Title: Cost Cutting Strategy By Indian Airlines

Indian airlines are Indias one of the most reputed airline company and is considered to be cheapest

. For few years Air India is not doing well financially and is not in a position to pay salaries to their employees. Besides this there was an offer to Indian airlines CMD Mr. Rohit Nandan and another official to renew membership of ultra prestigious club Royal Willingdon Club (founded in 1918) for 35 lakh each making total of 70 lakhs as Indian airlines CMDs have always been member of this club. Mr. Nandan was joint secretary at civil aviation ministry. Mr. Nandan took over Mr. Arvind Jadhav as CMD of Air India who was not able to handle three employee strikes causing a steaming loss of over Rs. 200 crore. Also since 2007 Air India incurred heavy losses due to failure in operations, high debt costs, high fuel prices, inflated wage bills and unprofitable routes. Hence on the other hand it is very necessary to recover the money and increase the cash flow of Air India.

According to officials Indian Airlines CMD refused to renew the membership of the prestigious club hence saving 70 lakhs cost to the company. His reason was very specific and clear, his point was if Air India is not able to pay salaries of employees on time, then it should not be renew membership of the club creating unnecessary financial crisis. Moreover in December 2010, Indian Airlines was put on cash and carry mode because it was not able to pay Rs. 2200 crores to oil companies. Moreover merger was done by government of Air India and Indian Airlines due to struggling performance of Air Indias last management team.

With Mr. Rohit Nandan down to earths approach, he has also decided to travel through economy class so that cash flow for the airlines keep on running by selling high priced ticket. Moreover after taking post of CMD, he decided to stay in a guest house rather than a five star hotel. Hence, he has understood each and every aspect of managing airlines and cut unnecessary costs wherever possible. However, Mr. Nandan have boost up the confidence of employees at initial level. Perhaps Mr Nanda will be working with Mr. Nasim Zaidi, Civil Aviation Secretary day to day working operations and turn around strategies. Moreover it is essential for Air India to take such tough decisions and should not worry about the consequences if it wants to be competitive. However there is no doubt that new Chairman of Air India Mr. Nandan is shaping himself in to super persuader.

by: Bilal

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