air india

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A

REPORT

ON

“PROJECT MANAGEMENT: AIR INDIA”

Submitted in partial fulfilment of the requirement of

Master of Business Administration

By

Arun Munjal

Badal Solapurwala

Harsh Parekh

Batch: MBA (2014-16)

AURO University of Hospitality and Management

Surat

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Contents INTRODUCTION .................................................................................................................................. 3

HISTORY ............................................................................................................................................... 4

SUCCESS OF AIR INDIA ..................................................................................................................... 6

OVERVIEW ....................................................................................................................................... 6

CHALLENGE..................................................................................................................................... 6

SOLUTION......................................................................................................................................... 7

RESULTS ........................................................................................................................................... 7

FAILED PROJECT OF AIR INDIA. ..................................................................................................... 9

REFERENCES .......................................................................................................................................... 12

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INTRODUCTION

Air India is the flag carrier airline of India and the third largest airline in India in terms of

passengers carried, after Indigo and Jet Airways. It is owned by Air India Limited,

a government of India enterprise and operates a fleet of Airbus and Boeing aircraft serving

various domestic and international destinations. It is headquartered in New Delhi.[3]

Air India

has major domestic hubs at Indira Gandhi International Airport, New Delhi and Chhatrapati

Shivaji International Airport, Mumbai and secondary hubs at Netaji Subhas Chandra Bose

International Airport, Kolkata and Chennai International Airport. Air India became the 27th

member of Star Alliance on 11 July 2014.

Founded in 1932 by J. R. D. Tata and later renamed to Tata Airlines, he flew its first single-

engine De Havilland Puss Moth, carrying air mail from Karachi to Bombay, and later

continuing to Madras. After World War II, it became a public limited company and was

renamed to Air-India. On 21 February 1960, it included it first Boeing 707–420 named Gauri

Shankar and became the first Asian airline to induct a jet aircraft in its fleet. In 2000–01,

attempts were made to privatise Air India and in 2006 onwards, it suffered losses after its

merger with Indian Airlines.

Air India uses the Airbus A320 family aircrafts with the Boeing 787 aircraft for selected

domestic routes while long distance services use Boeing 777-200LR, 777-

300ER, 747 and 787 aircrafts. Due to losses and financial restructuring, it sold all its Boeing

777-200LR aircrafts in 2013 and 2014

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HISTORY

Tata Sons, a division of Tata Sons Ltd. (now Tata Group) was founded by J. R. D. Tata in

1932. On 15 October 1932, J.R.D. Tata flew a single-engined De Havilland Puss Moth

carrying air mail (postal mail of Imperial Airways) from Karachi's Drigh Road Aerodrome to

Bombay's Juhu Airstrip via Ahmedabad. In its very first year of operation, Tata Airlines flew

160,000 miles, carrying 155 passengers and 10.71 ton of mail. Tata Airlines launched its

longest domestic flight – Bombay to Trivandrum with a six-seater Miles Merlin. In 1938 it

was re-christened as Tata Air Services and later same year was renamed as Tata Airlines. By

this time Delhi and Colombo were also serviced.

• After World War II regular commercial service was restored in India and Tata

Airlines became a public limited company on 29 July 1946 under the name Air India.

• In 1948, after the independence of India, 49% of the airline was acquired by the

Government of India, with an option to purchase an additional 2%.

• In return the airline was granted status to operate international services from India as

the designated flag carrier under the name Air India International.

• This was the airline's first long-haul international flight, soon followed by service in

1950 to Nairobi via Aden.

• On 25 August 1953 the Government of India exercised its option to purchase a

majority stake in the carrier and Air India International Limited was born as one of

the fruits of the Air Corporations Act that nationalised the air transportation industry.

• At the same time all domestic services were transferred to Indian Airlines (later

renamed as Indian).

• Eight pre-Independence domestic airlines, Deccan Airways, Airways India, Bharat

Airways, Himalayan Aviation, Kalinga Airlines, Indian National Airways and Air

Services of India and the Domestic wing of Air India, were merged to form the new

domestic national carrier Indian Airlines Corporation.

• International operations of Air India Ltd. was taken over by the newly formed Air

India International. Indian Airlines Corporation inherited a fleet of 99 aircraft

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including 74 Douglas DC-3 Dakotas, 12 Vickers Vikings, 3 Douglas DC-4s and

various smaller types from the seven airlines that made it up.

• Air India International entered the jet age in 1960 when its first Boeing 707–420,

named Gauri Shankar (registered VT-DJJ), was delivered.

• Jet services to New York City via London were inaugurated that same year on 14

May 1960.

• On 8 June 1962, the airline's name was officially truncated to Air India. On 11 June

1962, Air India became the world's first all-jet airline.

