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A Project Report
On
"Management Information System
Of Finance In
Air India
SUBMITTED TO SMT. K.G. MITTAL INSTITUTE OF
MANAGEMENT, I.T., & RESEARCH IN THE PARTIAL
FULFILLMENT FOR THE DEGREE OF
MASTER OF MANAGEMENT STUDIES
SUBMITTED BYAshvani R. Bhagat
Under The Guidance Of
Dr. Kinnarry Thakkar
Smt. K.G. Mittal Institute Of Management, I.T. & Research
Malad (West), Mumbai - 400064
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Declaration
I, Ashvani R. Bhagat the under signed that this project report entitled Management
Information System for Air India Ltd. is my original work. The empirical finding in this
report is based upon the information collected by me and not copied from elsewhere. I
understand that the detection of any such copying by me for this report is liable to punished
in any way the institute deems.
[Ashvani R. Bhagat]
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ACKNOWLEDGEMENT
No man can live as an island, journey through life alone
These words aptly describe the theme of this short but essential page of the report. In
our highly professional field, we need help from time to time from the people around us. Be it
simple suggestion or little words of encouragement, weird ideas or morale boosting talks.
Through these lines I humbly acknowledge the contribution of all those who have helped me
and to whom I am highly indebted.
I take this opportunity to convey my deep sense of gratitude towards the Director, ,
Smt. K.G. Mittal Institute of Management, I.T. and Research and Prof. Annie Joseph for
permitting me to undertake this project.
I am extremely thankful to Ms. Surekha Neelkantan Ma'am (Sr. Manager
Finance)and Mr. Vinod Hejmade (Dy. General Manager) who has extended his full support
and co-operation in the successful accomplishment of the project.
We would also like to thank Mr. Bindu Madhav Katti(Manager), Mrs. Shraddha
Gandhi(Manager, Finance),Mr. Uday Donwalkar, Mrs. Bharati Tambaku(Assistant Manager,
Finance), Praful Bhagat, Sujata Broker, for providing me this opportunity for taking up this
challenging project.
We are also thankful to all the employees of Air India who have helped us in
completing the project.
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EXECUTIVE SUMMARY
MIS is something we all do. Planning and preparation for the future is not important
for an individual, but also for a business. Successful companies are constantly improving
their ability to predict their future operations and their related resource requirements,
enabling them to adjust their plans as needed and stay ahead of the competition.
A Budget is our best estimate of what our business will achieve during the budget
period. It is planning tools, which provide us with forecasts of what might happen and also
target that we aim to achieve financially.
By considering the importance of the MIS, this report focuses on the following areas
Preparation of the Annual Revenue & Expenditure Budget of the Corporation in theform of the booklet for submission to the board for its approval
Intimation of the Annual Budget allotments, to the Outstations as well as thedepartments at headquarters
Comparison of Actual Expenses with the Budget Allotments Preparations of Monthly Report on Estimated Financial Result for submission to
Headquarters
Preparations of Quarterly Report, Performance Budget and other returns for submission toGovernment Agencies
Preparations of Cost Analysis Statement Submission of Data to the IATA Information Required from the Stores & Purchases
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TABLE OF CONTENT
Chapters Particulars Page No.
1 Company Profile
a. Historical Background
b. Wholly Owned Subsidiary Companies
c. Organization Structure
7
2 Types of Departments
a. Finance Department subsections
b. Financial Performance
12
3 Merger of Air India and Indian Airline 22
4 Research Hypothesis
a.Research Methodology 245 Working of MIS
a. Introduction
b. Management information System in Air India.
c. Role of MIS in the financial Aspects of air India
d. Route Analysis
e. Preparation of Route Analysis Report
30
6 Direct Cost / Revenue Ratio
a. Introduction
b. Preparation Of Direct Cost / Revenue Ratio Statement
c. Analysis Of Report
40
7 Revenue Expenditure Budget
a. Work of the section
62
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b. Preparation ofRevenue Expenditure Budget
c. Layout of Preparation ofRevenue Expenditure Budget
8 ERPa. Introduction
b. ERP - Financial Accounting Graph
c. ERP SAP
70
9 SWOT Analysis Of Air India 75
10 Findings and Interpretations 78
11 Implementation of Study - Cost Accounting Tool 84
12 Limitations 89
13 Conclusion 91
14 Recommendation 93
15 Future Scope 94
16 Bibliography 96
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Chapter 1.
Company Prof il e
Historical Background
Tata Sons Ltd has taken birth in the year October 15, 1932.Mr. J.R.D Tata who was
the first Indian to get his license in India. Mr. Neville Vincent a formal Royal Air Force
(RAF) pilot came to India in 1929 from Britain. He saw immense potential for aviation in
India. By consider future globalization of the world. Mr. J.R.D Tata has taken the first step
with an air service.
On consultation with Mr. J.R.D Tata Mr. Vincent brought out a scheme to operate an
Air service. They got this to the notice of Mr. Peterson a director of Tata Son Ltd. After the
approval they operate the first Air service Karachi to Bombay via Ahmedabad. In the first
full year of operation, Tata airline flew 1,60,000 miles, carried 155 passengers and 10.71
tones of mails. When a light single engine Puss Moth aircraft took off from Karachi with
J.R.D Tata as its pilot and landed on grass strip at Juhu. There was no runway, no radio
facility in the aircraft or on the ground and no Aerodrome officer on the ground.
The Government initially bought 49% of the airlines shares in 1946, making it a
public company and renaming it as Air India. On 8th march, 1948 Air India international has
been incorporated then they launched its first service to London via Cargo and Geneva on the
date 1st Jan 1949 with a twice weekly service. In the year 1952 the planning commission
recommended the nationalization of Air transport industry. This resulted in creation of two
nationalized corporations. Air India International which retained its identity and international
flag carrier status & Indian Airlines to operate at domestic level.
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WHOLLY OWNED SUBSIDIARY COMPANIES
(A) Hotel Corporation of India Limited:
As part of the disinvestments programmer an advertisement was issued in all the
leading newspapers in India and abroad inviting bids from the prospective buyers for the
remaining properties comprising of Hotel Corporation of India, a wholly owned subsidiary of
Air India viz the Centaur Hotel Delhi Airport and Chef air units at Delhi and Mumbai.
(B) Air India Air Transport Services Limited (AIATSL):
With a view to improve the quality of Ground Handling services to Air India flights
and those of Customer Airlines, AIATSL was registered as a fully owned subsidiary of Air
India on 9 June 2003. While the Company has been growing at a moderate pace, the year
2005-06 has been a very eventful year with its wings being spread to many Indian
international airports.
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AIATSL took over handling services at Calicut, Pune Ahmedabad and Amritsar in a
major way. While comprehensive handling was taken over at Calicut with the
commencement of AI Express flights effective 1August 2005, similar arrangement
commenced at Pune effective 12 December 2005. Terminal handling was taken over at
Ahmedabad and effective 1 May 2005 and 15 May 2005, respectively.
Resources for provision of security services have been inducted on three year contract
by AIATSL at these locations, the other handling activities are being availed through
outsourcing.
(C)Air India Engineering Services Limited (AIESL):
Air India Engineering Services Limited was incorporated on 11 March 2004 with
Authorized Capital of Rs. 10 cr. and is still awaiting Governments approval. The Certificate
to Commence Business was obtained on 17 January 2006. The Paid-up Capital of the
Company stands at Rs.5lacs. It is planned to develop this subsidiary company into a
Maintenance, Repair and Overhaul (MRO) facility in this Region with Air India providing
the necessary initial support in terms of infrastructure and domain knowledge.
(D) Air India Charters Limited:
Air India Express:
Air India Express, which operates under the flagship of Air India Charters Limited,
launched the first flight to Abu Dhabi from Thrivananthapuram on 29 April 2005. As on
31 March 2006, four aircraft had been inducted as follows:
VT-AXA23 February 2005
VT-AXB 08 April 2005
VT-AXC 19 April 2005
VT-AXD16 March 2006
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In April/May 2006, three more aircraft were inducted as follows:
VT-AXG06 April 2006
VT-AXF 10 May 2006
VT-AXG24 may 2006
All the above aircraft have been taken on dry lease for a period of five years.
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ORGANIZATION CHART
Director
Finance
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Chapter 2.
Types of Departments
Air India has been divided into different departments for the purpose of smooth
administration and operations. Each department is further sub-divided into sections that
expertise in their respective categories of skill. The departments are as listed below:
1.Air Safety Department
2.Airport Services Department
3.Commercial Department
4.Civil Works & Properties Department
5.Department of Information Technology
6.Engine Overhauling Department
7.Engineering Department
8.Finance & Accounts Department
9.Human Resources Development Department
10. In-flight Services Department11. Medical Services
12. Operations Department
13. Planning & International Relations Department
14. Public Relations
15. Security & Fire control
16. Stores & Purchases Department
Air India generates revenue through sales of passenger tickets sales, cargo and mail
handling, maintenance of other airlines and revenue sharing with other airlines. The finance
department is an important backbone of the companys roles at d ifferent levels of operation.
