Neha Jain: http://indianairlinesnews.blogspot.com/24

1. Air India board to review revival plan next week

MUMBAI: Air India's revised turnaround plan for its revival is likely to be submitted before the national carrier's board for approval next week, said an Air India official directly in the know of the matter.

The plan, vetted and modified by consultancy firm Deloitte Touche Tohmatsu (India), proposes focus on domestic routes as the best option to regain lost market share. The national carrier's domestic market share slipped to 15.8% in January from 17.1% in December last year. Deloitte, which was hired to vet the plan conceived by the Air India management in October last year, had earlier put forth four scenarios. The consultancy firm had left the choice of the suitable option to the airline's management.

"We did not want the options and the confusion associated with the scenarios presented by Deloitte. So it was best that we got one plan from them. There is 99% agreement on what has been presented to Deloitte by the Air India management after tweaking it," said a top Air India official, not wanting to be identified.

The turnaround plan, which is essentially a five-year business plan, has two parts involving financial turnaround of the airline using equity infusion from the government and operational business plan focusing on fleet size, the routes and ways to gain back the market share, said the Air India official.

For the financial turnaround, it has been accepted that Air India, which currently has a low equity base ( 945 crore), will need to almost double the money from the government that was agreed upon by the committee of secretaries last year. The amount was pegged at 10,000 crore then. Vayalar Ravi, the minister for civil aviation, had hinted recently that Air India needs more than 10,000 crore of equity support from the government.

The government has already pumped in 2,000 crore into the airline and Air India is seeking another 2,000 crore for the next financial year.

"Essentially there is an agreement for 20,000 crore of equity infusion from the government side," the official said. A strong focus on the domestic market to regain market share is what is being seen as the main priority by the airline's brass. For this, fleet expansion is being looked at actively.

Deloitte seems to have agreed that Air India should have 245 aircraft in its fleet by 2017 to capture the market share it has lost to rivals. According to the numbers released by the Indian regulator, despite the fact that airlines carried 4.93 million passengers, a growth of 21% from the same period last year, Air India has slipped to the fourth position. Air India had argued for 272 aircraft by 2015 but this seems to have been watered down by Deloitte.

2. Air India issues showcause notice to COO
National carrier Air India on Wednesday served a show-cause notice to its first expat Chief Operations Officer (COO) Gustav Baldauf for violating contractual obligations at a time when the airline is facing a crisis, top government sources said.

While Air India demanded an immediate explanation for his actions, sources in the know said this may pave the way for Baldauf’s exit. Baldauf is likely to receive the notice in his Mumbai office tomorrow.

Speaking to The Indian Express on Tuesday, Baldauf had lashed out against the government, saying too much government interference in day-to-day operations was hampering his work and the airline’s turnaround plan.

“By speaking out to the media, Baldauf has violated the contractual obligations. He has been asked to provide an explanation for his actions,” said a senior bureaucrat.

The one-page notice was served to Baldauf in the afternoon, said sources. In the evening, the Austrian COO met Civil Aviation Minister Vayalar Ravi for a one-on-one meeting for 15 minutes. Both Ravi and Baldauf declined to comment.

NEHA JAIN

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