air india

ORGANIZATION STUDY AT AIR INDIA LTD

This project report has been prepared after one month period of in plant training at Air India Ltd

a study of Air India Ltd as a whole and its various departments in detail. The main objective of

this study is to understand how the organization really works and to get a practical knowledge.

The study started with company profile and organization structure of Air India Ltd. Each and

every functional department studied individually in detail they are: Finance department,

Personnel department, Commercial department, Ground support department, Operations

department, Engineering department and Materials management department. Each department

plays a very important role in every organization and they are dependent on each other.

The study of functional departments started with Finance department. In Finance department the

manager was cooperative and friendly. He gave me last 5 years annual report to understand the

growth of the company and explained various functions and designation in Finance department.

In Personnel department the manager explained various functions and policies. She also

explained about various sections under Personnel department.

Commercial department provides various services to passengers and cargo. It also includes

public relations. The various promotion tools adopted by Air India Ltd were studied.

During one month studied all the departments in detail with the help and co-operation of the

employees of the company. I interacted with the employees of Air India Ltd and a lot of relevant

information was collected for preparing this report. Based on this information SWOT analysis is

prepared.

The study gave me an insight about the work environment and the operations involved in the

organization. It gave me an opportunity to know the working style of the organization and

understand the subject which I have studied in my academic in a better way.

During the project work many employees and officers in Air India Ltd helped me to know the

organization very well. Finally this study helped me in improving my knowledge.

CANARA BANK SCHOOL OF MANAGEMENT STUDIES Page 1


INDUSTRY PROFILE

Air travel remains a large and growing industry. It facilitates economic growth, world trade,

international investment and tourism and is therefore central to the globalization taking place in

many other industries.

In the past decade, air travel has grown by 7% per year. Travel for both business and leisure

purposes grew strongly worldwide. Scheduled airlines carried 1.5 billion passengers last year. In

the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient

and affordable for people to travel further to new and exotic destinations. Governments in

developing countries realized the benefits of tourism to their national economies and spurred the

development of resorts and infrastructure to lure tourists from the prosperous countries in

Western Europe and North America. As the economies of developing countries grow, their own

citizens are already becoming the new international tourists of the future.

Business travel has also grown as companies become increasingly international in terms of their

investments, their supply and production chains and their customers. The rapid growth of world

trade in goods and services and international direct investment has also contributed to growth in

business travel.

Aviation plays an essential role in economic progress of a nation as it is viewed as a necessary

link not only for international voyage and trade but also for providing connectivity to different

parts of the country. It is a one of the vital part of the infrastructure of the country and has

outcome for the development of tourism and trade, the opening up of inaccessible areas of the

country and for providing stimulus to business activity and economic growth.

With development of global aviation transportation, the international airline industry has been

able to cover almost every country in the world since 1905s. Today the global airline industry

consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700

airports. The growth of world air travel has averaged approximately 5% per year over the past 30

years, with substantial yearly variations due both to changing economic conditions and

differences in economic growth in different regions of the world.



The airline industry has always been an integral part of the world economy as it is a major

economic force for transportation, manufacture, technology and many other sectors in modern

society, thus it contributes a huge profit to world economy growth. According to the data from

The International Air Transport Association (IATA), the global airline industry profit decreased

to $4 billion in 2011. This would be a 54% fall compared with the $8.6 billion profit forecast last

year and a 78% drop compared with the $18 billion net profit (revised from $16 billion) recorded

in 2010. On expected revenues of $598 billion, a $4 billion profit equates to a 0.7% margin.

Figure 1: Global airline industry profit by Region 2011

Meanwhile the Global Airlines Industry Guide published by MarketLine also forecasts that the

global airline industry will reach a value of $713.6 billion, which would be a 42.2% increase

from 2010. And volume of the industry is forecast to top about 3 billion passengers in 2015, up

by 28.4% from 2010. So far, domestic is the largest segment of the global airlines industry,

accounting for 64% of the industry's total volume, and America’s accounts for 44.4% of the

global airlines industry value.



However, as IATA points out that the cost of fuel is the main cause of reduced profitability as

each dollar increase in the average annual oil price; airlines face an additional $1.6 billion in

costs. With estimates that 50% of the industry’s fuel requirement is hedged at 2010 price levels,

the industry 2011 fuel bill will rise by $10 billion to $176 billion. Fuel is now estimated to

comprise 30% of airline costs—more than double the 13% of 2001.

Figure 2: World economic growth and airline profit margins: 1970 to 2010

Source: IATA Financial Monitor for Jan/Feb-2012 released on 01-Mar-2012, sourcing IATA, ICAO & Haver



HISTORY OF AVIATION INDUSTRY

Modern aerospace began way back with Sir George Cayley in 1799 when he proposed an aircraft

with a fixed wing and a horizontal and vertical tail, defining characteristics of modern airplane.

The 19th century saw the creation of the Aeronautical Society of Great Britain, the American

Rocketry Society, and the Institute of Aeronautical Sciences, all of which made aeronautics a

more serious scientific discipline. The Wright brothers brought about the first powered sustained

flight at Kitty Hawk, North Carolina on December 17, 1903. The launch of Sputnik 1 in 1957

started the Space Age, and on July 20th, 1969 Apollo 11 achieved the first manned moon

landing. In 1981, the space shuttle "Columbia" launched the start of regular manned access to

orbital space. A sustained human presence in orbital space started with "Mir" in 1986 and is

continued by the "International Space Station". Space commercialization and space tourism are

more recent focuses in aerospace.

Early Years:

Aircraft remained experimental apparatus for five years even after the Wright brothers’ first

flight in December 1903. In 1908 the Wrights secured a contract to make a single aircraft from

the U.S. Army, and also licensed their patents to allow the Astra Company to manufacture

aircraft in France. Glenn Curtiss of New York began selling his own aircraft in 1909, prompting

many American aircraft hobbyists to turn entrepreneurial.

Manufacturing:

Europeans took a clear early lead in aircraft manufacture. By the outbreak of the Great War in

August 1914, French firms had built more than 2,000 aircraft; German firms had built about

1,000, and Britain slightly fewer. American firms had built less than a hundred, most of these

one of a kind. Seven firms built more than 22,500 of the 400-horsepower Liberty engines, and

their efforts laid the foundation for an efficient and well-concentrated aircraft engine industry --

led by Wright Aeronautical Company and Curtiss Aero plane and Motor.

National Advisory Committee for Aeronautics established was in May 1915 in the United States

that spread the scientific information for explicit use to industry. Universities began to offer



engineering degrees specific to aircraft. American aircraft designers formed a patent pool in July

1917, whereby all aircraft firms cross-licensed key patents and paid into the pool without fear of

infringement suits. The post-war glut of light aircraft allowed anyone who dreamed of flying to

become a pilot.

During the 1920s, aircraft assumed their modern shape. By the mid-1930s, metal replaced wood

as the material of choice in aircraft construction so new types of component suppliers fed the

aircraft manufacturers. Customers of aircraft grew more sophisticated in matching designs to

their needs and militaries formed air arms specifically to exploit this new technology. Air

transport companies began flying passengers in the 1920s. European nations developed airmail

routes around their colonies.

Airmail Business:

The United States was the only country with a large indigenous airmail system, and it drove the

structure of the industry during the 1920s. The Kelly Air Mail Act of 1925 gave airmail business

to hundreds of small pilot-owned firms that hopped from airport and airport. Gradually, these

operations were consolidated into larger airlines.

Many advances in aircraft design during the 1930s addressed the comfort, efficiency and safety

of air travel - cabin pressurization, retractable landing gear, better instrumentation and better

navigational devices around airports. In the six-year period 1940 through 1945, American firms

built 300K military aircrafts compared to 20K in the previous six year period. In 1943, the

aviation industry was America's largest producer and employer - with 1345K people working in

aircraft manufacturing sector.

New technologies prompted a massive restructuring of the industry. Established airframe firms

shifted from manufacturing to research, while the military channeled funds to technology-

specific startup firms. Intercontinental ballistic missile programs, started in 1954, fueled the

micro-level restructuring of the industry. ICBMs were touted as "winning weapons" to replace

massive numbers of aircraft, so missile firms invested in smaller but better factories.