Due to the large number of activities involved in business and to facilitate division of labor,
the finance department is divided into eighteen subsections. Each of these subsections has an
important role and specialized role in the day-today functioning of the organization. Although
the functions have been assigned to different subsections, some of the subsections are inter-
related functionally to perform effectively and efficiently.
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Finance Department subsections
1. Capital Budget
Capital Budget deals with budgeting requirements of the company. The main function
of the department is to forecast budget requirements of the upcoming financial year. The
elements that need to be taken into consideration are the requirements of new assets in terms
of aircraft, maintenance machinery, property and man power. This department is responsible
for deciding the capital structure to be used for the purpose of asset procurement.
Since most of the decisions taken by this department involve high cost and longerdecision making duration, each task is classified as a Project. The objective of a project is to
improve benefits and reduce cost and risk to the company. Decision making for a project
requires considering many elements that are important to the cost and risk factor of the
project. For example: Decisions regarding procurement of aircrafts and simulators is a project
under Capital Budget department.
2. Financial Accounts
Air India has a large number of operational and non-operational stations. Until 2005,
each station maintained its own accounts and these were later consolidated for the purpose of
creating the financial statements of the company. This was a very tedious, complex and time
consuming task. To overcome these difficulties, an ERP was implemented for the purpose of
centralized accounting. As a result, all accounts are now maintained on a common platform.
This makes it easy to draw decisive reports and generate financial statements easily.
An ERP section also exists to impart training related to ERP and control the ERP
activities.
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3. Management Information Systems and Statistics
The main role of this department is its contribution to analytics. The Management
Information System (MIS) implemented in the section is capable of generating around 100
reports at regular intervals. The reports provide a trend of the past performance for the chosen
parameters. These reports are forwarded to the management for decision making as support
tools. The reports along with some other decision factors form the basis for creating future
plans. The reports thus act as a bridge between the finance department and the management.
It provides an indication of the companys performance in all areas.
4. Fuel and Oil
For an airline, fuel accounts to 60 percent of the operational expenses in an
accounting year. Thus, it plays a major role in the financial bills payable by the company.
The fuel and oil department is responsible for ensuring the procurement of fuel to the airline
at the best cost. The department also decides on method of payments for fuels to vendors viz.
fixed rate, floating rate or mixed rate. Fixed rate involves buying fuel from a vendor at a
fixed cost. Usually, this cost is higher than the current market price. This pricing is done
taking into consideration the future changes in fuel prices. If the market price increases
beyond the fixed price company still continues to pay the price fixed between both parties.
In floating rate, the fuel prices are paid as per changes in the market price. In mixed
rate, certain portion of the amount is paid on fixed rate and the remaining at floating rate.
Decisions regarding fueling strategy of aircrafts are decided by this section. If an
aircraft travels from Mumbai to London and then from London to New York, depending on
the fuel prices at different locations, it can decided how much fuel should be filled at Mumbai
and London.
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5. Banking
Banking section deals with handling transactions with banks where Air India holds
accounts for operational purposes. These accounts are used to meet operational expenses at
the current station or any other station. Transfer of funds among bank accounts is done in
order to facilitate funds at stations facing shortage.
Treasury management is another important function of banking section. It controls the
cash inflow and outflows at the stations.
6. Passenger Sales
Passenger sales deals with revenue generated exclusively from sale of tickets to
passengers. This section is further classified into two subsections: Offline section and
Commercial section.
Offline section
Revenue generated from ticket sales to passengers from stations where Air India does not
operate its flights are handled by this section. Air India has signed provisos with other airlines
that help in moving passengers from offline stations to operated destinations from where Air
India can fly them to their destination. The provisos cover revenue sharing agreements
between the airlines that outline fares to be shared and their percentages.
Commercial section
Commercial section deals with passenger handling at Air India operated stations. It
handles all cash sales, credit sales and agent sales of passenger tickets. Invoices are raised on
daily basis for passengers of otherairlines who have used Air Indias services and issued to
the respective airlines. Also, it settles invoices issued by other airlines in lieu of Air India
passengers who have used other airlines services. General Sales Agent (GSA) commissions
and other payments are settled by commercial section.
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7. Cargo and Mail
This department functions similar passenger sales section. It deals with revenue from
cargo and mail services.
8. Station Expenses Reconciliation (SER)
Station expenses reconciliation is responsible for handling expenses occurring at the
stations due to operations. It generates the statement of expenses and clears the dues.
Statement includes sharing of rent, telephone charges, conveyance with GSA, electricity,
government taxes etc.
9. Accounts Receivable Control (AR Control)
AR Control is responsible for ensuring the accuracy of entries in the ERP system. Part
of this system is outsourced to Kale consultants, an outsourcing agency. It handles revenue
documentation of passenger ticket audit coupons. Based on usage or cancellation of
passenger ticket effective revenue is calculated and credited to the respective sales station.
Before effective revenue realization, station is the debtor.
10. Insurance
Insurance section deals with all insurance needs of Air India. Insurance is mandatory
for assets like aircrafts, property, maintenance facilities, passengers, cargo and employees.
In case of aircrafts and passengers, the insurance cost is very high and thus it involves
high risk to the insuring company. In most of the cases, the insurance company reinsures part
or the full amount with a third party to pass the risk factor and reduce liability. Each aircraft
also needs to be insured with the manufacturer i.e. Boeing and Airbus for Air India.
For property and maintenance facilities insurance is required to safeguard in case of
any unexpected events like natural calamities or terrorist attacks.
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11. Billing
Billing is the largest section in the finance department. It deals with payments that are
to be done to external parties by the airline. These are classified as
Miscellaneous Billing Local Billing Billing
It includes all payments that are to be done by the company to outside parties like fuel
vendors, other airlines, airport payments, legal charges etc.
Policies regarding priority payments are done by this department.
12. Store Accounts
Stores accounts deals with acquiring spares as required. Procuring inventory for
stationery and aircraft spare parts required for maintenance from the company approved
vendors at the lowest price is the responsibility of this department.
13. Income Tax
Income tax department handles all income tax transactions for the airline. All these
factors are consolidated to help in filing the companys overall tax returns. The various
transactions handled are:
Earnings and employee taxes Corporate taxes Service taxes Employee tax returns Tax deducted on source (TDS)
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14. IATA
International Air Transport Association (IATA) is the regulatory authority for all
airlines across the world. This section deals with all payments that need to be routed through
IATA. Payments to invoices raised by other airlines for passenger and cargo services are
performed by IATA section.
15. Revenue Pools
Revenue pools are responsible for identifying areas that can be used for better revenue
earnings. It helps in measuring the current level of efficiency and comparing it with the
expected results. This can help in planning for future based on new revenue opportunities.
16. Pay Accounts
Pay accounts section deals with payments that are to be done for staff. Salaries and
other incentives to be credited to staff accounts are handled by this section. Air India houses
staff belonging to 38 categories and each category is further divided into grades. Pay
accounts section arranges for funds required for monthly salary payments. Along with
monthly payments, work related conveyance charges, other claims and dues are paid through
the pay accounts section.
17. Staff Claims
Along with salaries, some categories of staff are also eligible for allowances like
telephone charges, vehicle claims etc. These non claims are non taxable and are handles by
the staff claim section. Other claims like outstation expenses and expenses incurred on
travelling for business related reasons for Air India are also settled by this section.
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18. Refunds & Recoveries
The refunds section is responsible for handling all refunds and recovery related to
employees. Refunds like payments of unused staff tickets (fare and tax as applicable) are
handled by the refund section. The recovery section deals with recovering extra payments
that have been provided to staff for different reasons like advance taken for outstation
conveyance, salary paid in advance etc.
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Financial Performance
Revenue Earned:-
During the year 2005-2006, the total revenue of the company consisting ofpassengers, Excess Baggage, Mail, Cargo, Pool, Charters, Block Seat Arrangement, Royalty
from Air India Charters Limited and Handling/Miscellaneous Revenue was Rs. 92,449.5
Million as compared to Rs. 77,268.9 Million in the year 2004-2005, representing an increase
of 19.6%
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Expenditure Incurred:-
During the year, the total expenditure of the company likewise was Rs. 92,325.2
Million as against Rs. 76,617.5 Million representing an increase of 20.5%.
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Chapter 3.
Merger of A ir I ndia And Indian Air lines
As you would all be aware on 1 March 2007 Government of India approved to merger
of Air India and Indian Airlines known as National Aviation Company of India Limited
(NACIL). The Indian aviation industry to create a single mega national carrier which is also
poised to become South Asias largest airline Touted as the mother of Indian aviation
mergers. The merger of Air India and Indian is expected to form Indias largest airline with a
clout to take on the domestic and international competition.
