The Air India has decided to cut its costs by Rs 1400 crore (US $227 million), or about 6 per cent of its total outlays in the coming fiscal year.

Air India, which controls close to a fifth of the domestic air travel market is running through losses for years and has long been criticised for its high costs. In 2012, the government handed the airline a bailout package worth US $5.8 billion.

The AI management has announced a 10-per cent cut in allowances for its staff for travel and telephone bills, abolition of posts from non-operational areas and scrapping of flights on chronic loss-making routes.

The crew has been asked to stay at hotels near airports. These hotels are good and much cheaper than the more expensive hotels.  AI hotel bills for overseas flights to destinations like New York, London and Paris are expected to come down significantly.

AI has a 22,500-strong workforce as against 33,000 at the time of merger of erstwhile international carrier Air India and Indian Airlines. The national career could have only 11,000 employees by the next fiscal. This is expected to bring down the wage bill significantly. AI is aiming at a figure of 100 employees for every aircraft, which at one point was as high as 250.