Also revolutionary were the spacecraft and the rockets that lifted them into orbit. The neologism

"aerospace" reflected the shape of the money that flowed into the industry following the Soviet

launch of Sputnik in October 1957.

International Industry:

International politics has always played a role in aviation. Aircraft in flight easily transcended

national borders, so governments jointly developed navigation systems and airspace protocols.

Spacecraft overflew national borders within seconds so nations set up international bodies to

allocate portions of near-earth space. INTELSAT, an international consortium modeled on

COMSAT (the American consortium that governed operations of commercial satellites)

standardized the operation of geosynchronous satellites to start the commercialization of space.

International travel grew rapidly, and airlines became some of the world's largest employers. By

the late 1950s, the major airlines had transitioned to Boeing or Douglas-built jet airliners --

which carried twice as many passengers at twice the speed in greater comfort. The Boeing 747

took international air travel to a new level after its introduction in January 1970. Each nation had

at least one airline, and each airline had slightly different requirements for the aircraft they used.

By the 1990s more than thirty nations had some capacity to manufacture complete aircraft. Some

made only small, general-purpose aircraft.



Figure 3: Total number of airlines worldwide

HISTORY OF INDIAN AVIATION INDUSTRY

I. Indian Aviation Sector (till 1986):

In December 1912, the first domestic air route was unwrapped between Delhi and Karachi by the

Indian State Air Services (in collaboration with Imperial Airways of the UK). This marked a new

beginning in India. Then countries’ first air mail service was started by the Tata Airlines in 1912.

Although Tata Airlines was started as an air mail service but later it endeavored in carrying

scheduled passenger traffic. Tata Airlines was renamed as Air India in 1946. In early 1948, a

joint sector company, Air India International Ltd., was established by the Government of India

and Air India (earlier Tata Airline). There were eight companies were in service within and

outside the country at the time of independence, namely Tata Airlines, Indian National Airways,

Air service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. In

1950, the Government formed an Air Traffic Enquiry Committee to consider the problems of the

airlines industry. Some problems faced by the airline industry at that time included, the towering

prices of aviation fuel, mounting salary bills and disproportionately large fleets. The financial

health of companies declined even with liberal Government support, particularly from 1949, and

an upward trend in air cargo and passenger traffic. The Committee, although found no

justification for nationalization of airlines, it supported their voluntary merge. So, Government in

the wake of vanishing financial conditions of the Airlines decided to take some actions and

nationalize the air transport industry. Accordingly, two self-governing corporations were created

on August 1, 1953. In 1953, the government nationalized the airlines via the Air Corporations

Act, 1953, which gave birth to Indian Airlines and Air India. Indian Airlines came into being

with the merger of eight domestic airlines to operate domestic services, while Air India

International was to operate the overseas services. Furthermore, the Act gave monopoly power to

Indian Airlines to operate on domestic scheduled services ruling out any other operator. Air India

became the single Indian carrier to operate on international itinerary excluding some routes to the

neighboring countries which were given to Indian Airlines.



II. Industry from 1986-2003

The second phase of the sector began in the year 1986. In this period, the private sector players

were granted permission to operate as air taxi operators. These private players who were allowed

to operate as air taxi operators included Air Sahara, Jet Airways, Damania Airways, East West

Airlines, Modiluft and NEPC Airways. In 1994, government of India revoked the Air

Corporation Act. Consequently, in 1995, government granted scheduled carrier status to six

private air taxi operators. But only four operators Jet Airways; Air Sahara; Jagsons and Spicejet

(previously operated as Modiluft) started operations by 1997 and continued to operate.

Eventually, by 1998, at least six private airlines, East- West, Modi-Luft, NEPC, Damania,

Gujarat Airways and Span Air were closed and according to an estimate, the capital losses

implicated after these closures were to the tune of Rs 10 billion.

III. Airline industry from 2003 – 2006

By 2003, only two private carriers survived to see the sunrise of the new century, i.e. Jet and

Sahara. But the duopoly of Jet and Sahara as private carrier was challenged in 2003 by Air

Deccan.

Air Deccan gave India its first Low Cost Carrier (LCC) or no frills Airline which was a turning

point in the history of Indian Aviation Sector. It marked a shift from the stereo type economy

fares & business fares to the era of check fares ; web fares ; APEX fares ; internet auctions ;

Special discounts ; Corporate plans ; last day fares; promotional fares etc. With the arrival of

Deccan, reformation and innovation began in the aviation sector. Air traffic since then had

tremendous growth rates.

On witnessing the success of LCC Model, other airlines also started to operate in the sector and

opted for No-Frill Model. These airlines included; Kingfisher; Indigo; Paramount; Go Air which

began operations in India. Some new carriers such as Star Airlines, Skylark, Magic Air, Air One

and some others were given license to operate in the sector.



IV. Aviation from 2006 onwards:

Another milestone in the history of the Indian Aviation sector came in the year 2007. This was

the year of mergers and collaborations in the Indian skies. In the year 2006, the merger of Jet-

Sahara & IA-AI was announced but it materialized only in 2007. After this, the Indian aviation

sector has witnessed a series of M&A of airlines namely: Indian-Air India; the Jet-Sahara Deal;

the Kingfisher-Deccan Deal.

Figure 4: Passenger traffic in Indian airports

Figure 5: Air traffic movement in Indian airports



PLAYERS IN INDIAN AVIATION SECTOR

At present, there is decent number of players compared to the one man army scenario prior to

1990’s. They are as follows:

I. Air India:

Air India is the flag carrier airline of India. It is part of the government of India owned Air India

Limited (AIL). The airline operates a fleet of Airbus and Boeing aircraft serving Asia, Europe

and North America. Its corporate office is located at the Air India Building at Nariman

Point in South Mumbai. Air India has the fourth largest share in India's domestic air travel

market, behind Jet Airways, IndiGo and SpiceJet, as of May 2012

II. Jet Airways:

In May 1974 Jetair (Private) Limited was founded. In 1991, as part of the ongoing diversification

programmer of his business activities, Naresh Goyal (founder of Jet Airways) took advantage of

the opening of the Indian economy and the enunciation of the Open Skies Policy by the GOI, to

set up the company for the operation of scheduled air services on domestic sectors in India. It

started its International Operations in the year 2004 and carries more than 7 million passengers

per annum. In May 2007, Jet Airways took 100% stake in Air Sahara it is being renamed as “Jet

Lite”. Jet has intensions of converting Air Sahara in sync with LCC model to reach every

segment of air travelers.

III. Kingfisher:

The King Fisher initiated its operations in May, 2005. It is a major Indian luxury airline

operating an extensive network to 34 destinations, with plans for regional and long-haul

international services. Kingfisher Airlines, through its parent company United Breweries Group,

has a 50% stake in low-cost carrier Kingfisher Red. The airline has been facing financial issues

for many years. Until December 2011, Kingfisher Airlines had the second largest share in India's



domestic air travel market. However due to a severe financial crisis faced by the airline at the

beginning of 2012, it has the lowest market share since April 2012.

IV. GoAir:

GoAir is an Indian low-cost airline based in Mumbai. It was established in June 2004, the airline

started its operations in October 2005 with a fleet of 20 leased Airbus A320 aircraft.

V. Indigo:

IndiGo Airlines commenced its operations in 2006 and went on to swiftly establish itself as one

of the premier budget airlines in the country. IndiGo Airways soon added IndiGo flights and

destinations to its network. The unimpeachable services and timely performances of IndiGo

flights added to the popularity of the airline.

VI. Spicejet:

SpiceJet, a rebirth of ModiLuft marked its entry in service by offering fares priced at Rs.99 for

the first 99 days since its inception in 2005. The carrier is giving tough competition to Railways.

Air India17%

Jet Airways21%

Jet lite7%

Kingfisher4%

Spice Jet19%

Go Air 7%

IndiGo26%

Market share of scheduled domestic airlines (as per July 2012)

Figure 6: market share of scheduled domestic airlines



CHALLENGES FACING AVIATION INDUSTRY

The growth in the aviation sector and capacity expansion by carriers has posed challenges to

aviation industry on several fronts.

