January 19, 2015 / 5:07 AM / 4 years ago

Air India to cut costs by $227 mln to reduce losses

An Air India passenger plane takes off from Sardar Vallabhbhai Patel International Airport in Ahmedabad January 30, 2013. REUTERS/Amit Dave/Files

NEW DELHI (Reuters) - State-owned carrier Air India is to cut its costs by 14 billion rupees ($227 million), or about 6 percent of its total outlays, in the next financial year after the government asked the loss-making airline to improve its finances.

Air India, which controls close to a fifth of India’s domestic air travel market, has been losing money for years and has long been criticised for its high costs. In 2012, the government handed the company a $5.8 billion bailout package.

The airline said in a statement late on Sunday that it would identify “surplus staff”, freeze contractual hiring and discontinue flights which are not meeting fuel cost targets, to reduce its variable spending of 140 billion rupees by a tenth.

Restrictions on staff travel and hospitality have also been introduced, Air India said.

All but one of the major carriers in India are losing money because of high operating costs and some of the lowest fare prices in the world amid intense competition.

($1 = 61.6100 rupees)

Reporting by Tommy Wilkes; Editing by Kenneth Maxwell

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