The formal approval given for the merger by the Union cabinet on March 1, 2007
cover the way forthe birth of the Rs. 15,500 cr. Airline which is almost thrice the size of its
closest domestic rival, Jet Airways. Though the cost of integration of the merger is estimated
to be around Rs. 200 cr.
The past couple of years many players like Kingfisher, Air Sahara, Jet Airways, Go
Air, Air Deccan, Spice Jet, Paramount, Indigo and Indus have entered the air space. Jet
Airways and Kingfisher, closest rival of the public sector airlines, have around 44 & 23 fleets
respectively and gearing up to induct about 20 &109 aircrafts.
All these factors challenges for the government owned airlines which have been
witnessing declining market shares. In attempt to increase their market shares, both Indian
and Air India have started eating into each other market shares. The Indian Government, the
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owner of these two airlines, has finally decided to merge these to companies to protect the
economic interests. The merger formalities are expected to be completed by 2010, forming a
new entity with over 33,000 employees and a fleet size of 112 new generation aircrafts. The
government has already placed a orders for 68 and 43 planes from Boeing and Airbus.
The merger of the two airlines can be envisaged as the beginning of the consolidation
efforts in the Indian aviation space which is the fastest growing in the world at a rapid pace of
40% compared to 15-20% growth at the global level.
New airline introduce Boeing 777 aircraft on August 1st, 2007 the Non stop daily
flight Mumbai - New York - Mumbai.
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Chapter 4.
Research Hypothesis
A hypothesis is a preliminary or tentative explanation or postulate by the researcher of
what the researcher considers the outcome of an investigation will be. It is an
informed/educated guess. It indicates the expectations of the researcher regarding certain
variables. It is the most specific way in which an answer to a problem can be stated.
Research hypotheses are the specific testable predictions made about the independent
and dependent variables in the study. Hypotheses are couched in terms of the particular
independent and dependent variables that are going to be used in the study. The research
hypothesis of this study is as follows.
1) Ho: There is significant relationship between performance and profitability.
Mean
Std.
Deviation N
Performance 1.72 .573 20
Profitability 1.50 .707 20
Correlations
Incentives
Employee
performance
Cost Pearson Correlation 1 .655(**)
Sig. (2-tailed) . .000
Sum of Squaresand Cross-products
16.080 13.000
Covariance .328 .265
N 50 50
performance Pearson Correlation .655(**) 1
Sig. (2-tailed) .000 .
Sum of Squares
and Cross-products13.000 24.500
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Covariance .265 .500
N 20 20
** Correlation is significant at the 0.01 level (2-tailed).
Inference:
Since the Correlation is significant at the 0.01 level (2-tailed) the null hypothesis that is
There is significant relationship between Performance and Profitability is rejected and
an alternative hypothesis is framed.
H1: There is significant relationship between incentives and employees performance.
2) Ho: There is no significant relationship between Cost Control and Poor Quality Services
Mean
Std.
Deviation N
career
developmentopportunities
3.70 1.035 20
extent of
motivation3.36 1.317 17
Correlations
career
development
opportunities
extent of
motivation
career
development
opportunities
Pearson
Correlation 1 .909(**)
Sig. (2-tailed) . .000
Sum of Squares
and Cross-
products
52.500 52.111
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Covariance 1.071 1.184
N 50 45
extent of
motivation
Pearson
Correlation.909(**) 1
Sig. (2-tailed) .000 .
Sum of Squares
and Cross-
products
52.111 76.311
Covariance 1.184 1.734
N 18 17
** Correlation is significant at the 0.01 level (2-tailed).
Inference:
Since the Correlation is significant at the 0.01 level (2-tailed) the null hypothesis that is
There is no significant relationship between Cost and Poor Quality Services is rejected
and an alternative hypothesis is framed.
H1: There is significant relationship between Cost and Poor Quality Services.
3) Ho: There is significant relationship between MIS and Marketing.
Mean
Std.
Deviation N
Performance
appraisal system2.40 1.143 20
Extent of
Motivation2.60 1.355 20
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Correlations
performance
appraisal
system
Extent of
Motivation
Performance
appraisal system
Pearson
Correlation1 .962(**)
Sig. (2-tailed) . .000
Sum of Squares
and Cross-
products
64.000 73.000
Covariance 1.306 1.490
N 50 50
Extent of
Motivation
Pearson
Correlation.962(**) 1
Sig. (2-tailed) .000 .
Sum of Squares
and Cross-
products
73.000 90.000
Covariance 1.490 1.837
N 20 20
** Correlation is significant at the 0.01 level (2-tailed).
Inference:
Since the Correlation is significant at the 0.01 level (2-tailed) the null hypothesis that is
There is significant relationship between MIS and Marketing is rejected and an
alternative hypothesis is framed.
H1: There is no significant relationship between MIS and Marketing
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RESEARCH METHODOLOGY
Research is a systematic method of finding solutions to problems. It is essentially an
investigation, a recording and an analysis of evidence for the purpose of gaining knowledge.
According to Clifford woody, research comprises of defining and redefining problem,
formulating hypothesis or suggested solutions, collecting, organizing and evaluating data,
reaching conclusions, testing conclusions to determine whether they fit the formulated
hypothesis
Sampling Design
A sample design is a finite plan for obtaining a sample from Air India. Simple random
sampling is used for this study.
Universe
The universe chooses for the research study is the MIS & Statistics of Air India ltd.
Sampling Procedure
The procedure adopted in the present study is probability sampling, which is also known as
chance sampling. Under this sampling design, every item of the frame has an equal chance of
inclusion in the sample.
Methods of Data Collection
The datas were collected through Primary and secondary sources.
Primary Sources
Primary data are in the form of Direct Cost / Revenue Ratio Statement to which statistical
methods are applied for the purpose of analysis and interpretations.
The primary sources are discussed with employees.
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Secondary Sources
Secondary datas are in the form of Budget Estimation as they have already been treated
statistically in some form or other.
The secondary data mainly consists of data and information collected from records, company
websites and also discussion with the management of the organization. Secondary data was
also collected from journals, magazines and books.
Nature of Research
Descriptive research, also known as statistical research, describes data and characteristics
about the population or phenomenon being studied. Descriptive research answers the
questions who, what, where, when and how.
Although the data description is factual, accurate and systematic, the research cannot describe
what caused a situation. Thus, descriptive research cannot be used to create a causal
relationship, where one variable affects another. In other words, descriptive research can be
said to have a low requirement for internal validity.
Sample
A finite subset of population, selected from it with the objective of investigating its properties
called a sample. The response to various elements under each questions were totaled for the
purpose of various statistical testing.
Variables of the Study
The direct variable of the study is the working of MIS in Finance Dept. in Air India.
Indirect variables are the Region wise Budget Estimation, Region wise Budget allotment,
Direct Cost/Revenue, Cost Profitability Ratio etc.
Tools and Techniques for Analysis
Correlation is used to test the hypothesis and draw inferences.
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Chapter 5.
Working of M IS
Introduction
A management information system (MIS) provides information that is needed to manage
organizations efficiently and effectively. Management information systems involve three
primary resources: people, technology, and information or decision making. Management
information systems are distinct from other information systems in that they are used to
analyze operational activities in the organization. Academically, the term is commonly used
to refer to the group of information management methods tied to the automation or support ofhuman decision making, e.g. decision support systems, expert systems, and executive
information systems.
Types
Management information systems (MIS), per se, produce fixed, regularly scheduledreports based on data extracted and summarized from the firms underlying
transaction processing systems to middle and operational level managers to identifyand inform structured and semi-structured decision problems.
Decision support systems (DSS) are computer program applications used by middlemanagement to compile information from a wide range of sources to support problem
solving and decision making.