Fuel prices: As fuel prices have climbed, the inverse Relationship between fuel prices and

airline stock prices has been demonstrated. Moreover, the rising fuel prices have led to increase

in the air fares

Employee shortage: There is clearly a shortage of trained and skilled manpower in the aviation

sector as a consequence of which there is cut-throat competition for employees which, in turn, is

driving wages to unsustainable levels. Moreover, the industry is unable to retain talented

employees

Local connectivity: One of the biggest challenges facing the aviation sector in India is to be able

to provide regional connectivity. What is hampering the growth of regional connectivity is the

lack of airports

Infrastructure: Airport and air traffic control (ATC) infrastructure is inadequate to support

growth. While a start has been made to upgrade the infrastructure, the results will be visible only

after 2 - 3 years

Reserves routes: The entry of new players would ensure that air fares are brought to realistic

levels, as it will lead to better cost and revenue management, increased productivity and better

services. This in turn would stimulate demand and lead to growth. High participation

expenditure: Apart from the above-mentioned factors, the input costs are also high. Some of the

reasons for high input costs are:-Withholding tax on interest repayments on foreign currency

loans for aircraft acquisition. Increasing manpower costs due to shortage of technical personnel.



Airports in India (Domestic, International, operational, Non-operational etc.)

Figure 7

HISTORY OF AIR INDIA



Air-India Limited operates passenger and cargo flights from Bombay to destinations in the

United States, Europe, the Middle East, Africa, the United Kingdom, Russia, China, Japan, and

other countries. It holds the distinction of being the world's first all-jet airline. Founded as a

small, private, domestic carrier in 1932, Air-India is now government owned. Once regarded as a

"little jewel" of an airline, its reputation became somewhat tarnished as service and profits

slipped. Significant changes, however, have rejuvenated the airline, put it back in the black, and

restored its ranking among the better airlines of the world. Three million passengers a year fly

Air-India.

Origins

Air-India began operating in 1932 as Tata Airlines, named after J. R. D. Tata, its founder. The

line carried mail and passengers between the Indian cities of Ahmadabad, Bombay, Bellary, and

Madras, and Karachi, Pakistan. Within a few years Tata Airlines' routes included the Indian

cities of Trivandrum, Delhi, Colombo (in Sri Lanka), Lahore, and other locations in between.

In 1946, at the conclusion of World War II, the airline became a public company and was

renamed Air-India Limited. In just two years, with the government having a 49 percent share in

the company, the airline was flying further outside of India, with regular flights to Cairo,

Geneva, and London. The line's name changed again to reflect its new scope of operations,

becoming Air-India International Limited.

India enjoyed more success in the airline industry than most other developing countries for a

number of reasons. Whereas others had to rely on foreign pilots to fly their planes, Air-India

used mostly native-born pilots. Similarly, skilled Indians were plentiful enough to maintain

India's fleet as well as to train and supervise its personnel; many other countries had to go

outside for this kind of expertise. Air-India benefited from these advantages along with its sister

carriers.

Air-India first encountered competition for its routes in the early 1950s. Many new airlines were

forming, propelled into business by the availability of inexpensive, war-surplus DC-3s. No fewer

than 21 airlines had been established, with 11 of them licensed to fly the skies of India. A 1985



article in the Economist cited Tata's foresight of what this plethora of airlines could lead to: "The

scene was well and truly set for the ultimate debacle."

To prevent that debacle from occurring, the Indian government in 1953 took control of all of the

airlines within its borders. Along with the nationalization the government created two

corporations. Indian Airlines Corporation, which merged Air-India Limited with six smaller

lines, served the country's domestic travel needs. Air-India International Corporation flew routes

overseas. By 1960 the international airline had routes to Singapore, Sydney, Moscow, and New

York. By 1962, when the name was shortened to Air-India, it had become the world's first all-jet

airline.

The Jet Age

Beginning in the 1970s, however, Air-India saw difficult times. It suffered a net loss in three of

the years between 1976 and 1985. The downturn in the world economy had a significant effect

on air travel throughout the world, and India was no exception. In addition, the government kept

a number of unprofitable routes open simply for prestige purposes--a strictly commercial airline

may have closed those routes. Its flights to New York, for example, resulted in losses for a

number of years, even though many of those flights were full. At one point an airline official

estimated that only about ten percent of Air-India's passengers to New York were business

travelers who would buy the more expensive seats. Flights to Canada were even less profitable,

flying at around 55 percent of capacity. Another factor in the airline's financial problems was

that, to compete for American and European travelers with American and European airlines, Air-

India had to discount many of its fares. In addition, the airline depended heavily on local

citizens--"ethnic traffic"--which generally meant lower fares.

The routes that had proven to be most profitable for Air-India had been those to the oil-

producing nations. Flights to the Persian Gulf accounted for 35 to 40 percent of Air-India's

traffic in the mid-1980s. Working with Gulf Air, Air-India operated 60 flights each week

between the Gulf and India. But even these routes saw profits fall, as revenue in the gulf states

declined. Another problem was the shortage of tourists traveling to India. Communal violence

and the assassination of Indian Prime Minister Indira Gandhi in 1984 kept tourism down. In



addition, to combat the terrorism that was becoming a major problem at many of the world's

airports, the government imposed heavy restrictions at airports, giving tourists another reason to

stay away.

The darkest note in Air-India's history was the tragedy that took place in June 1985 when one of

its 747s, on a flight from Toronto to Bombay, crashed to the sea with 329 passengers aboard. A

Canadian Safety Board Report, addressing an inquiry by Indian High Court Judge Bhupinder

Nath Kirpal, concluded that an explosive device was the probable cause of the crash. The board

reported that an X-ray machine at Pearson International Airport in Toronto broke down before

the entire luggage had been checked. Nonetheless, the effect on the reputation of Air-India was

severe.

Despite these problems, Air-India's productivity was high. By acquiring large-body airliners, its

productivity almost doubled from the year 1974-75 to the year 1983-84. In terms of rupees, this

productivity figure translated to a per-employee production of Rs 125,000 (US $16,000) in

operating revenue in the 1974-75 year and Rs 439,000 in the 1983-84 year. In 1985 Air-India

flew 8.1 billion passenger-kilometers (number of passengers times distance), a figure that

prompted the International Air Transport Association to rank Air-India 15th out of 136 member

airlines in passenger-kilometers on scheduled services.

Nevertheless, Air-India lost US $23 million in the 1987-88 fiscal years. To stem such losses,

Prime Minister Rajiv Gandhi named Rajan Jetley chairman of Air-India. Jetley took command of

an airline that was overstaffed, mired in sticky negotiations with unions, and struggling under

difficult working conditions. In addition, some bureaucratic meddling and high gasoline taxes

interfered with procedures and made operating the airline expensive.

A number of these factors came together to have a significantly negative impact on the airline.

Specifically, Air-India was flying many flights with intermediate stops, while competing airlines

were flying the more attractive nonstop flights. One reason for these intermediate stops was the

pilots' refusal to fly more than nine hours. A second reason was that, to minimize the effect of

the high cost of fuel, Air-India did much of its refueling outside of India's borders. Jetley dealt



with these problems by convincing the government to reduce its gasoline tax and by convincing

the pilots to fly longer flights.

According to Jetley, as quoted in a 1990 New York Times article, the carrier was "packing the

back of the bus" on many of its routes. In addition to selling coach fares, Jetley hoped to entice

affluent fliers to purchase the more profitable business-class seats. Toward that end he bought

new planes and changed the look of the airline, ordering a new logo and a redesign of the planes'

decor and employees' uniforms and improving in-flight service and meals. He increased the

number of flights to Europe, making Frankfurt, Germany, a hub and enabling passengers to

connect to other European cities. In addition, he adjusted the timing of flights, making it more

convenient for passengers to connect with other flights. Under Jetley's direction, Air-India turned

the loss of the previous year into a profit of US $23 million. The airline rose to number 22 on the

International Air Transport Association's list of the world's most profitable airlines. The

revitalized Air-India saw record profits of US $41 million in the year 1989-90, then topped that

the following year with profits of US $42.7 million. These accomplishments were all the more

startling because they came at a time when many of Air-India's flights to the Persian Gulf had to

be suspended because of the conflict between Iraq and Kuwait and the ensuing Persian Gulf War.

