Covid-19 crisis: Air India to push cargo sales to combat losses
In the light of the government’s decision to enforce a blanket ban on international commercial scheduled flights, national carrier Air India announced its decision to push cargo sales as a part of a series of measures undertaken to maximize revenue.
The government had decided on prohibiting any incoming scheduled international commercial passenger aircraft to disembark passengers in India after 1:31 am of March 23 till April 2nd.
Air India sees nearly 60-70 per cent of its revenues from foreign operations and in a bid to combat losses, announced a string of measures to maximise revenue.
The measures include beginning renegotiation of lease contracts, renegotiation of hotel agreements, reduction in salaries, apart from an aggressive push to increase cargo sales at a time when passenger loads are minimal.
“In view of reduction in passenger load due to COVID-19, cargo sale to be aggressively taken up for optimal utilisation of available space/load to ensure maximum revenue.”
The Air India office order, listing 21 financial and personnel measures, noted.
With the international flight ban, India’s air cargo segment is expected to undergo a severe impact. About 60 per cent of international cargo volumes come from underbelly cargo space, while the rest comes from freighter aircraft, as per aviation industry sources . While freighter aircraft will continue to operate, cargo volumes are expected to nosedive.
“In the wake of recent global developments and the serious impact of COVID-19 pandemic, which has adversely impacted aviation industry both in the domestic as well in the international front there is an insurmountable dip in the revenue which calls for stringent measures to reduce our costs. All airlines have taken drastic steps to survive the current crisis and an urgent need is felt to take steps to curtail costs to mitigate the current financial crisis,” the order read.
Suspension of foreign operations has had a massive impact on ground-handling players like Celebi Aviation, which is almost entirely dependent on international flights for revenues. The company has witnessed almost 80 per cent of its revenues compromised.
“There has been a steep fall in the number of flights being handled. It’s almost negligible now. With a work force of over 8,000, we might have to take up some extreme decisions like ‘leave without pay’ and other measures as an alternative to try and secure our market viability,” said Murali Ramachandran, CEO-India, Celebi Aviation while speaking to a reporter of a newspaper.
Source : logisticsinsider