Executive information systems (EIS) is a reporting tool that provides quick access tosummarized reports coming from all company levels and departments such as
accounting, human resources and operations. Office (OAS) support communication
and productivity in the enterprise by automating work flow and eliminating
bottlenecks. OAS may be implemented at any and all levels of management.
http://en.wikipedia.org/wiki/Information_systemhttp://en.wikipedia.org/wiki/Information_systemhttp://en.wikipedia.org/wiki/Decision_support_systemhttp://en.wikipedia.org/wiki/Expert_systemhttp://en.wikipedia.org/wiki/Executive_information_systemhttp://en.wikipedia.org/wiki/Executive_information_systemhttp://en.wikipedia.org/wiki/Transaction_processing_systemshttp://en.wikipedia.org/wiki/Decision_support_systemhttp://en.wikipedia.org/wiki/Executive_information_systemhttp://en.wikipedia.org/wiki/Executive_information_systemhttp://en.wikipedia.org/wiki/Decision_support_systemhttp://en.wikipedia.org/wiki/Transaction_processing_systemshttp://en.wikipedia.org/wiki/Executive_information_systemhttp://en.wikipedia.org/wiki/Executive_information_systemhttp://en.wikipedia.org/wiki/Expert_systemhttp://en.wikipedia.org/wiki/Decision_support_systemhttp://en.wikipedia.org/wiki/Information_systemhttp://en.wikipedia.org/wiki/Information_system -
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Management information System in Air India
Initially in Air India, Internal Reporting was made manually and only periodically, as
a by product of the account system and with some additional statistic(s), and gave limited
information on management performance. Previously, data had to be separated individually
by the employees -in Air India as the requirement and the necessity. In the year 2007-08, the
Management Information System was also implemented in Air India. Thus the data was
distinguished from information, So instead of the collection of mass of data, important and to
the point data that was needed by the organization was stored. This informations retrieved
from the raw data was used for preparation of entire management report and these report
helped in analysis. Thus the MIS that was implemented and helped in providing the manager
with information about sales, inventories, profitability and other data that would help would
help in managing Air India as an organization. MIS provides for reports based upon
performance analysis in areas critical to any plan, with feedback loops that allow for
titivation of every aspect of the business, including recruitment and training regimens. In
effect, MIS not only indicates how things are going, but why they are not going as well as
planned where that is the case. These reports include performance relative cost centers and
project that drive profit or loss and do so in such a easy that identifies individual
accountability and in virtual real time.
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Role of MIS in the financial Aspects of air India
Management Information System (MIS) in finance have been widely adopted in Air India
since 2007-08. They are information system with capacity to maintain large data base
enabling organization to store, organize and access financial information easily. These
systems are primarily used for accounting operation and generation of financial reports.
Increasingly they are also used to support budgetary, planning and decision making
processes. These systems are credit with increasing financial transparency, efficiency and
accountability.
Management Information System in the Finance department of Air India helps
In providing timely, relevant and accurate information related to finance in order tosupport better business decisions
Provides integrated financial information Helps in flexibility of report and additional control over expenditure Helps in providing a clearer view of budgets versus actual
Budget Planning
Financial budget planning uses project financial statements that serve as formal
document of managements expectations regarding sales, expenses and other financial
transactions. Thus financial budget are tools used both for planning as well as control. MIS in
finance helps organizations evaluate what if scenarios. By modifying the financial ratios,
management can fore see the effects of various scenarios on the financial statement. MIS thus
serves as a decision making tool, helping in choosing appropriate financial goals.
Route wise analysis reports
The route wise analysis reports that are generated in Air India gives a summary of all the
aircraft that do not meet fuel cost, aircrafts that meet fuel cost but do not meet cash cost,
aircraft that meet the cast but do not meet the total cost and aircrafts that meet the total cost.
Thus based on this report generated various decision are taken by the management.
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Direct cost / Revenue ratio
The direct cost / revenue ratio gives the ratio of direct cost to revenue and thus helps in
planning and controlled the cost. It gives region wise and region wise station wise summary
reports of the direct cost / revenue ratio. Thus giving clearer view of how and where cost is
incurred.
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ROUTE ANALYSIS
Introduction
To soar over turbulent times, it is vital for airlines to save every single penny andoptimally utilize their assets to reduce costs and increase profitability. This calls for careful
analysis of various data and talking well - informed decisions. One of the key factors which
decide the future of an airline is Route Profitability.
Route profitability reports help in determining whether a particular route is profitable
or not during a given period of time. Route profitability analysis enable the management to
take decision on whether to change, add or eliminate routes from airline's schedule.
The focus of the Commercial/Planning department of Air India is to improve revenues
on route from various points of sales. Towards this, the commercial function is expected to
have a thorough understanding of the route and take actions on a regular basis to improve the
performance. In a continuously evolving market place the only constant for the commercial
function is a focused analysis of routes on a regular basis.
Thus the MIS section of the Air India generates the "Route Analysis Reports" monthly
in order to study the routes and to analyze and monitor them. Route analysis is the techniqueto study routes and analysis to study routes and analysis hem a give time interval.
Features
Review performance on existing routes Determine the viability of proposed new routes Validate the actual flown information with defined masters Build route studies for domestic and international destinations Providing to define specific rates for landing, parking, technical handling, ground
handling and cargo handling based on time slots and aircraft types
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Preparation of the report:
ROUTE
ANALYSIS
REPORTS
FINANCIAL
SYSTEM
EXPENDITUREMASTERS
(internal system)
REVENUEKALECONSULTANTS
FLIGHT
MANAGEMENT
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Preparation of Route Analysis Report
The MIS in Air India has facilitated the development of comprehensive framework
for analysis of route performance and identifying revenue drivers to evaluate route
performance against identified revenue drivers to provide on demand analysis.
The revenue report of Air India is generated by Kale Consultants by extracting the data from
the respective stations. It is then forwarded to MIS Section of AIR India where the revenue
report is then combined with expenditure report, which is generated in the MIS section using
the FoxPro software. The update rates are taken from the internal system and the report is
generated. This report is then forwarded to Management, the Marketing department and the
Commercial/Planning department.
Analysis of the Report
The Route Analysis is done separately for domestic flights and international flights.
These flights are then categorized based on the following four conditions.
Services not meeting ATF cost Services meeting ATF cost but not meeting Cash cost Services meeting Cash cost but not meeting Total cost Services meeting Total cost
Services not meeting the ATF cost are those flights that do not meet the fuel cost i.e. the
revenue generated by the route is insufficient to even meet the fuel cost. Since fuel forms
almost 40% of the total expenditure, if the service does not meet the ATF cost then it cannot
meet the other costs too.
Services meeting the ATF cost but not meeting Cast Cost are those flights that meet the
fuel cost but fail to meet the other costs like aircraft landing fee, navigation charges etc. Cash
cost is variable cost which is incurred when an aircraft is used.
Services meeting Cast cost but not meeting Total Cost are those flights that meet the cash
cost but fail to meet the cost. Total cost includes the operating cost as well as the non
operating costs.
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EXAMPLES:
The two major factors considered for the route analysis are the cost and the load
factor.
Passenger Load Factor (PLF) is the ratio of Passenger kilometers (PKMs) to Available Seat
Kilometer (ASKMs), usually expressed as percentage. PKM is the product obtained by
multiplying the number of fare playing passengers by the distance in kilometers flown by
them. ASKMs are the product obtained by multiplying the number of passenger seats
available in an aircraft by the distance flown in kilometers.
The Cost considered for the route analysis can be explained as follows:
A. CASH COST
Aircraft Fuel And Oil
Material Consumption Including Outside Repairs
Aircraft Landing free
Navigation Charges
Charges for Handling by other Operators
Cabin Crew expenses and insurance
Operating Crew expenses and insurance
Legal Liability Insurance
Booking agency Commission
Food and cabin service amenities
Hire of aircraft
Dry lease rentals
PLI
B. F IXED COST (Dir ect)
Operating Crew salaries
Cabin crew salaries allowances
Engineering, stores, GSD staff salaries
Engineering dept stores, GSD Staff
Aircraft insurance
Depreciation aircraft
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The Summary of ROUTE ANALYSIS is as given below:
SUMMARY
How does the Route Analysis Report help the Management?
Route profitability analysis can be broadly classified into two based on business drivers:
Past Performance Analysis This is mainly done to determine whether the existingroutes are profitable or not
ForecastThis to understand the viability of new route and the profitability forecastof existing routes based on future prediction of cost and revenue.
Past performance analysis: Whenever the report is submitted to the management, the
decisions are made keeping into consideration the performance of the route for the past 5 to 6
yrs. The management also checks whether the marketed section had done enough marketing
for the route. If the route was not well marketed then the changes of the load factor being less
is more. Thus the route does not meet the required load factor due to the lesser marketing
done by the marketing department and thus it cannot be shutdown. Also if the number of
passenger is less as compared to the available seats then the aircraft type also needs to beadjusted. Moreover if the fuel price increases every year then the previous reports of the route
cannot be the only source of decision making. Also the bilateral agreements are considered
before taking any decision on the routes.
Forecast: While past performance analysis gives a clear indication on the performance of the
routes, forecast indicates how a particular route is likely to perform based on various
parameters provided in these system. While some of them are more or less fixed there are
components which can vary dramatically.
Components that may have relatively low variations and thereby better control
includes cost like depreciation, interest, insurance, landing, navigation, ground handling, etc.
A component that has a great impact and which cannot be controlled by Air India or other
airline is the fuel cost.
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On the revenue side, the airline has limited control though the sale and marketing
functions tries to keep this as high as possible. While the break even Load factor can be
arrived at by feeding various parameters based on experience and expectation, some of the
following questions will remain a challenge and can affect the profitability factor drastically.
