Air India might charge for meals on domestic flights

Last Updated: Thu, Jun 20, 2013 04:45 hrs

Enjoying a complimentary meal which comes with your air ticket could be history very soon. Full service carrier (FSC) Air India is now planning to charge for all meals onboard on its domestic flights.

In case it does so, it will be the first FSC in the country that will charge for meals, a practice common among low-cost carriers.

The move is clearly part of Air India's attempt to generate more revenues as well as reduce its costs to control its losses. A senior executive in the airline told Business Standard: "We have already started levying a standardised fee on excess baggage and have enhanced cancellation/rescheduling charges. We are looking at charging for food on short-haul flights to boost ancillary earnings."

The measure is part of the 47 recommendations made by the Dholakia committee on cost-cutting to enhance revenues and improve the financial health of the ailing national carrier. And it follows the government allowing airlines to charge passengers separately for preferential seating, meals and drinks except water, usage of airlines' lounges, carrying check-in baggage, sports equipment carriage, musical instrument carriage and luggage specially declared valuable earlier in April this year.

"Overall, the attempt is to evolve a functional hybrid' model by incorporating the best practices of low-cost carriers, while retaining the core features of a full-service airline," added the senior executive.

Air India has constituted a three-member team comprising Naseer Ali (joint managing director), Deepak Brara (director commercial) and S Venkat (director finance) to implement the suggestions in a time-bound manner. According to initial estimates, the airline is expected to generate savings of around Rs 500 crore over the next six months by implementing some of the recommendations made by the Dholakia committee.

Air India has already reduced the free check-in baggage allowance for passengers travelling on economy class to 15 kg from the earlier limit of 20 kg. Flyers are now charged Rs 250 for every kilogram of excess baggage on the airline. Besides, rescheduling charges have been doubled both for low fare economy and mid-range fare bucket tickets to Rs 1,500 and Rs 1,000, respectively.

The airline is also working on programmes to monetise its base of 1.1 million frequent flyers through tie-ups with hotels and retail chains, to lease out under-utilised assets and let out for adverstisements space on boarding passes, in-flight entertainment systems and airport lounges to generate additional earnings.

With the help of these initiatives the national carrier is expected to pare cash losses by Rs 1,102 crore in the current financial year. Net losses in the period, too, are estimated to decline by over 23 per cent to Rs 3,989 crore as compared to Rs 5,198 crore recorded last financial year. The airline is expecting be Ebitda to be positive by Rs 1,040 crore against Rs 19.45 crore registered in FY13.

The revenues of Air India are expected to increase by 20.2 per cent to Rs 19,393 crore in the current financial year.

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