The move has created two companies – Air India Air Transport Services and Air India Engineering Services – which will trade as discrete profit centres.
The deal paves the way for Air India Engineering Services Limited (AIESL) to offer engineering maintenance, repair and overhaul services for other airlines in addition to Air India’s own fleet, according to a statement from the airline.
The proposal to hive off these two units is a part of the turn around plan of the airline, which has been approved by the Cabinet Committee on Economic Affairs, trade journal Air Transport World (ATW) noted.
“Air India Air Transport Services carries out ground handling at domestic Indian airports, both for Air India as well as third-party customers. Air India Engineering Services similarly undertakes maintenance, repair and overhaul services,” according to ATW.
“The proposal to split off the two units from the airline was first discussed about 10 years ago. It was finally passed as part of a turnaround plan, approved by the Indian government. Employees working in the ground handling and maintenance units are now assigned to the independent companies, but service conditions and salaries remain unchanged.”
Air India sources said the unions have directed employees not to sign any papers accepting the new dispensation yet. The ground handling company has already begun work at three domestic airports.
Air India confirmed it will fund the first rounds of expenditure needed to separate the two companies.