What wil l be the fuel cost be 6 months form now?
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Chapter 6.
Direct Cost / Revenue Ratio
INTRODUCTION
Every organization generates revenue and also uses the revenue for various activities.
Thus it is necessary to keep a control on the expenditure by the various activities. This cans
be done by calculating the ratio between the costs incurred to the revenue generated. As a
result it becomes easy to figure out which activity needs more expenditure. In this way we
can control the cost incurred by the particular activity.
Direct cost/ revenue ratio statement is a statement that gives the ratio between the
costs incurred to the revenue generated by the stations. A lower percentage is better since that
means expenses are low and earnings are high.
Direct cost/ revenue ratio statement is prepared for both, the online stations and the
offline station. An offline station normally refers to a station that is not represented by an
airline, but still capable of supporting that airline i.e. the airline might not fly there, but do
have officers around that area so that the station is still capable of supporting that aircraft
should it need to land there is an emergency.
EXAMPLE
Sr. No. Region Station
1 USA Houston, Los Angeles
2 Europe Geneva, Amsterdam
3 Southern India Coimbatore, Trichur
An offline station is a place or station that the airline flies etc.
EXAMPLE
Sr. No. Region Station
1 USA New York, Chicago
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2 Europe Frankfurt, Paris
3 Southern India Cochin, Mangalore
Preparation of the report:
EXPENDITURE
MASTERS
(internal system)
REVENUE
FINANCIAL
SYSTEM
DIRECT
COST/REVENUE RATIO
STATEMENT
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PREPARATION OF DIRECT COST / REVENUE RATIO
STATEMENT
The statement of direct cost / revenue ratio of stations are generated based on the datacollected in one year. It is generated only once in a year unlike the route analysis reports.
The report is generated from the data received from the stations. The revenue and the
cost of every activity is received from the station by the MIS section of IAr India and the the
report is generated.
ANALYSIS OF THE REPORT:
The direct cost/ revenue ratio statement is a report that gives the details of the
stations performance and also the performance of the region.
The total cost incurred by a particular station is calculated on the various parameters.
These parameters include Pay Allowance, Staff Cost, Landing, Handling, Publicity, Motor,
Insurance, Commission, Rent Rates, Printing and Stationery, Communication and
Miscellaneous.
The major cost that is the fuel cost is not considered during the preparation of the
direct cost / revenue ratio statement.
There has to be an effective use of the above mentioned parameters in order to control
or reduce cost. The Pay Allowance can be controlled by reducing new recruitments or by
avoiding overtime performance. The Staff Cost can be reduced by controlling the conveyance
cost and the welfare cost. The Landing fee depends on the operations. IF the cost related to
the landing has to be reduced or controlled then there has to be use of better equipment etc
.The handling Fees is based on the contractor. The only way to reduce the cost is to negotiate
about the costs or to wait for the contract to get over and give the contract to another contract
that can provide the same service at a lower cost. The publicity cost is incurred on
entrainment etc and can be controlled by use of barter system. The insurance cost is the cost
related to the employee insurance etc. It does not include the aircraft insurance. This cost
cannot be reduced. Commission is directly related to the revenue generated; this parameter
too cannot be controlled. The rent rates can be reduced by checking out region with lower
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rent. The Printing and Stationery, Communication and Miscellaneous Cost can be reduced by
controlling the use of the stationeries available.
The analysis is done keeping into consideration the report generated form past 5 t o 10
years. The bilateral agreements are also considered before taking any decisions.
How does the route analysis report help the management?
These reports are helpful to both management as well as the station heads for
following reasons:
The Management is able to judge the performance of each online/Offlineoffice
Station head are in a position to take effective steps in controlling expenditureand increasing revenue, as any deterioration in their performance will be
reflected in the percentage of the region and the corporation as a whole.
Name of
foreign unit/
Branch
Country Address of
foreign Unit /
Branch
Turnover/Expendit
ure during the year
ended 31st march2009 - 2010
Turnover/Expendit
ure during the year
ended 31st march2010 -2011
Turnove
r (in
Lacs)
Expendi
ture (in
Lacs)
Turnove
r (in
Lacs)
Expendi
ture (in
Lacs)
New York-
NYC
USA 570,Lexington
Avenue 15th
Floor,Newyork
1022
48797.58 17699.9 4644.86 15623.4
Newark -
EWR
USA Same as above 11861.93 4951.49 11352.85 4697.29
Chicago-CHI USA 33,North
Dearban sl suite
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2425
CHICAGO,IL
60602-3101
31443.91 6147.15 36155.03 6798.9
Los Angeles-
LOS
USA 5959 West
century,Bouleva
rd
Suite 118 Los
Angeles
9223.92 667.71 7281.87 668.75
Washington-
WAS
USA 1612,K Street
N.W.Suite 200
WASHINGTO
N DC 20005
12023.52 1394.76 12861.75 1360.77
Atlanta-ATL USA C/O.570,Lexing
ton Avenue
15th
Floor,Newyork
1022
Houston-
HOU
USA 1319 Grand
Haven
Lane,Sugarland
TXT
5303.06 110.69 4659.77 347.54
San
Francisco
USA 1014 Pomona
Avenue Aibary
ca.
539.19 134.54 492.7 192.24
Montreal-
YUL
USA POB 187
STN.Ahunlic
Montreal
8509.92 791.24
Toronto- USA 25 Adetaide 16080.84 5015.55 18112.62 5963.82
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46
YYZ street E.suite
Vancouver-
YVR
USA POB273,Surray
B.C.Canada v3t
8201.48 413.41
TOTAL 143475.4 36535.2 104071.3 36443.9
London-LON
/ BHX
UK 1st Floor Great
west House
Brantford,
36412.3 11629.3 38172.02 12180.9
Manchester-
MAN
UK Terminal
Building MAN
Intl Airport
TOTAL 36412.3 11629.3 38172.02 12180.9
Geneva/Zuric
h
Europe 7RUE DE
Chanta,Poulel
1201 Geneva
2349.34 473.9 1309.53 207.22
Amsterdam Europe Rokln Plaza
Bldg.Papenbrok
e street
1621.14 305.23 1853.65 223.79
Brussels Europe 60,RAVENSTE
INS 1000
Brussels
433.96 127.38 437.99 141.16
Copenhagen Europe VesterFanmaga
sgade1,1606
copenhagen
1548.44 236.76 2006.69 86.43
Stockholm Europe Harkussgaman
12,7th floor,SE
11152
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47
Frankfurt Europe Baselestrase 5th
floor 46-58
FRA
20168.6 19737.9 16787.3 14278.1
Vienna Europe Opemring
1/E/2-A-1010
VIE AUSTRIA
1966.58 275.93 2625.41 237.86
Rome Europe Resident sales
Manager
ITALY VIZ E
2564 422.93 1785.03 473.26
Milan Europe VIA Pantano
2,20122 Milan
Italy
Athens Europe Athens Intl.
Airport Greece
Paris Europe 5 Rue Des
Colonnes 75002Paris
10586.79 3371.83 9535.62 3662.6
Barcelona Europe Gran VA De
Les Corts
Catalanes 634
TOTAL 41238.85 24951.8 36341.22 19310.5
Moscow CIS Korovy Val 7
Ground floor
MOW
2628.94 473.43 978.82 173.23
Nicosia Africa Nicosia INTL
Airport Cyprus
Nairobi Africa 1 FLR Jeevan 3036.12 667.84 633.26 142.8
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Bharti Bldg.
Harnambee
Mauritius Africa No 5 President
John Kennedy
St Roge
437 25.01 51.69 4.85
Lagos Africa 16/164 Talewa
Balewa SQ.
Race Course
Dar-es-Salam Africa AL Ltd. Plot
61/62 UWT St.
Upang RD P
Johannesburg Africa JNB ITL
Airport S.Africa
TOTAL 6102.06 1166.28 1663.77 320.88
Abu Dhabi Middle
East
Bader Tower 1
FLR POB
46889 Airport
2846.42 658.53 5738.25 1025.91
RDME/Duba
i/ SHJ
Middle
East
Flat #404/405
AL Mulla Bldg
Plot# 76, Dubai
8346.97 2777.92 10429.72 2514.85
Fujiarah Middle
East
C/o AL Mullah
Bldg Baniyas
St. POE 170
Cairo Middle
East
1 Talaat Harb
St. Cairo
284.05 343.58 30.61 62.51
Amman Middle
East
C/o AL Mullah
Bldg Baniyas
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St. POE 170
Kuwait Middle
East
Al-Hilaliah
Building Al
Sour St.,PoBox-
594,Safat13006,
11123.93 111.45 487.02 147.42
Tehran Middle
East
AVE Shaheed
Sarafraz Av
Daryae E No.
58.45 36.75 35.54 26.78
Riyadh Middle
East
PO BOX
NAFA Building
Takhassosy st.
