chicago, United States, flight which was currently thrice a week and which earned the airline the same revenue as seven services a week to New York, US.

Mascarenhas said frequency increase was also planned to Manchester in the United Kingdom, the Middle East and Singapore. He said the violent currency fluctuations in East and Southeast Asia had severely hit the airline. The crash of the baht in Thailand had resulted in revenue coming down by 50 per cent for Air-India, he said.

In Japan, the seat factor had gone down by 11 to 12 per cent during December-January which was the busy season. Seoul, after the won fell, had been a disastrous sector for Air-India and the airline, like many others, had no choice but to pull out.

He said the fare war started by British Airways was unexpected, unprofessional and in violation of the DGCA regulations.

"It may have been brief but it will have long term repercussions as for nine weeks tickets were sold at 40 per cent discount. For us it is going to hurt.''

Mascarenhas said there was some dichotomy over what was agreed to when the bilateral air agreements were signed and what happens in the market. The problem was faced only during 12 or 13 weeks in the year but it left an impression on the performance of an airline throughout the year. ''We intend taking this up with the airlines,'' he added.

Asked why the airline was giving productivity linked incentives (about Rs 1.35 billion annually) when it was suffering a loss, he said that was because of an agreement that was signed with employees.

To another question, the Air-India managing director said the airline's borrowing since mid-1996 was now about Rs 10.35 billion.

He said despite the difficult times, the airlines had to refurbish its assets and get younger aircraft. It had already sold two old 747-200 planes and had floated an international tender for the sale of two more. They would be replaced by four new aircraft.

Both Boeing and Airbus had said they would arrange finance of 85 per cent for Air-India's purchase of MCLR, he said, when asked how the airline would finance the new planes. Since the market was soft presently for aircraft purchase, Air-India should be able to get competitive prices, he added.

Mascarenhas, who is the only third Air-India employee to become managing director, said the airline had made significant progress in bringing about teamwork among its staff which has led to giving an improved product to the consumer.

UNI