NACIL, the holding company of national airline Air India and erstwhile Indian, has initiated a slew of cost-cutting initiatives, including re-negotiating hotel contracts and capacity redeployment in line with load-factor.

Other initiatives include a review of productivity-linked incentives for Indian staff at overseas stations, rationalisation of various off-line offices and in posting of managers, customer-relation managers and airport managers in and outside of India, among others.

The aviation industry in India continues to be in a difficult position with huge losses being reported by all airlines, NACIL chairman Raghu Menon said in a circular to the company's employees.

"A number of measures have been initiated by the industry at large to cut costs and enhance revenue, including pay-cuts and retrenchment of staff," the circular said.

While NACIL was not attempting these, "it is extremely important that costs are further curtailed and revenue is enhanced so that the company is able to achieve break-even at an early stage," Menon said.

Capacity deployments in NACIL were not in line with the load available and hence needed to be rationalised and regularly monitored with the load-factors by executive directors of respective regions to avoid unnecessary operating costs, the circular said.

"Besides, capacity deployment during different seasons also needs to be in line with the load-factors and the reduction in number of seats, if required, be carried out in proportion to the load factor," Menon's circular said.

The national air-carrier would also conduct a critical review of existing hotel contracts for the crew and other staff to save some costs in view of the economic slowdown, which has adversely affected traffic flow both from and out of India, making the company's financial situation critical, Menon said.

In addition, a 25 per cent reduction in fuel and entertainment bills reimbursement of the employees, reduction in transport and canteen subsidies, restricted use of staff on duty travel, reduction in contract employment and manpower-sharing at overseas stations are some other measures that the company has effected to cut costs.

Interestingly, to take the employees along on the issue, the management has sought suggestions on cost-cutting measures and revenue enhancement from all unions of NACIL.