Air India unit in talks with Tata-SIA for maintenance deal
By Anirban Chowdhury, ET Bureau | 8 Nov, 2013,
Air India Engineering Services is talking to the Tata-Singapore Airlines joint venture airline to provide engineering and maintenance services
MUMBAI: Air India Engineering Services, a unit of the national carrier, is talking to the Tata-Singapore Airlines joint venture airline to provide engineering and maintenance services for its aircraft.
"We have put across a proposal to them and they are yet to get back to us," said HR Jagannath, executive director of Air India Engineering. He added the unit has also approached AirAsia India with a proposal to maintain its planes in India.
Like Singapore Airlines, the Malaysian budget carrier too has tied up with Tata Sons to set up an airline in India. Adding third party customers will enhance revenues of Air India's engineering unit, helping in the overall turnaround of its parent Air India, which has been struggling with continuous losses since 2007.
Also, lending its services to these two airlines would bring it closer to the salt-to-software conglomerate , whose chairman emeritus Ratan Tata recently said his group will look at the national carrier if the government decides to sell stake in it.
Civil aviation minister Ajit Singh has also said the government can privatise the airline if other political parties agree to it. Air India was founded by Tata Sons patriarch JRD Tata in 1932 as Tata Airlines. It was nationalised in 1953 and eventually renamed Air India.
The Tata Group has in the past made an unsuccessful attempt to buy a stake in the airline. Air India's board on December gave a nod to its proposal of hiving off its engineering and groundhandling businesses into two separate units.
"Hiving off the two units - a key aspect of the carrier's turnaround plan - will build them as two separate profit centres as well as divert Air India's mammoth workforce. The engineering unit currently has 6,500 employees. Before the hive-off, Air India had a workforce of more than 30,000. Air India's engineers last year accounted for 15-20 % of its annual salary bill of over Rs 3,000 crore," said an executive at the airline.
The engineering unit will have a separate balance sheet from next financial year, he added . Air India Engineering currently gets about Rs 100 crore from third party work, which it aims to increase by four times to Rs 400 crore by 2016-17, said the senior executive at the airline.
The airline already has contracts with local carriers such as Go Air and international carriers such as Sri Lanka's Mihin Lanka and Silk Air, Singapore Airlines' budget carrier for maintenance of planes.
The unit will also soon put in place a marketing team and is interviewing candidates to head it after its current acting chief KM Unni retires in the next few months.[/FONT]