Riyadh11321
21372.17 3703.49 20538.79 6168.55
Dhahran Middle
East
Airline Cente
POB 298 King
Abdul Aziz
14601.23 4057.98 13033.97 4074.52
Jeddah MiddleEast
M/s. Yusuf BinAhmed Kanno
Kil 07 Madiena
26612.11 4159.68 31322.67 7283.29
Beirut Middle
East
Beirut Intl
Airport
Lebanon
212.73 24 168.81 32.3
Muscat Middle
East
P.O.Box
No.962,P.Code-
100,Muscat
Istanbul Middle
East
Istanbul Intl
Airport Turkey
TOTAL 85458.06 15873.3 81785.38 21336.1
Shanghai Far East 1002 OOCL 6020.5 1338.79 8908.36 2229.54
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Asia plaza 841
Yanan Rd West
Shanghai
Bangkok Far East
Asia
C.P. Tower
Bldg, 3rd FLR,
unit D-10(A),
313 Silom Rd,
Hongkong Far East
Asia
Unit 44 FLR
Hopewell center
183 Quee
4695.85 2283.83 5760.7 3335.45
Tokyo Far East
Asia
Imperial HTL
Tower 11th
FLR RM C-5/6
11138.58 3497.29 17313.46 4786.96
Osaka Far East
Asia
Kokusai Bldg
3F-3-13
Azuchimmachi
2-CHQ
5786.59 1961.26 7837.94 2341.95
Seoul Far East
Asia
6th FLR Sina
Bldg 39-1
Seosomun
Dong
959.88 273.87 4807.26 1249.05
Taipei Far East
Asia
9-1 FLR
No.341 Hung
HaoBldg Chung
370.44 25.02 250.27 15.24
Kualalumpur Far East
Asia
1st
Floor,63,jalan
Ampang,50452
Kuala Lumpur
TOTAL 28971.84 9380.06 44877.99 13958.1
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Jakarta South East
Asia &
Australasa
Homoin Plaza
Bldg block J/8
JLN Suiyop
899.32 94.6 724.1 90.75
Singapore South East
Asia and
Australasia
Marina
House,shenton
way,singapore-
079118
7428.51 2643.24 9527.67 3740.65
Sydney South East
Asia and
Australasia
Level 15,31
Market st. SYD
NZW 2000
1331.92 226.75 767.24 203.25
TOTAL 9659.75 2964.59 11019.01 4034.65
East India India
Calcutta India 8310.47 1729.22 12510.01 1876.59
Gauhati India 129.06 6.86 265.49 23.03
Dhaka Bangladesh Hotel Sheraton,
Extn Vldg, 1-
Minto RD
Dhaka
2131.92 201.12 779.6 94.15
TOTAL 10571.45 1937.2 13555.1 1993.77
Northern
India
Delhi India 80403.39 17814.0 107763.1 25850.3
Amritsar India 900.48 563.99 401.58 351.96
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Lucknow India 630.23 27.22 978.25 134.41
Jaipur India 804.06 36.94 1178.57 106.53
kanpur India 53.67 9.57 71.71 16.31
Kathmandu Nepal Hattisar
4429468(BO)
Komal Pokhari
POB No.300
670.48 63.23 653.9 61.57
TOTAL 83462.31 18514.9 111047.1 26521.1
Southern
India
Bangalore India 9110.26 1761.79 12853.6 1563.1
Madras India 17139.52 4503.81 22860.73 4639.74
Hyderbad India 19873.2 1984.34 11357.91 2169.21
Trivandram India 4872.67 1378.44 6166.01 1595.61
Cochin India 11847.51 1670.71 7475.63 2178.06
Kozikode India 8729.38 1592.16 11201.49 2556.6
Trichy India 897.84 38.58 1251.3 109.39
Colombo India Bristo
Complex, 4-
Bristol Street
Colombia 01,
27.45 3 53.57 6.85
Coimbatore India 283.02 16.03 311.48 26.53
TOTAL 72780.85 12948.8 73531.72 14845.0
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Budget Allotment of 2011 - 2012
APRIL11- MAR12
ALLOTMENTS
PERCENTAGE ACCOUNT
CODE
Cost Sub-Head TOTAL
100 63301 Salaries-India Based Staff - Foreign 75,950,017
100 63302 Salaries - Local Resident Staff - Foreign Stat 368,216,364100 63303 Salaries - Staff In India 425,593,863
50 63306 Salaries - CaSUAL lABOUR 15,134,845
100 63320 Expns.A.I.Building Pay.Allo.P.F.Bonus -
100 63324 Bonus Expense 1,225,000
100 63325 Interim Relief To Executives 1,000
100 63327 Staff Income Tax Relief 5,840,000
100 63328 Staff Rent Releif 12,544,790
100 63311/12 Performance Link Incentive 13,490,000
50 63313/14 Late Sitting 45,000
50 63315 Over Time - India Based Staff 12,832,500
50 63316 Over Time - Local Resident Staff 176,300
50 63317 Over Time - Staff In India 7,150,250
100 63309 Staff Transport/Conveyance Allowance 8,808,027
50 63318/19 Weekly Offs / Holidays 277,000
100 63321 Travel-Reimbursement - Retired Staff 150,000
100 63322 Travel-Reimbursement 36,000
100 63323 Staff Travelling & Outstation Expenses 1,659,260100 63329 Telephone Allowance 5,540,600
100 63330 Reimbursement Of Costs - Kit Maintaince -
100 63333 Out Of Pocket Expenses 551,160
100 63334 Severance Compensation Foreign Stns 250,000
100 63332 Compensation For Weekly Off -
955,471,976
100 51511 Bar Loss Compen.To Cabin Crew -
100 51512 Sky Bazar Incentive For Cabin Crew 50,000
100 51513 Crew Entertainment Expenses 1,469,900
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100 51514 Training By 3Rd Parties Ops Pilots 150,000
100 51515 Long Haul Allowance U.K. Flts. 750,000
100 51516 Hourly Payments -
100 51517 Special Travelling / Productivity Allowance 200,000
100 63517 Crew Layover Allowance 33,302,285
35,922,185
100 63701 Company Contribution.P.Fund
I.Based.Foreign stations.
609,600
100 63702 Company Contribution to P.Fund Staff In
India
4,142,940
100 63703 Company Contribution to P.Fund Local
Staff Foreign stns
1,128,200
100 63704 Payment Under Social Legislation 59,634,158
65,514,898
90 51311 Purchase of Medicnes and X-Ray 4,502,250
90 51312 Medical Clinic-Staff Welfare - Other
Expenses
-
90 51313/382 Medical.Benefit Scheme #REF!
90 51314 Medical Benefit Sch.Ret.Emp.Families 2,430,000
90 51315 Medical Benefit Sch.Retired Employee 15,018,300
90 51316 Medical Expenses Government Off. -
100 51317 Staff Medical Expenses 73,055,072
50 51351 Holiday Home Expenses 9,625
75 51361 Cash Awards To Employees 3,750
90 51362 Joint Sub.Employee Transport -
80 51364 Other Welfare Expenses 820,749
80 51367 Hindi Incentive-Tran.& Typg 43,200
80 51368 Language Promotional Expenses 17,200
100 51370/71 Expenses On Sports 210,000
80 51376 Other Staff Welfare Expenses 53,596,336
95 51377 Farewel To Retired Staff 328,28290 51378 Provisions & Purchase M.Clinic N.Point -
90 51381 Staff Housing Colony Expenses - New Delhi 900,000
100 51386 I A T T / Fuel Surcharge - S.O.D. 43,923
100 51387/88 Consum.Of.Spares & Store - M.T. Medical
Clinic
-
80 51412 Breakfast / Lunch Allowance 6,791,648
80 51413 Breakfast / Lunch Allowance - Delayed
Flights
-
80 51414 Expenses On Staff Residence 3,025,491
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90 51415 Canteen Subsidy To Staff In India 676,080
90 51417 Childrens Education Allowance 149,279
80 51418 Uniform Maintaince.Allowance. 1,760
90 51419 Clothing Allowance 4,950
90 52251 Staff Uniforms - Consumption 1,156,334
80 63137 Repair And Maintenance Of Buildings - Ccu
Hsg
316,800
90 63151 Repairs and Maintenance-General 69,246
#REF!
