Air India to generate cash from rentals, in-flight ads

Air India, the cash-strapped national carrier, is all set to rent out its excess property across the country and encourage in-flight advertising to augment revenues.

"Under our new financial plan, we have decided to rent out property at prime locations to banks and other companies," a senior Air India official told IANS from Mumbai. "We have have currently identified 22 such properties and bids for 19 have already been received."

The company is also looking at renting out more floors of its iconic 22-storey Air India building at Nariman Point, which houses the chairman and managing director's office, and can command a handsome rent of Rs 300-350 per sq ft.

Till recently, several bids have failed to attract potential customers as locations such as Nariman Point have lost out their charm of being in the central business district to the Bandra-Kurla Complex, for instance.

However, State Bank of India (SBI), information technology major Tata Consultancy Services (TCS), the Directorate General of Shipping and the Sales Tax Department have rented out few floors at Nariman Point or shown interest in doing so.

Renting out the building is expected to annually fetch the company around Rs 100 crore. The airline has already shifted its key executives to its New Delhi office at Airlines House on Parliament Street.

Apart from renting out properties, the company plans to generate additional revenue by placing advertisements on aircraft bodies and in-flight areas, which the official claimed has generated substantial interest from advertisers, as this kind of advertisement has assured visibility.

The airline is also mulling creating advertisement space on its boarding passes and bag tags. This form of advertising has been around for some time and is gaining popularity. Air India expects substantial revenue addition from the advertisement space on some 22 million boarding passes per annum.

A third way to generate revenue is allowing in-flight sampling of products by consumer durables companies.

The move is expected to provide financial relief to the company, which is currently reeling under accumulated losses and loans of around Rs 67,520 crore.

In the early 2000s, the airline used to provide free VSNL prepaid international SIM cards to its business class and frequent flier passengers.

Air India has taken Rs 21,200 crore as a working capital loan, Rs 22,000 crore worth of long-term loans for aircraft acquisition, Rs 4,600 crore of vendor bills and an accumulated loss of Rs 20,320 crore.

The government in April 2012 approved a turnaround plan and a financial restructuring plan for which Air India will receive some Rs 30,000 crore worth of equity infusion over nine years.

(IANS)