VRS plan is not enough to turn Air India's fortunes; effective management is also required
State-run Air India has approved a plan to cut-down its manpower strength by 5000 through a Voluntary Retirement Scheme (VRS). The VRS scheme that will need 1,100 crore rupees to make itself appealing is part of the ailing national carrier's turn around plan.
The success of the VRS plan, which aims to rationalize manpower for achieving optimum utilization of manpower resources, totally depends upon the government as the airline itself has no funds to sponsor the scheme. But will the government get ready to shell out 1,100 crore rupees more when Air India had already made a demand of 10,600 crores for its bail out?
Even if government gets ready to make the compensation package attractive, whether the success of the VRS scheme is guaranteed in terms of turning the fortunes of Air India? Aviation analysts do not feel so.
“The basic problem of Air India is not mere the employee cost, but the basic problem is their revenue generation and the cost control. It is not the first time VRS plan has been experimented. Air India has been doing this from time to time, but it has not made any material difference. Unless the management of Air India is improved, I don't think these measures would make any material difference in the working of Air India,” aviation analyst Harsh Vardhan told to this citizen journalist
He also pointed out a problem with the VRS plan that it is the good people who opt for VRS more than the people for whom the VRS is intended for.
The total employee strength of Air India is above 27,000 and with a ration of 1:258, it has one of the highest aircraft to manpower ratio in the world
as against the normal industry norm of 1:150. One of the main reasons behind the highest aircraft to manpower ratio is that most of the functions in Air India are being performed in-house unlike the private sector airlines, which have outsourced their works.
Indian aviation sector is in trouble for quite some time. It is not only the state-run Air India, but private sector operated Kingfisher Airways is also in trouble with losses kept on mounting each financial year. Sector analysts believe that the next two quarters will surely be challenging for the country's airlines.
“Clearly I think the India Aviation sector continues to experience significant financial distress. It is seeking support from the government through favorable policies as well as rationalization of the taxation structure. I think the next couple of quarters are going to be challenging for the sector. I think we will have to wait and watch if the situation improves from here on," Kapil Arora, an aviation analyst told this citizen journalist.