100 52651 Landing Fees - Scheduled & Other Ops 1,338,412,917
100 52652 Landing Fees - Delayed Flights -
100 52653 Landing Fees - Training & Practice Flight 10,000,000
100 52655 Landing Fees - B737 Aicl -
1,348,412,917
100 52611 Housing & Parking Fees - Scheduled 102,812,878
100 52612 Housing & Parking Fees - Delayed Flights -
100 52614 Housing & Parking Fees - Ops B737-Aicl -
102,812,878
100 52681 Flight Comm. & Navigation Charges 597,394,713
100 52684 Exp.Flight Comm.& Navigation - Training -
100 52685 Exp.Flight Comm.& Navigation Ops B737-
800-Aicl
-
100 52686 Exp.Flight Comm.& Navigation Traing Flts
B737-
1,000,000
598,394,713
100 55351 Handling Charges-Technical AI 65,594,900
100 55352 Handling Charges-Commercial AI 2,380,617,310
100 55353 Handling Charges-Delayed Flights AI 72,000
100 55354 Handling Charges-A.I.A.T.S.Ltd. -
100 55355 Handling Charges-Comm. A.I.C.Ltd -
100 55356 Handling Charges-Tech. A.I.C.Ltd -
100 55357 Handling Charges-Comm Freighter Ops 25,000
100 55358 Handling Charges-Comm. B737-Aicl -
100 55359 Handling Charges-Tech. B737-Aicl -
2,446,309,210
100 55401 Security Charges-Courier Baggage 4,621,631
100 55402 Special.Security Service Charges 304,282,040
308,903,671
90 55311 Expenses On Pax Baggage Claims 34,612,218
90 55312 Expenses on Cargo Claims 737,100
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90 55313 Expenses on Cargo Immigration Fines 192,150
35,541,468
80 53,561 Pax Amenities - Catering On Ground 70,727,552
80 53562 Pax Amenities - Catering On Ground -
Delayed Flights
14,072,320
80 53563 Pax Amenities - Catering On Board 735,273,520
80 53564 Pax Amenities - Catering On Board -
Delayed Flights
400,000
80 53569 Pax Amenities - News Paper Service-Depart.
Pax
559,440
80 53568 Pax Amenities - Hotel Expenses - Delayed
Flights
22,453,600
80 53565 Pax Amenities - Hotel Expenses 54,956,223
80 53567 Pax Amenities - Sundries - Bombay Airport 103,200
80 53571 Pax Amenities - C.S.Sun.Incl.Ser 12,211,938
80 53572 Immigration Fine - Foreign Stns 978,016
80 53573 Expenses Incurred On Deportees 445,104
80 53574 Pax Amenities - C S Sun Incl Sur - Delayed
Fli
9,713,040
80 53575 Pax Amenities - Maharajah Club- Executive
Class
1,454,904
80 53577 Pax Amenities - Denied Boarding Compen
To Pax
1,791,786
80 53566 Pax Amenities - Call Centre Charges -
925,140,643
80 54091 Expns.On Computer Reservation - Rental Of
Cable
1,316,541
80 54092 Expns.On Computer Reservation - Rental Of
Modem
2,800
80 54093 Expns.On Computer Reservation - Other
Expenses
699,376
80 54094 Expns.On Computer Reservation - Tds For
Arms
-
80 54095 Expns.On Computer Reservation - Other
Carriers
-
2,018,717
80 54068 BSP-ARC Processing Chgs / Subscription 978,000
80 54056 Expenses On Sita Circuit -
80 54057 Expenses On Telephone Circuit 2,291,791
80 54058 Postage 12,568,90180 54060 Telephones 22,511,524
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80 54061 Telephones Delayed Flights -
80 54064 Telephone Equipment Rental 42,560
80 54065 Trunk-Calls 10,452,544
80 54066 Trunk-Calls Delayed Flights 5,280
80 54067 Expenses On Residence Telephone / TrunkCalls
4,781,760
80 54059 Telegrams -
53,632,360
90 63511 Crew Catering Expenses 87,907,382
90 63512 Crew Meal Allowance -
90 63513 Crew Catering Expenses - Delayed Flights -
90 63514 Crew Meal Allowance - Delayed Flights -
90 63515 Crew Hotel Expenses 599,306,646
90 63516 Crew Hotel Expenses - Delayed Flights 9,000
90 63518 Crew Layover Expenses - Delayed Flights -
90 63519 Crew Short Payment -
90 63520 Crew Suppl. Layover Allowance 21,110
90 63521 Crew Allowances Account 9,918,000
90 63522 Crew Transhipment Expenses 57,758
90 63559 Crew Allowance on Temp.Posting 22,500
697,242,396
80 63551 Staff Travelling Expenses-India 3,243,76080 63552 Staff Travelling Expenses - India To Foreign 5,124,288
80 63554 Staff Travelling Expenses - Out Side India 20,693,834
80 63555 Expenses On Temporary / Permanent
Transfer
2,038,456
80 63556 Visa Charges 630,568
80 63557 Hotel Expenses - Staff on Duty In/To India 33,548,816
80 63558 Allowance On Temporary Posting 48,523,034
113,802,756
90 62401 Rates & Taxes 7,623,127
90 62402 Expns.A.I.Building Municipal -&-Other
Taxes
-
7,623,127
90 62451 Rent-Premises 304,066,836
90 62452 Expns.A.I.Building Ground Rent -
304,066,836
100 63141 Maintenance of Office Buildings 28,805,173
100 63143 Expn.A.I.Building-Repair/Maint.Bldg. -
100 63161 Maint of Staff Training College -
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28,805,173
100 63111 Maint of Equipments 44,025,873
100 63116 Maint of Equipments (Others) 170,250
100 63121 Maint of Ramp Equipments 13,000,000
100 63166 Maint of Engineering Equipments 10,000
100 63211 Ramp Equipment-O/S 375,000
100 63221 Repair by Outside Party - Motor Transport 6,126,329
100 63113 Repair & Maintenance of Equipment-A.I.
Bldg.
-
63,707,452
80 61136 Hire of Transport - Cabin Crew 23,430,560
80 61141 Hire of Transport-Cockpit Crew 22,278,816
80 61131 Hire of Transport 30,513,297
80 61133 Hire Of Transport Delayed Flight 59,440
80 61151 Hire of Transport -CIP/VIP 30,000
76,312,113
100 71701 Insurance General Equipment / Store 2,173,094
100 71703 Insurance General M.T 437,128
2,610,222
100 52803 Water Charges 3,624,600
90 71301 Electricity & Heating Charges 78,910,908
90 71302 Expns.A.I.Building Elect/Pow.Charge -82,535,508
100 62212 Publicity and Sales Promotion - Publicity 13,500
100 62223 Publicity and Sales Promotion - TSC -
13,500
100 71801 Legal Charges 9,515,780
9,515,780
100 61129 Printing and Stationary 16,511,996
16,511,996
100 52868 Audit Fees & Exp. - Accts. Fee /
Certification
280,500
100 71111 Audit Fees - Statutory Audit -
100 71112 Statutory Auditors Out Of Pocket Exps 54,650
335,150
100 52711 Fuel and Oil-HSD and Petrol Consumption 9,687,000
100 52714 Fuel And Oil - Surface Transport 50,424,562
100 52801 Staff Training Expenses 8,895,300
90 52802 Staff Travelling Government Off. -90 52829 Laundry Charges 4,125,004
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90 52833 Membership Subscription & Fees 1,657,533
90 52849 Payments To Clubs 20,250
90 52857 Conveyance Expenses 19,498,039
90 52858 Conveyance Expenses Delayed Flights -
90 52863 Ex-Gratia Payment 1,225,218
80 61811 General Charges 70,319,997
80 61826 General Charges - Delayed Flight -
80 61812 General Charges - HAJ Exp. 120,000
100 61841 Haj Expenses -
90 52842 Compensation Payable To Agents -
100 71533 Commission to Payment Gateway -
100 71533 FTT claims of Custom-Commercial -
90 52820 Expenses On Ai Guest House - New Delhi 405,000
90 52832 Local Tax 5,879,060
90 52834 Office Cleaning 4,248,958
90 52854 Expns.A.I.Building Water Charges -
90 52855 Expns.A.I.Building Other Misc.Expns -
90 52271 Clearing and Forwarding 25,281,729
90 52805 Taxes - M.T. 5,580,888
90 52831 Income Tax - Foreign Station 5,382,000
80 61112/113 Books and Periodicals 8,213,368
100 52867 Audit Fees - Tax Audit -100 52869 Audit Fees & Exp. Accts.-Other Audit Exp. 402,000
100 52870 Audit Fees - Internal Audit -
100 52871 Internal Audit Out Of Pocket Exps -
90 52821 Fees To DGCA 5,400
90 52825 IATA Fees & Expenses-Fees 307,440
90 52826 IATA Fees & Expenses - Comm.Cl.Hse. 1,440,000
90 52827 IATA Fees & Expenses - Comm.-Conf.Chr. -
90 52828 IATA Fees & Expenses - Misc. 161,190
90 52835 Exp.For Custom Office Comm.-Hotel Exp. 545,400
90 52836 Exp.For Custom Office Comm.-Other Exp. 5,400,000
90 52837 Exp.For Custom Office Comm.-Transport. 288,000
90 52838 Exp.For Custom Office Comm.-Overtime -
90 52839 Quarantine Fees - Commercial 130,050
90 52840 Transhipment Fees - Commercial 472,500
90 52804 Rent - M.T. 2,004,846
90 52847 Entertainment General 110,016
90 52862 Entertainment Expenses 1,790,07890 52807 Professional / Consultation Fees & Expenses 4,798,314
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90 52818 Donations -
100 53512 Cabin Material-Nonconsummable 12,000
100 21788 Social Security-IBO -
100 21789 Social Security-Local Staff -
100 51385 Staff Insurance 38,454
100 53511 CONSUMPTION OF CABIN SERVICE
MATERIAL
903,802
100 52217 Motor Transport Spares-Consumption 12,785,000
100 55456 Acct.Mach.Rent.Maint Accts.Rentals 12,864
100 55457 Acct.Mach.Rent.Maint Accts.Maint. 12,000
100 55458 Acct.Mach.Rent.Maint Accts.Services 40,000
100 61301 Lease Rental For Personal Computers 1,000,000
100 71521 Bank Charges 3,447,639
100 71702 General-MT & Others 177,120
100 55459 Hire Of Equipment 2,467,300
100 71515 Diff in Exchange 700,000
100 51373 XMAS Expenditure 2,000
100 51409 Medical Insurance Premium 130,000
100 51409 Fiscal Stamp Duty -
100 260,547,319
100 51383 Expenses on Retired Staff Welfare -
-TOTAL 8,575,712,305
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Chapter 7.