The airline, though, did experience activity during the conflict, launching a massive airlift to help

110,000 Indians flee war-torn areas. Ravi Mani, deputy general director of cargo for Air-India,

was quoted by the Journal of Commerce as saying that compared with this airlift, "the Berlin

airlift was chicken feed."

Air-India was intent on continuing its success of the early 1990s. Although it controlled 28

percent of air passenger traffic out of India, which was a drop from 32 percent just a few years

before. Subbash Gupte, acting chairman after Jetley left his post, explained, as quoted by

the New York Times: "The reason for the drop is simple. Other airlines have expanded, bought

new aircraft; we haven't." Between 1982 and 1986 the airline had kept its capacity at a standstill.

While Jetley was still in command, however, plans were implemented to increase capacity by six

to eight percent each year from 1990 to 1995, reducing the average age of its fleet--13 and one

half years in 1990&mdashø about four and one half years by the turn of the century.



Succeeding Jetley was Chairman and Managing Director Yogesh Deveshwar, who outlined the

airline's direction for the 1990s. As reported in Travel Weekly in 1992, Deveshwar said: "We

want to make Air-India a boutique carrier, as opposed to a department store." Parts of those plans

called for expanding the carrier's United States routes to include Chicago, Los Angeles, and

Newark. Flights to Los Angeles, it was hoped, would attract many ethnic Indians, who were

using other carriers to other points in the Far East and then transferring to Air-India. New

aircraft, including long-haul 747-400s, would help to bring those plans to fruition.

In addition to passengers, cargo has always been a large portion of Air-India's business. Its major

cargo markets are the Persian Gulf countries, Europe, the United States, the United Kingdom,

and Japan. In 1989 (the last year for which figures were available) Air-India ranked 19th among

all International Air Transport Association carriers in scheduled international freight tons. The

carrier handled 66,000 metric tons of cargo that year.

One of the major goals of Air-India for the 1990s was to increase its cargo operations still

further. At the beginning of the decade Air-India had about 30 percent of the country's air cargo

market, while more than three dozen airlines from other countries carried the balance of the

country's cargo. The airline planned to lease additional jet freighters to increase its capacity to

carry exports. The International Airports Authority of India improved the infrastructure and

ground handling at the gateways it operates, making them more attractive to carriers and freight

forwarders. With these changes under way, cargo revenue for fiscal 1990 amounted to US $195

million, 21 percent of Air-India's revenue.

The Challenging 1990s

Air-India lost $171 million in the three years beginning with 1994-95. The airline gained a

reputation for poor service and poor on-time performance. The company initiated a generous

incentive program to motivate employees, which proved successful. In addition, a computerized

flight system and updated lounges and cabin interiors were added to update the company's image

among customers. Management cut fares drastically and provided two-for-one discounts.

In the summer of 1997 the carrier negotiated code-sharing deals with Air France and Singapore

Airlines. Streamlining the carrier's route network became an ongoing process. In fact, Air-India



was notorious for constantly adding and dropping routes. Its network dropped Canada, Australia,

and South Africa in an attempt to cut losses.

Air-India sought to offer its $150 million annual North American income streams as debt

securities, pending the approval of a hesitant Indian government. The company also planned to

raise cash (it already had reserves of more than $110 million) by selling its Hotel Corporation of

India subsidiary, worth at least $220 million, as well as some older Boeing 747-200s, valued at

$60 million.

Still, the company owed $900 million on new aircraft purchases. In spite of this impressive sum,

Air-India found itself chronically short of medium-sized long haul aircraft, reported Air

Transport World. Most of its planes were too large to be profitable on their particular routes, a

liability previously covered by an especially profitable Persian Gulf market.

A recovery seemed to be in place upon the announcement of a quarterly profit of $10 million in

the fall of 1997. More positive results were projected. Operating revenue was expected to reach

Rs 4,189 million in 1997-98.

It was later announced that these results had been overly optimistic; the $10 million profit was in

fact a $10 million loss. Managing Director Michael Mascrenhas announced the news after taking

over from Brijesh Kumar, whose two-year term had just expired. Mascrenhas colored the news

in the best possible light, noting in Air Transport World that Air-India had lost money only "six

times in the last 43 years."

A planned merger between Air-India and Indian Airlines was canceled in spring 1998.

Nevertheless, closer ties between the two carriers remained after the aborted deal. As Air-India

cut routes, it maintained code-sharing deals with Air France, SAS, Singapore Airlines, and

Austrian Airlines. Still, market share fell from 35 percent to 20 percent in 1997-98.

Reducing its annual payroll costs of $40 million was a top priority for Air-India, which had not

found sufficient productivity increases to match its generous incentive programs. Air Transport

World reported that Mascren has trimmed $23 million in other areas.



In spite of these savings, Mascren has predicted Air-India would not pull out of the red for

another two years after projecting a 1997-98 loss of $44 million. To raise desperately needed

cash, the airline offered its hotels and two 747 airliners for sale. As the carrier planned for its

$150 US/Canada security issue, the Indian government also was considering a rescue plan.

Amalgamation of Air India and Indian Airlines with National Aviation

Company of India Limited (now Air India Ltd)

The Government of India, on 1 March 2007, approved the merger of Air India and Indian

Airlines. Consequent to the above, a new Company viz National Aviation Company of India

Limited (NACIL) was incorporated under the Companies Act, 1956 on 30 March 2007 with its

Registered Office at Airlines House, 113 Gurudwara Rakabganj Road, New Delhi. The

Certificate to Commence Business was obtained on 14 May 2007.

It has been decided that post merger, the new entity will be known as “Air India” while

“Maharaja” will be retained as its mascot. The logo of the new airline will be a red colored

flying swan with the “Konark Chakra” in orange placed inside it. The flying swan has been

morphed from Air India’scharacteristic logo “The Centaur” whereas the “Konark Chakra” was

reminiscent of Indian’s logo. The Corporate Office of NACIL will be at Mumbai.

The new logo would feature prominently on the tail of the aircraft. While the aircraft will be

ivory in color, the base will retain the red streak of Air India. Running parallel to each other will

be the orange and red speed lines from front door to the rear door, subtly signifying the

individual identities merged into one. The brand name `Air India' will run across the tail of the

aircraft.



Financial Impact after Merger of Air India and Indian Airlines:

The erstwhile Air India had registered profit of Rs. 65.14 crores and Rs. 12.43 crores in 2004-05

and 2005-06 respectively. During the same period, the erstwhile Indian Airlines had also

registered profit of Rs. 71.61 crore and Rs.63.00 crores. However, erstwhile Air India suffered a

loss of Rs. 541.30 crore and the erstwhile Indian Airlines suffered a loss of Rs. 320.97 crore

during 2006-07.

The merged Air India has also suffered loss of Rs. 2226.16 crore in 2007-08, Rs. 5548.26 crore

in 2008-09, Rs. 5552.44 crore in 2009-10, Rs. 6865.17 crore in 2010-11 and the estimated loss

for 2011-12 is Rs. 7853 crore.

Air India has completed integration of 74% processes and integration of 23% processes is in

progress. The remaining 3% processes are yet to be initiated. The manpower integration is one of

the important processes which are yet to be completed.

Corporate Vision

Vision

To be among top five Asian airlines in terms of Yield, Profitability, Productivity,

Size and Quality Focus on customer satisfaction.

Mission

Focus on customer satisfaction.

Grow with emphasis on sustained profitability.

Provide exciting and satisfying work environment to retain and develop employees.

Focus on social responsibility – environment & community.

Objectives

Achieve unit revenue, unit cost, profitability, productivity and service level targets, based

on benchmarked parameters.



