Air India plans to close its 64 city booking offices in the country by October 1. Saddled with rising losses, the government-owned airline is reviewing the viability of its offices in 46 foreign cities.
"The city office in Madurai has been closed. There is no need to maintain physical infrastructure for ticketing, cancellation and refund when most airlines are aggressively using the web. It has been decided to close all city booking offices by October 1," said an Air India executive.
"Ticketing and marketing are more cost-effective if we spruce our site. We estimate saving Rs 18 crore a year in rent and salaries by shutting the offices." Air India has 46 offices abroad, a fifth in cities to where the airline does not fly like Washington, Toronto, Los Angeles, Cairo, Teheran, Vienna, Amsterdam and Chittagong. Despite recommendations from a section of the management to close these, the airline has said these had been set up to cater to the diaspora.
At six offices Air India has general sales representatives on contract. The airline has 170 employees in its foreign offices. "What is the need of employees in global offices in places where Air India does not have direct operations? A review is being done on maintaining the offices," said an executive. Operational costs have widened to Rs 5,400 crore from the targeted Rs 3,989 crore in 2013-14. The airline reported a net loss of Rs 5,100 crore in 2012-13 and Rs 7,100 crore in 2011-12.
In the second quarter of 2013-14, it missed its revenue target by Rs 700 crore as its passenger load declined amid a price war. But the airline met its Rs 19,300-crore revenue target for 2013-14.
The government bailed out Air India with Rs 30,000 crore in 2012. Air India continues to lose money on 19 routes, six international. The local routes include Mumbai-Kolkata and Delhi-Bangalore and the global routes include Delhi-Sydney and Delhi-Milan.
Independent directors on the board are monitoring the financial performance across routes to cut costs. Since 2013-14, the airline has cancelled flights, changed aircraft or stopped flying on routes where it was not recovering fuel costs. Air India is mulling discontinuing services that do not recover variable costs, as suggested by the independent directors.
OFFICES TO FLAP THEIR LAST
Air India's booking office in Madurai has been closed
An official says no need to maintain physical infrastructure for ticketing, cancellation and refunds at a time when most airlines are aggressively leveraging the web
- Air India has city offices at 64 locations in the country