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Retirement age rollback to cost IA over Rs 3.2 cr

Ashwini Phadnis

NEW DELHI, Feb. 25

INDIAN Airlines is likely to incur an expense of more than Rs. 3.2 crores due to the lowering of the retirement age to 58 years and the placement of advertisements seeking global advisors to draw up a road-map for the airline's disinvestment process.

Airline sources said that the ``goodwill'' gesture of providing three months' salaries to the 829 official affected immediately by the decision to roll back the retirement age is likely to cost the airline Rs. 3 crores.

Besides, the airline spent close to Rs. 22 lakhs on the advertisements seeking global advisors to draw up a road-map for disinvestment of Government equity in the airline.

Sources told Business Line that almost half of the amount was spent for the advertisement put out in The Economist magazine. Sources said that the advertisement in The Economist set the airline back by close to $26,000 (approx. Rs. 11.44 lakhs). The airl ine also advertised in two UK-based flight magazines, `Flight International' and `Airline Business', apart from three Indian newspapers.

``To get a better and bigger response, it is imperative that one does not look at the cost of advertisements. The Economist is read in the right circles as are the two flight magazines and should hopefully result in the best in the industry placing bids for becoming global advisors,'' senior airline officials said.

The decision to place advertisements was taken after the first meeting of the Disinvestment Commission on February 7, which was set up after the Cabinet Committee on Disinvestment approved the proposal to disinvest Government equity in the domestic carri er. The global advisor is expected to provide advice regarding disinvestment of Government equity in IA.

Airline officials felt that one way to recover some of the cost incurred on the advertising campaign could have been done by hiking by amount being asked as earnest fee.

Further, they felt that the entire expenditure may not be incurred this year and that a part of the proposed expenditure will be reflected in the next year's financial statements when they have been actually incurred.