SUBSIDIARY COMPANIES

I. Air India Air Transport Services Limited (AIATSL)

Air India Air Transport Services Limited (AIATSL) provides ground handling services (cargo,

passenger, baggage) at various airports in India. The Chief Operating Officer (COO) of the

company was Captain Gustav Baldauf .Captain Gustav Baldauf resigned as COO of AIATSL on

28 February 2011 because of his remarks against the government of India. The Company has

authorized Share Capital of Rs.500 crores divided into 42,56,36,820 Equity Shares of Rs.10/-

and 74,36,318 Redeemable Preference Shares of Rs.100/- each and present paid-up capital

comprises 15,38,36,427 fully paid equity shares of Rs.10/- each amounting to Rs.153.84 Crores.

It employs all the staff on Contract basis.

II. Air India Charters Limited (AICL)

This subsidiary of Air India operates low cost carrier Air India Express from India to the Gulf

and Southeast Asia.

AICL operates flights from airports in Kerala, Punjab and Mangalore to Dubai, Abu Dhabi, Al

Ain, Muscat and Salalah in the Middle East and Singapore in the east. Air India Charters has

charters flying throughout India. It works with other charter companies including Vibha

Lifesavers for air ambulance and Hi Flying aviation for its general charters in India.

III. Airline Allied Services Limited (AASL)

Airline Allied Services Limited is operating as Alliance Air. Airline Allied Services Limited

provides air transportation services. The company was incorporated in 1983 and is based in New

Delhi, India. Airline Allied Services Limited operates as a subsidiary of Air India Limited.

IV. Hotel Corporation of India Limited (HCI)

It was incorporated on July 8, 1971 under the Companies Act, 1956 when Air India decided to

enter the Hotel Industry in keeping with the then prevalent trend among world airlines. The



objective was to offer to the passengers a better product, both at the International Airport and at

other places of tourist interest, thereby also increasing tourism to India.

Presently HCI operates 2 Hotels, one each at Delhi and Srinagar under the brand name ‘Centaur’

and 2 Flight Kitchens one each at Mumbai and Delhi under the brand name ‘Chefair’.

V. Vayudoot Limited

Delhi-based Vayudoot was launched as a subsidiary of erstwhile Indian Airlines in January 1981

to serve the northeast region. Vayudoot grew to operating in 100 stations across the country. It

ceased operations in 1997 and the airline’s employees were absorbed by Air India.

Air India plans to revive Vayudoot. In its new avatar, Vayudoot will be a feeder service bringing

traffic from small towns to larger cities and state capitals and from there to other national and

international destinations.

VI. Air India Engineering Services Limited (AIESL)

This company was incorporated in the year 2006 to undertake engineering and allied activities. It

undertakes Maintenance, Repair & Overhaul (MRO) activities.



AWARDS AND RECOGNITIONS

Preferred International Airline award for travel and hospitality from Awaz Consumer

Awards 2006.

Best International West Bound Airline out of India for three successive years by Galileo

Express TravelWorld Award.

Best Corporate Social Responsibility Initiative by Galileo Express TravelWorld Award.

Best Short-Haul International Airline by Galileo Express TravelWorld Award 2008.

The Mercury Award for the years 1994 and 2003, from the International Flight Catering

Association, for finest in-flight catering services.

Amity Corporate Excellence Award instituted by the Amity International Business School,

Noida, Uttar Pradesh to honor Corporates with distinct vision, innovation, competitiveness

and sustenance.

Reader’s Digest Trusted Brand Award

Dun and Bradstreet Award (D&B)- first in terms of revenue out of the top airline

companies out of India.

Best South Asian Airline award by readers of TTG Asia, TTG China, TTG Mice and TTG-

BT Mice China, all renowned Mice and business travel publications.

Cargo Airline of the Year at the 26th Cargo Airline of the Year Awards.

The airline entered the Guinness Book of World Records for the most people evacuated by a

civil airliner. Over 111,000 people were evacuated from Amman to Mumbai.The operation

was carried out during Persian Gulf War in 1990 to evacuate Indian expatriates from Kuwait

and Iraq.

The Montreal Protocol Public Awareness Award was awarded to Air India by the United

Nations for environmental protection, especially in the ozone layer.

World's first all-jet airline- June 1962

Air India's security department became the first aviation security organization in the world to

acquire ISO 9002 certification (31 January 2001).

Air India's Department of Engineering has obtained the ISO 9002 for its Engineering

facilities for meeting international standards.



CURRENT FLEET

Air India has had a number of aircraft in its fleet. Below is a list of current Air India aircraft

(includes leased aircraft):

Air India fleet (excl. subsidiaries) as of August 2012:

Aircraft Type

Current Future Historic

TotalActive Stored On Order Due To other Operator Stored Scrapped Written-Off

Airbus A300 5 5

Airbus A310 2 22 3 1 28

Airbus A319 24 24

Airbus A320 28 3 1 32

Airbus A321 20 20

Airbus A330 2 2

Boeing 747 5 15 1 7 3 31

Boeing 757 1 1

Boeing 767 3 3

Boeing 777 20 3 4 27

Boeing 787 Dreamliner 27 27

Douglas DC-8 15 15

Lockheed L-1011 TriStar 1 1

Total 101 0 30 0 66 7 9 3 216



SERVICES

Premium lounges:

The Maharaja Lounge (English: "Emperor's Lounge") is offered to First and Business class

passengers. Air India shares lounges with other international airlines at international airports that

do not have a Maharaja Lounge available. There are six Maharaja Lounges, one at each of the six

major destinations of Air India:

International

London Heathrow Airport

John F. Kennedy International Airport (New York)

India

Bengaluru International Airport (Bangalore)

Chhatrapati Shivaji International Airport (Mumbai)

Indira Gandhi International Airport (Delhi)

Rajiv Gandhi International Airport (Hyderabad)

In-flight entertainment:

Air India's Boeing 777-200LR/-300ER as well as some refurbished Boeing 747-400 aircraft use

the Thales TopSeries IFE systems for on board in-flight entertainment. Airbus A310s do not have

personal LCD screens. Airbus A330s have widescreen displays in Business and Economy classes

but no personal IFEs.



MCKINSEY 7S MODEL

The McKinsey 7S Framework is a management model developed by well-known business

consultants Robert H. Waterman, Jr. and Tom Peters. The 7-S framework of McKinsey is a

Value Based Management (VBM) model that describes how one can holistically and effectively

organize a company. Together these factors determine the way in which a corporation operates.

The 7S model can be used in a wide variety of situations where an alignment perspective is

useful, for example to help you:

Improve the performance of a company.

Examine the likely effects of future changes within a company.

Align departments and processes during a merger or acquisition.

Determine how best to implement a proposed strategy.

The Seven Elements:

The McKinsey 7S model involves seven interdependent factors which are categorized as either

"hard" or "soft" elements:

Hard Elements Soft Elements

StrategyStructureSystems

Shared ValuesSkillsStyleStaff

"Hard" elements are easier to define or identify and management can directly influence them.

These are strategy statements; organization charts and reporting lines; and formal processes and

IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and

more influenced by culture. However, these soft elements are as important as the hard elements

if the organization is going to be successful.



The way the model is presented below depicts the interdependency of the elements and indicates

how a change in one affects all the others.

Figure 8

S1: STRUCTURE



Business needs to be organized in a specific form of shape that is generally referred to as

organizational structure. Organizations are structured in a variety of ways, dependent on their

objectives and culture. The structure of the company often dictates the way it operates and

performs. Traditionally, the businesses have been structured in a hierarchical way with several

divisions and departments, each responsible for a specific task such as human resources

management, production or marketing. Many layers of management controlled the operations,

with each answerable to the upper layer of management. Although this is still the most widely

used organizational structure, the recent trend is increasingly towards a flat structure where the

work is done in teams of specialists rather than fixed departments. The idea is to make the

organization more flexible and devolve the power by empowering the employees and eliminate

the middle management layers.

Being a statutory corporation; Air-India submits a yearly report of its activities to the Parliament

through the Ministry of Civil Aviation. It enjoys functional autonomy and its management is

through a Chairman and Managing Director (CMD) who works under a Board of Directors. The

Board is re-constituted every two years by the Government. The Board of Directors is the highest

governing body of Air-India. Chairman cum Managing Director (CMD) is the Chief executive

of the corporation.

