New Delhi: Air India is considering buying a hub control system to streamline the operations of its 140 aircraft for about $36 million (Rs165 crore), two airline officials said.
The flag carrier, run by the National Aviation Co. of India, also decided in a board meeting on Thursday to lease at least two A310 freighter aircraft to Delhi-based Aryan Cargo Express Pvt. Ltd for three years, but deferred a decision on payments to Booz and Co.
Air India had hired the consulting firm to lead its cost-cutting plan, on which depends an initial Rs800 crore equity infusion by the government.
The payment to Booz is largely linked to the cost cuts the consultant can achieve and a decision on giving it structured payments, one of the two Air India officials said.
“We have decided to ask them to reduce the rates (and come back),” this official said. Both the officials didn’t want to be named.
No new decision on wage cuts for employees or a reduction in performance-linked incentives, or PLI, was taken at the board meeting. “There was no PLI, no wage cuts. We are flying below the radar,” the official said.
Air India plans to buy the hub control software from Texas-based technology firm Sabre Holdings Corp. It is yet to finalize the plan.
The software will help the airline coordinate its flights and bookings more seamlessly than the manual feeding system that is currently uses.
Given that Air India is yet to fully merge with the erstwhile Indian Airlines—in many ways, these still work as separate units—the new system will help its operations team monitor the flights from takeoff to landing across the network and improve parameters such as on-time performance and processes, the second Air India official mentioned above said.
Kapil Kaul, chief executive of the Centre for Asia Pacific Aviation, India, said an effective IT system that “integrates your back-end and front-end” is critical for large carriers. “It’s not only about efficiency but also ensuring that you are creating a streamlined structure,” he said.
Air India, however, is still to merge its IT systems, a legacy from merging two different airlines, which is critical for it to join the global airline grouping of Star Alliance and increase its revenue inflow.
“It’s an expensive solution, and more important than that was the passenger service system for the airline (right now),” the second Air India official said.
Air India and Indian Airlines currently don’t have a common reservation or booking system.
Air India, which is also the official Indian carrier for the Commonwealth Games in New Delhi in October 2010, operates at least 400 flights daily. It has seen its domestic market share climb marginally to 18.6% in October.