Revenue Expenditure Budget
Work of the section:
Preparation of the Annual Revenue & Expenditure Budget of the Corporation in theform of the booklet for submission to the board for its approval
Intimation of the Annual Budget allotments, to the Outstations as well as thedepartments at headquarters
Control over the expenditure of outstations by calling for quarterly returns of theactual expenditure incurred within the approved allotments under certain specificheads, and calling for explanations regarding variations
Comparison of Actual Expenses with the Budget Allotments Preparation of Direct / Revenue ratio of station for submission to the Commercial
department and bringing out in detail the performance of individual stations on the
basis of their direct expenditure viz-a-viz revenue
Preparations of Monthly Report on Estimated Financial Result for submission toHeadquarters
Preparations of Quarterly Report, Performance Budget and other returns forsubmission to Government Agencies
Preparations of Cost Analysis Statement Submission of Data to the IATA Information Required from the Stores & Purchases
Data obtained from the outstation and department at Headquarters:
The Corporations Overall revenue expenditure budget estimates for the current year
(revised) and next financial year are based on the information collected from outstation and
departments at headquarter. The information in the form of Budget Estimates is called for
the month of October. For this purpose standard formats (separate for online and offline) are
sent to outstation. (From 1) The format lists out the various Revenue Expenditure Account
Heads along with the account codes so that no errors may be made in grouping various
accounts under these specific heads. The outstations are also required to submit the
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worksheets for the certain account heads such as Landing and Handling Fess, Route
Navigation Charges, Rent Rates and Taxes, Crew Allowances and Hotel Expenses etc. as per
prescribed formats, in support of the estimates.
The Budget Estimates for the current year and next year are required to be sent by the
outstation to the Budget Section by 30th November every year.
The Actual expenditure incurred during the first half (April/September) of the current
financial year, and the estimated expenditure for the second half (October/March) of the
current financial year are required to be given in the Budget Estimates Form. The total actual
plus estimated expenditure of the current financial year together with the actual expenditure
of the previous year form the basis on which the budget Estimates for the next financial
year are required to be prepared. The Winter Time table for the next year circulated to
stations also forms the basis for preparation of Budget Estimates.
Some of the information called for department wise is a given below:
Planning Traffic Revenue:
Scheduled Services:The Estimates of Revenue from Scheduled Services in respect of each route, and each
aircraft type in fleet with detail working for the remaining period up to March and
also for the next year is provided category wise as follows:
1. Passenger2. Excess Baggage3. Mail4. Freight
The above information is broken down month wise by Planning Department
Revenue Pools:The revised Estimates of Receipts / Payments in the revenue pools for current year
and estimates for the next year.
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RTKM and PKMS:Aircraft type wise, category wise and route wise for both years with month wise
years.
Commercial Department:
Opening of new Online / Offline officesParticulars relating to opening of new online / offline offices during the remainder of
the current year and the next year giving estimated recurring expenditure
Closure of Online / Offline OfficesParticulars relating to the effective date of closure transfer of sales staff and available
details of saving in cost / estimated loss of revenue.
Charters:
The estimate of number of flights, flying hours, route, revenue and load factors should be
give for the following:
Open Market Charters Cargo Sub-Charters
The information is given for each aircraft type
Billing:
Handling and servicing receipts (Current yearrevised and next year)1. Handling Revenue: - An estimate of station wise handling revenue shows the
revenue from regular contracts and casual operations. Details of additional
handling contracts which are likely to be obtained during the above period and
information on any of the existing contracts I likely to be terminated. Aboveinformation is given aircraft wise.
2. Servicing Revenue: - The estimated revenue under this head covers overhauland defect rectification jobs form outside parties.
3. Aircraft type wise number of flights of other carriers handled at IndianStations.
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Miscellaneous receipts under the following heads1. Sale of Scrap2. Hire of transport to outside parties3. Loan of equipment to outside parties4. Storage Commission
Number of staff to be taken for calculation of ATKM per employee
Operations
Fuel and Oil (Aircraft)
Block fuel and oil consumption (US gallons per hour) in respect of scheduled flying
on each route and by aircraft type. Estimates of overflying Charges payable during the
current year and next year country wise. As regards Euro control charges, the anticipated
percentage increase in charges and the effective period is also advised by Engineering
Department. Estimated expenditure on Procurement and Issue Of Operating crew uniforms
during current year and next year separately giving details of item wise uniforms long with
cost thereof and the number of crew entitled for such uniform. A current list of Operating
crew, category wise stating Name of the Crew, Staff Number and Type of aircraft operated.
The crew layover pattern for the current year (winter time table) and the next year.
Information is given station wise, on number of sets and weekly layover days.
In-flight Services:
Estimated expenditure on Procurement and Consumption during the current yearand next year, in respect of:
1. Cabin services material (Consumable)2. Cabin services material (Non Consumable)
Estimated expenditure on Procurement and Issueof cabin crew uniforms duringcurrent year and next year given separately, giving details of item wise uniform along
with the cost thereof and the number of crew entitled for such uniforms.
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Aircraft type wise cabin crew complement Crew layover pattern for current year and next year. Information is given station wise
and aircraft type wise
Airport Services:
Estimated cost of consumption of spares for maintenance of ground supportEquipment and Transport Separately-Station wise
Estimates station wise cost of consumption of fuel and oil on operation of GroundSupport Equipment and Transport separately
Estimated station wise cost of outside repairs to above equipment Estimated cost of spares on maintenance of Equipment, Provision required for
replacement of existing equipment and additional equipment is to be furnished
separately
Aircraft type wise number of flights handled for other carriers Number of staff handling such flights category wise
This information is required both for the current year (revised) and next year the basis on
which the expenditure on Ground Support Equipment to be allocated to each aircraft type.
The other departments that give in their information are Publicity, Engineering, Stores,
Computer Division, Communication Division, Pay Accounts, Staff Claim, etc.
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PREPARATION OF REVENUEEXPENDITURE BUDGET
The Preparation of the revenue expenditure budget is done in MIS section of the Finance
department in Air India. The MIS section sends a circular to the various stations and the
departments regarding the estimates needed for the preparation of the budget, This circular is
sent in the month of October November every Year. The stations and departments are
supposed to submit their budget Estimates by December. The estimates received from the
outstations and the departments are thoroughly scrutinized and subjected to various checks
based on the latest available data in MIS section as well as the other sections of the
Accounts Department. The estimates after scrutiny are tabulated Account Head wise to arrive
at total estimated expenditure of the corporation for each account head. The estimated for
some expenditure Account Head such as Landing Fees, Handling Charges, Route Navigation
Charges, Crew Layover and Crew Hotel expenses etc. are independently worked out in MIS
section and compare with the stations estimates and differences if any investigated. The
outstations are advised to breakdown the annual allotment into monthly/quarterly allotments
according to the expenditure anticipated to be incurred by them during each month/quarter.
The reasons for increase or decrease in the allotment as compared to the estimates given by
the station are mention in the remarks Column.
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LAYOUT OF PREPARATION OF REVENUE EXPENDITURE BUDGET
Budget preparation
Revenue Expenditure
Scheduled
services revenue
Other revenue Department Stations
Estimates are scrutinized,
checked and tabulated account
Estimates of some expenditure account
heads such as landing fees, handling fees
etc. worked out independently i