The corporation has its headquarter in Bombay. Bombay headquarter has a big establishment

with well defined divisions and departments. All the policy matters are decided at the

headquarter level and executed through field and branch offices. The field stations and branch

offices are spread in a large number of cities in India and abroad. Under the Managing Director

there are the Deputy Managing Director and a host of Directors looking after various functions

and departments. The following Chart represents the organizational structure.



Figure 9

BOARD OF DIRECTORS OF AIR INDIA LIMITED



1. Shri Rohit Nandan - Chairman & Managing Director

2. Shri Syed Nasir Ali - Jt. Managing Director Air India Limited

3. Shri S Machendranathan - Additional Secretary & Financial Advisor Ministry of Civil

Aviation

4. Shri Prashant Sukul - Jt. Secretary Ministry of Civil Aviation

5. Shri Vipin K. Sharma - SBU Head-MRO (Eng. & Comp.)

6. Shri K.M.Unni - SBU Head-MRO (Airframe) Engineering Department

7. Shri S. Venkat - Director-Finance

8. Shri G.D.Brara - Director-Commercial Air India Limited

9. Shri N K Jain - Director-Personnel Air India Limited

INDEPENDENT DIRECTORS

1. Air Chief Marshal (Retd) - F H Major

2. Shri Harshavardhan Neotia

ORGANIZATION CHART (REGION)



Figure 10

S2: STRATEGY


EXECUTIVE DIRECTOR (NR,SR,WR,ER)

GM(FIN)

DGM(REV) DGM(EXP)

GM(PER)

Sr. mgr(sec) Sr. mgr(med) DGM(PER)

GM(COM)

DGM( COM)

GM( GS)

DGM(GS)

GM(OPS)

DGM(OPS)

GM( ENG)

DGM(ENG)

GM( MM )

DGM(MM)


Strategy is the plan of action an organization prepares in response to, or anticipation of, changes

in its external environment. Strategy is differentiated by tactics or operational actions by its

nature of being premeditated, well thought through and often practically rehearsed. It deals with

essentially three questions (as shown in figure):

1) Where the organization is at this moment in time,

2) Where the organization wants to be in a particular length of time and

3) How to get there.

Thus, strategy is designed to transform the firm from the present position to the new position

described by objectives, subject to constraints of the capabilities or the potential.

Business Strategy of Air India

A Multi-pronged approach

Capacity & Network Expansion – to increase market share & garner competitive strength

Achieve dominance in core markets (USA/UK/Gulf/SEA)

Increase market access through strategic alliances

Product Upgradation:

Deploy modern aircraft with state-of-art passenger amenities

Operate customer friendly schedules with increased network connectivity

Operations Improvement – to reduce unit costs through


WHERE DO WE WANT TO BE?

WHERE ARE WE NOW?

HOW DO WE GET THERE?


Increased asset (aircraft & manpower) productivity

Out-sourcing/hiving-off of non-core activities to subsidiaries

Technology upgradation

Benchmarking & adoption of “Best Practices”

S3: SYSTEMS

Every organization has some systems or internal processes to support and implement the strategy

and run day-to-day affairs. For example, a company may follow a particular process for

recruitment. These processes are normally strictly followed and are designed to achieve

maximum effectiveness.

Air India has been following a bureaucratic-style process model where most decisions are taken

at the higher management level and there are various and sometimes unnecessary requirements

for a specific decision to be taken.

TOP LEVEL MANAGEMENT: CMD

SENIOR LEVEL MANAGEMENT: Directors

MIDDLE LEVEL MANAGEMENT: Executive directors

LOW LEVEL MANAGEMENT: Managers

S4: STYLE

It includes the dominant values, beliefs and norms which develop over time and become

relatively enduring features of the organizational life. It also entails the way managers interact

with the employees and the way they spend their time. Culture remains an important

consideration in the implementation of any strategy in the organization.

In Air India decision making involves discussions among cross section of departments and/or

formal decisions by the Competent Authority on office notes in accordance with the Instrument

of delegation of Financial and Administrative powers.



In respect of decision making on day to day basis at airports/stations, all the Duty

Officers/Station Managers take spot decisions in accordance with the Instrument of delegation of

Financial and Administrative powers and the established practices.

S5: SKILLS

Skills refer to the capabilities of the staff within the organization as a whole. The employees of

Air India Ltd possess different skills which are relevant for their work. They use both on the job

and off the job training methods.

On the job training:

This kind of training is provided to specific employees like operators, engineers, technicians,

security personnel, commercial etc. The period of training depends upon the nature of job.

Off the job training:

Under this method, employees are trained through lectures, written material etc. So the

employees can place their entire concentration in learning rather than spending time in

performing job.

S6: STAFF

Organizations are made up of humans and it's the people who make the real difference to the

success of the organization in the increasingly knowledge-based society. The importance of

human resources has thus got the central position in the strategy of the organization, away from

the traditional model of capital and land.

Air India has total staff strength of about 29,000. The selection procedure includes written test,

group discussion and personal interview for non technical jobs and technical evaluation for

technical jobs. The recruitments of job vacancies are made by publishing advertisement in

newspaper, employment news paper, walk in etc.

S7: SHARED VALUES



All members of the organization share some common fundamental ideas or guiding concepts

around which the business is built. These values and common goals keep the employees working

towards a common destination as a coherent team and are important to keep the team spirit alive.

Safety

Service

Excellence

Teamwork

Accountability

Social responsibility

I. FINANCE AND ACCOUNTS DEPARTMENT

In Air India the finance department basically handles the revenue which consists of tickets, cargo

and freight revenue, excess baggage etc. The basic thing that needs to be maintained is that the



sales account should be updated from time to time so that actual revenue inflow and outflow is

known. From this information funds can be diverted from time to time.

One very important function of the finance department in Air India is to arrange finance

for purchase or leasing of aircraft and non aircraft items. Apart from this department also handles

various functions of different sections like taking care of bad debts, payments of salary and

remittances of cash, transfer of funds, banking, insurance, payment of income tax etc.

FUNCTIONS OF DEPARTMENT OF FINANCE AND ACCOUNTS

1. Billing & Realization of Revenue

2. Liaising with various airports- domestic and international.

3. Dealing with Revenue Policies & Procedures

4. Cash Management including Investment of Funds

5. Compilation of yearly budget for Operational Revenue & Expenditure

6. Compilation of yearly budget for Capital Expenditure including projection of funding

through internal, budgetary and extra-budgetary resources.

7. Finalization of annual accounts of the airline

8. Servicing of loans from Domestic / Foreign sources

ORGANIZATION CHART OF FINANCE DEPARTMENT



VARIOUS SECTIONS UNDER FINANCE DEPARTMENT:

Capital budget

It involves procurement of asset including aircraft and non aircraft items and assigning priorities

to different sections.

1. Financial accounts

It includes ledger booking of each and every section and preparation of annual report. It keeps

check on all the activities, legal chargers, donations, audit fees and deposits made to parties and

deposits received from outside parties.

Fuel and Oil Section

It manages oil and fuel requirement of each and every station of the corporation time to time and

its payments. It also manages the payments made for the same.


GM

DGM(REV)

Sr.mgr

Mgr

Dr.mgr

Ass.mgr

AO

DGM(EXP)

Sr.mgr

Mgr

Dy.mgr

Ass. mgr

AO


Cash / Banking Section

It deals with the treasury management and bank reconciliation statements.

Credit Control

This section is concerned with the Credits and Loans of Air India.

2 . Revenue Pool Section

It manages interlinked settlement with different airlines.

Cargo and Mail Section

Manages revenues collected by the cargo.

Taxation

Calculates taxes like VAT, Income Tax, Sales Tax, Service Tax, Revenue Tax, etc.

Pay Accounts

Concerned with the salary calculation of the employees taking into consideration the allowances

granted to the staff, paid leave, leave without pay, increments, etc.

Internal Audit Section

This section deals with the internal audit of accounts prepared by the Accounting section.

