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Monday, December 04, 2000

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Air India plans to offer second VRS

Our Bureau

MUMBAI, Dec. 3

AIR India is introducing a voluntary retirement scheme (VRS) for its employees for the second time and has sought the approval from the Ministry of Civil Aviation and the Department of Public Enterprises.

The VRS may cost Rs 65 crore on the airline's estimate that over 750 employees may opt for it. The earlier scheme did not find many takers.

AI has devised the scheme in two parts, catering to non-executive and executive employees separately.

Employees over 40 years age with 15 years of service will be eligible for the scheme. Under the VRS, non-executives will be offered, whichever is lower, either three months' `provident fund salary' (salary excluding perks and overtime wages) for each of the completed years of service or three months' salary for each of years of service left. Executives will receive 60 days' PF salary on similar terms.

Mr M.P. Mascarenhas, Managing Director, AI, told newspersons that AI has reduced its employee strength from 18,900 to 17,400 in the last one year. ``This has been possible because we banned recruitment and froze 875 posts. We also rolled back the retirem ent age to 58 from 60.''

He said AI is also offering two years' long leave without pay to its employees.

He agreed that there were discrepancies in the wage structure in AI. Licensed category employees accounted for seven per cent of the staff strength but took away 45 per cent of the airline's wage bill.

AI is expected to end the current fiscal with a turnover of Rs 4,500 crores as compared to Rs 4,200 crores in the previous fiscal.

Grounded by fuel costs: Yadav

THE Union Minister for Civil Aviation, Mr Sharad Yadav, who was in Mumbai to review the performance of AI, Indian Airlines, Hotel Corporation of India (HCI) and the Airports Authority of India, said AI's fuel costs of Rs 158 crore had eroded its profits. ``Without the fuel costs, AI would have earned a profit of Rs 135 crore in the first half of 2000-2001,'' he said.

IA's input costs stood at Rs 350 crore per year. In the first half of the current fiscal, fuel costs were Rs 88 crore.

AI also faced the burden of sales tax, Mr Yadav said. Talks were on with various State Governments to reduce sales tax. Currently, AI's average sales tax incidence is 22 per cent and it pays Rs 89 crore per annum as sales tax on fuel uplifts.

AI, which achieved a passenger load factor of 73 per cent in the April-September 2000 period, the highest in its history, is augmenting its capacity. It has finalised agreements to acquire four Airbus A310s, two each from Singapore Airlines and GECAS on a three-year dry lease. These aircraft will join the fleet by April 2001.

Mr Yadav said HCI, the subsidiary of AI, has shown an improvement in its occupancy at 60 per cent from the previous 35 per cent.

HCI has introduced a 50-per cent senior citizen discount scheme for clients over 65 years old to increase occupancy. It has taken up renovation of 244 rooms at a cost of Rs 16 crore.

The AAI has also taken up initiatives for expansion and modernisation of its airports across the country, Mr Yadav said.

He said the Mumbai airport's Rs 570-crore expansion plan is under way.

The Government is exploring the joint venture or lease routes for setting up airports, he said.

The Devanahalli and Shamshahbad airports will be joint venture entities between the Union Government the respective State Governments and a private partner. The Centre and the respective State Governments will hold 13 per cent stake each, Mr Yadav said.

Related links:
AI board clears VRS proposal
AI working on `lucrative' VRS
AI to set up panel to study fuel price hedging

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