3. Stores Accounts Section:

Stores are those products which are purchased by Air India to be provided on board to the

travelers or for sale. Purchasing of such products is dealt by this section.

4 . Insurance Section:

Deals with aircraft insurance and also non-aircraft insurance like vehicles, machinery and

furniture.

II. PERSONNEL DEPARTMENT

This department is responsible for hiring, training and placing employees and for setting hr

policies. This department includes security and vigilance, medical and human resource.

SECURITY AND VIGILANCE DEPARTMENT



This department is concerned with the discipline of all categories of employees and to curb

corruption and malpractices in the organization. It also provides security to passengers who

board the flight and the entire crew of the organization.

MEDICAL

This is basically a welfare department for the employees. All the cockpit crewmembers are

medically examined before they undertake flight.

HUMAN RESOURCE DEPARTMENT

This department involves recruitment, selection, training and placement of employees. It sets

strategies and develops policies, standards, systems and processes that implement these strategies

in a whole range of areas. It also handles the grievances of employees and act as a link between

the management and trade union.


GM(PER)

Sr. mgr(sec)

mgr

Dy.mgr

Ass. mgr

AO

Sr.mgr(med)

mgr

Dy.mgr

Ass.mgr

AO

DGM(hr)

Sr.mgr

mgr

Dy.mgr

Ass.mgr

AO


FUNCTIONS OF PERSONNEL DEPARTMENT

1. Personnel Policies.

2. Personnel Management.

3. Placement of Personnel.

4. Career Planning and Career advancement of the employees.

5. Welfare.

6. Management of Performance appraisal records.

7. Creation and review of requirement of manpower.

8. Human Resource Development (Recruitment, Training and Counseling).

9. Redressal of Grievances.

10. Implementation of Government Policies on weaker section of the society in personnel

matter.

11. Industrial Relation.

12. Control, Discipline and Appeal of employees.

III. COMMERCIAL DEPARTMENT

The Commercial Department is responsible for the marketing & sale of the services provided by

an airline, for creating and developing traffic, for securing and maintaining friendly relations

with the travelling and trading public and for cultivating good public relations. The fixing of

rates, fares and other charges and the correct collection, accounting and remittance of traffic

receipts are also among its functions.

PASSENGER HANDLING

It includes all the services provided to the passenger from the moment he enters the airport till he

boards the flight. This includes services such as:

Ticketing and reservation, X ray scanning

Providing check-in counter services for the passengers departing on the customer airlines.



Providing Gate arrival and departure services. The agents are required to meet a flight on

arrival as well as provide departure services including boarding passengers, closing the

flight, etc.

Staffing the Transfer Counters, Customer Service Counters, Airline Lounges.

Passenger Facilitation Assistance (PFA) for outgoing and incoming passenger etc.

CARGO

In line with various marketing and pricing initiatives taken in the field of passenger traffic, the

company gave an equal impetus to the steps in the area of improving and upgrading cargo

services. Air India carries all types of cargo including dangerous goods (hazardous materials)

and live animals, provided such shipments are tendered according to IATA Dangerous Goods

Regulations and IATA Live Animals Regulations respectively.

PUBLIC RELATIONS

This department is responsible for promoting the airline's corporate image, boost its reputation

and stimulate demand for its services.

Following are the promotion tools undertaken by Air-India

Press /Media.

Multilingual Advertisement.

Sponsorship.

Lucrative schemes for the customers.

Less financial burdens on buyers.

Product uniqueness propaganda.

Easy accessibility of tickets.

Hoardings and billboards.

ORGANIZATION CHART OF COMMERCIAL DEPARTMENT



MATTERS DEALT IN COMMERCIAL DEPARTMENT

Rates and fares.

Claims for refund and for compensation.

Prevention of Claims.

Marketing & Sales.

Passenger amenities.

Traffic Surveys.

Research and Development.

Catering and Vending.

Ticket checking.

Commercial Statistics.

Computerization of Reservation.

Commercial advertising and publicity.


GM

DGM

Sr.mgr

Mgr

Dy.mgr

Ass.mgr

AO


FUNCTIONS OF COMMERCIAL DEPARTMENT

1. To explore new areas for developing new streams of traffic and to improve the quality of

service provided to traders by maintaining close liaison with them and to ascertain and solve

their problems in connection with expeditious transportation of their goods.

2. To take up measures to arrest competition.

3. To give wide publicity to the various measures adopted to improve passenger services and

facilities provided to the trading public.

4. To convey to the various departmental officers concerned public suggestions and grievances.

5. To correct misstatements made in the Press.

6. To educate staff about their duties and responsibilities as public servants, especially in the

matter of courtesy to the public.

7. To educate the travelling public the rules of health, hygiene and courtesy, and co-operate

with the airline staff in their measures for combating anti-social practices like ticketless

travel begging and un-authorized hawking and causing damage to the property.

IV. GROUND SUPPORT DEPARTMENT

This department undertakes servicing of an aircraft while it is on the ground and (usually) parked

at a terminal gate of an airport. It includes cabin service and catering.

CABIN SERVICE

These services ensure passenger comfort. They include such tasks as cleaning the passenger

cabin and replenishment of on-board consumables or washable items such as soap, pillows,

tissues, blankets, etc.

CATERING

It includes the unloading of unused food and drinks from the aircraft, and the loading of fresh

food and drink for passengers and crew. Meals are typically delivered in trolleys. Empty or trash-

filled trolleys from the previous flight are replaced with fresh ones. Meals are prepared on the

ground in order to minimize the amount of preparation (apart from chilling or reheating) required

in the air. The caterers of Air India Ltd are Taj SATS Air Catering Ltd, Bangalore.



ORGANIZATION CHART OF GROUND SUPPORT DEPARTMENT

V. OPERATIONS DEPARTMENT

Operations Department is responsible for flight operations and also looks after navigational

problems, training and licensing of air crew. The operations department liaises with Air Traffic

Control, Meteorological department and Airports Authority of India to get clearance of aircraft

after each landing and departure. It includes in flight services.

IN FLIGHT SERVICE:

This department is responsible for all the services provided to the passengers on board. It attends

to the needs and requirements of the passengers on board. Some of the services are:

Trolley service in J class.

Tray set up for J and Y class.

Improved variety of welcome drinks on board.

Amenity kits in J class on selection of international sector.


GM(GS)

DGM

Sr.mgr

Mgr

Asst.mgr

AO


FUNCTIONS OF OPERATIONS DEPARTMENT

Ensure a sound Safety Management System.

Promote active participation of all departments in adopting optimum safety standards.

Introduce methods which enhance safety awareness.

Investigate Incidents / Accidents.

Recommend safety measures within the Training environment, thereby addressing known

/ perceived threats and errors.

ORGANIZATION CHART OF OPERATIONS DEPARTMENT



VI. ENGINEERING DEPARTMENT


GM(OPS)

DGM

Sr.mgr

Mgr

Asst.mgr

AO


This department takes care of maintenance, repair and overhaul of aircrafts. It also manufactures

simple equipments required for the aircraft. The prime objective of Air India's Engineering

Department is to maintain all aircraft in its fleet in a continuous state of airworthiness in order to

secure a high level of safety. This involves a system of preventive and corrective maintenance,

including servicing, inspection, testing, overhaul, repair, modification and replacement of parts.

The Engineering Department in Air India ensures maximum availability of airworthy aircraft

without compromising on safety, at high Technical Dispatch Reliability and operating at an

optimum cost in a competitive environment.

Air India’s Engineering Facility is recognized as Certified Repair Shop both by the Federal

Aviation Administration (FAA) of the USA and the European Aviation Safety Agency (EASA).

Air India is certified by DGCA as approved CAR-145 (Civil Aviation Requirements)

Maintenance Organization. Air India is also certified by CAAS (Civil Aviation Authority of

Singapore) and holds ISO-9001:2000 (Bureau of Indian Standards) certification.

ORGANIZATIONAL CHART OF ENGINEERING DEPARTMENT

VII. MATERIALS MANAGEMENT DEPARTMENT


GM(ENG)

DGM

Sr.mgr

Mgr

Asst.mgr

AO


This department takes care of all the purchases and maintenance of the stores. The requirements

of all departments are procured by the Materials Management Department. There are occasions

where department specific requirements are handled differently.

MAJOR PURCHASES UNDER THE PERVIEW OF MMD

AIRCRAFT PURCHASE

This section deals with the procurement of Spare parts and components for all types of aircraft in

Air India's fleet. The procurements are based on indents from MPD and classified as routines,

WSP and AOG (Aircraft on Ground) nature. Whilst arranging to procure the spares and

components, the section keeps continuous communications with our planners at MPD (Material

Planning Division) of Engg. Dept., overseas purchase offices at New York and London and also

with suppliers around the globe.

COMMERCIAL PURCHASE

This section deals with a wide range of items. Activities carried out are as under:

Procurement of Hardware items, Paints.

Abrasives

Books and Periodicals (Except flight use)

Medicines

Office Furniture / Equipment

Service Contracts for typewriters, duplicating machines etc.

Industrial Gases, LPG for canteens

Fuel and Lubricants

Canteen Provisions

Uniform Material

Monsoon Equipment

Tender Advertisement

INFLIGHT SERVICE PURCHASE

This Section deals with the procurement of items required for use on board. The Inflight Service

material is categorized into the following two categories:



1. Consumable Items

2. Non-Consumable Items

Consumable Items:

Items of consumable nature such as hot drink cups, paper napkins, refuse bags, toiletries,

etc.

Food items like caviar, soft drinks, different types of sauce, cheese, biscuits etc.

Bar sale items such as liquor and cigarettes.

Newspaper and magazines.

Non-Consumable Items:

Non-Consumable items consist of major galley inserts such as meal/bar carts, standard units,

Oven cages, refuse containers, carry cots etc. Items such as crockery, cutlery, and linen items

etc., which are of reusable nature, are also categorized as non-consumables.

PRINTING PURCHASE

This section deals with procurement of various kinds of printed and plain stationery items. These

include passenger tickets, boarding passes, airway bills, thermal baggage tags and other flight

related items as also publicity give-away items for Publicity and Cargo Section of Commercial

Department. This Section also undertakes printing of timetables, calendars, visiting cards etc.

This section also deals with procurement of Rubber Stamps, Computer stationery, Pens

consumables, book binding jobs etc.

TECHNICAL PURCHASE

This section deals with all technical requirements /procurement for various departments mainly

Engineering Department, Ground Service dept, DIT, Properties and Facility Division etc. Their

scope of activity is taking care of procurement of spares and services for the equipment used in

various departments. These include:

Transport spares such as tyres, tubes, batteries etc.

Capital items of Ground Support Equipment like tractors, Step ladders, Vehicles, X-ray

machines and electrical equipment.



Procurement of tools both general and special.

Electrical accessories, electronic goods.

Spares for equipment.

Servicing Contracts.

Repair Jobs.

Procurement of spares, tools and equipment from outstations.

IT related products and services.

FUNCTIONS OF MATERIAL MANAGEMENT DEPARTMENT

1. Materials Planning.

2. Purchasing.

3. Store Keeping.

4. Inventory Control.

5. Receiving, Inspection and Dispatching.

6. Value Analysis, Standardization and Variety Reduction.

7. Materials Handling & Traffic.

8. Disposal of Scrap and Surplus, Material Preservation.

ORGANIZATION CHART OF MATERIALS MANAGEMENT

DEPARTMENT



SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position

of the business and its environment. Its key purpose is to identify the strategies that will create a

firm specific business model that will best align an organization’s resources and capabilities to

the requirements of the environment in which the firm operates. In other words, it is the


GM(MMD)

DGM

Sr.mgr

Mgr

Asst.mgr

AO


foundation for evaluating the internal potential and limitations and the probable/likely

opportunities and threats from the external environment. It views all positive and negative factors

inside and outside the firm that affect the success. A consistent study of the environment in

which the firm operates helps in forecasting/predicting the changing trends and also helps in

including them in the decision-making process of the organization.

STRENGHTS

1. Strong financial Backing by the government of India.

2. Brand New Fleet of aircraft.


STRENGHTS

What do we do well?

What unique resources

can we draw on?

WEAKNESS

What could we improve?Where do we have fewer resources than other?What are the others likely to see as weakness?

OPPORTUNITIES

What trends could we take

advantage of?

How can you turn your

strengths into opportunities?

THREATS

What trends could harm us?

What threats do our

weaknesses expose us to?


3. It is known for its unique and high quality "Maharaja" advertising.

4. Air India has its presence in nearly 19 countries.

5. It covers approximately 50 destinations in India.

6. It has a good reputation in both international and domestic markets, quality service and

the age-old Goodwill that has still kept it alive in the interests of the rescue operators.

WEAKNESSES

1. Labor Problems and political intervention is a cause of worry.

2. Air India is operating across broad international and domestic markets competing with

world leading giant airlines as well as local small operators. This lack of clarity on the

strategic direction largely dilutes its capabilities and confuses its brand within markets.

3. Financial crisis leading to payment issues of employees.

4. Under utilization of capacity and resources.

5. Growing Competitor base and entry of Low-Cost Carriers (LCC’s).

6. Poor maintenance of flights.

OPPORTUNITIES

1. India airline industry is growing faster and will continue to grow as the GDP increases,

and the trend is predicted to continue once the slowdown recedes.

2. Dedicated set of customers. Can leverage on brand new fleet.

3. Expansion of routes and international destinations.

4. Solving internal issues regarding workforce can hugely boost image and operations.

THREATS

1. Rising Labor Costs.

2. Rising Fuel Costs.



3. Losing Market share due to other carriers.

4. The Indian Railway Ministry has dramatically improved speed and services in their

medium/long distant routes, attracting passengers away from air service, with prices

almost at par with the low cost carriers.

LEARNING EXPERIENCE



I gained so much knowledge from this organization study in Air India Ltd. It gave me an

exposure to aviation industry. The employees and my guide were very cooperative. They spent

their valuable time in explaining and guiding me throughout this study. This study will be very

helpful in my career. During this exposure my objectives of the study as mentioned under were

successfully fulfilled.

I started my training under the guidance of Mr. Roop Kumar Victor who gave me an

insight of how the organization works.

My study started with industry profile and company profile.

I studied Finance department and it helped me in understanding the various sections

under finance department and how it works.

The various functions and organization structure of Personnel department was studied.

The nature and importance of all the departments in the organization was studied.

It gave me an understanding as to how organization operates.

I was given an opportunity to refer the organization records, where in I got to know about

the documentation procedures involved and gained a fair idea of the functions in Air

India Ltd.

Importance of different management functions such as planning, organizing and staffing,

directing and controlling was known which guide the organization in facing stiff

competition from competitors.

Importance of time management.

The theoretical aspects we learn in class room were implemented here like recruitment

process, training programs, human resource planning, performance appraisal etc.

FINDINGS

The financial resource is allocated by the Union Government depending upon the

requirement of the organization.



There exists a good coordination and communication between different departments and

it is highly hierarchical.

Customer satisfaction is the main motto of Air India limited.

Air India has global presence.

Air India lacks the competency in dealing with its fellow competitors; revenue of the

company has decreased to greater extent, ever since many private firms entered the

aviation industry.

The company believes in adopting latest technology.

There are multiple trade unions, now a day’s strikes have become very common from the

employees.

The company is under financial crisis from past 5 years.

Since the financial crisis aroused, Air India is not able to pay salaries to the employees on

time.

There is an increase in employee (particularly pilots) turn over.

Since it is a government organization decision making is a very time consuming process.

Air India fall Par behind than its competitors in promotional and aggressive marketing

activities.

Promotions to the employees are based on seniority and experience, rather than the

efficiency and achievements of the employees.

Major Key designations are occupied by the aged personnel, so it lacks creative ideas and

thoughts to promote the organization.

Air India is not using its resources in effective manner.

There are more number of complaints regarding poor customer service and rude staff.

Now a day’s Air India is hiring lower level and middle level employees on the contract

basis.

There is more number of employees than required.

SUGGESTIONS



CONCLUSION




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ground support

air india

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