• In 1971, the airline took delivery of its first Boeing 747-200B named Emperor

Ashoka (registered VT-EBD).

• In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-

400 named Konark (registered VT-ESM) made history by operating the first non-stop

flight between New York City and Delhi.

• In 1994 the airline was registered as Air India Ltd.

• Air India International entered the jet age in 1960 when its first Boeing 707–420,

named Gauri Shankar (registered VT-DJJ), was delivered.

• Jet services to New York City via London were inaugurated that same year on 14

May 1960.

• On 8 June 1962, the airline's name was officially truncated to Air India. On 11 June

1962, Air India became the world's first all-jet airline.

• In 1971, the airline took delivery of its first Boeing 747-200B named Emperor

Ashoka (registered VT-EBD).

• In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-

400 named Konark (registered VT-ESM) made history by operating the first non-stop

flight between New York City and Delhi.

• In 1994 the airline was registered as Air India Ltd.

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SUCCESS OF AIR INDIA

Air India required a resilient, scalable, low-maintenance platform to support critical

messaging and calendaring services for more than 10,000 employees. By selecting SUSE®

Linux Enterprise Server for System z to run its Lotus Domino environment, the airline gained

a responsive platform for corporate communications that can be managed with just two

dedicated staff. The stability of the SUSE operating system keeps maintenance tasks to a

minimum and helps ensure high quality of service.

OVERVIEW

Air India is the country’s flag carrier airline, with a fleet of more than 100 modern aircraft

serving 59 domestic destinations and 31 international destinations across four continents. A

member of the Star Alliance global network, Air India has 23,000 employees and has a 19

percent share of the domestic market.

CHALLENGE

When Air India merged with Indian Airlines in 2007, it was important to consolidate IT

systems in order to help realize the targeted financial benefits of the merger. One key

decision was around the corporate messaging and calendaring system— vital for smooth

internal operations as well as communications with external partners and customers. With

only limited internal IT resources, and a growing focus on taking cost out of the business

after the merger, the airline required a solution that would ensure strong performance for a

large number of users without requiring significant administration. This implied finding a

solution that would offer a high degree of stability and resilience, as well as consistent long-

term vendor support. The merging companies selected Lotus Domino as the new corporate

standard for messaging and shared calendaring. To minimize disruption and staff training

requirements, Air India planned to benefit from existing investments in platform technology,

bringing the choice of platform down to AIX on IBM Power Systems hardware or Linux on

the IBM System z mainframe platform.

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SOLUTION

Air India decided to deploy its Lotus Domino environment on SUSE Linux Enterprise Server

for System z. The company uses three Integrated Facility for Linux (IFL) processors on a

mainframe that is dedicated to the Domino workload. Sanjay Agarwal, AGM

(Systems/Maintenance) at Air India, said: ―We felt that SUSE Linux Enterprise Server for

System z would be the best platform for supporting a large number of email accounts—we

did not want to have any issues with scalability or performance.‖ IBM recommended the use

of the SUSE Linux Enterprise platform over competing distributions, and the ability to

deploy it on IFL processors helped Air India to keep the ongoing cost down. ―SUSE Linux

Enterprise Server for System z was launched as long ago as 2000, so it’s a highly mature

enterprise operating system,‖ said Sanjay Agarwal. ―We know that both IBM and SUSE are

committed to continually refining the already-excellent performance and stability, and it’s

good to know that we have their backing.‖ Running on two logical partitions, the Lotus

Domino landscape at Air India is split into two nodes that are clustered at the application

level to ensure high availability. In the event of any loss of service, users are automatically

switched from the failed node to the remaining node in the cluster. This approach also

facilitates maintenance and backup tasks. ―Using SUSE Linux Enterprise Server for System z

gives us a highly responsive platform that also simply keeps working without any real need

for maintenance,‖ said Sanjay Agarwal. ―We can therefore focus our attention on

administering the Lotus Domino environment itself, so that we can offer a fast, high-quality

email service to our users.‖

RESULTS

For Air India, a key advantage of using SUSE Linux Enterprise Server for System z is the

reliability of the platform, which helps the company both to minimize the administrative

overhead and to ensure excellent levels of service. ―SUSE Linux Enterprise Server for

System z has a very long track-record of extreme stability at Air India,‖ said Sanjay Agarwal.

―We simply don’t see any crashes or instability, which translates into better availability and

performance for our users, as well as minimizing the administrative effort for the IT team.‖

SUSE Linux Enterprise Server for System z provides several unique tools for system

administrators to help reduce the maintenance burden, including ZYpp for optimized package

management, and YaST and AutoYaST for system installation and configuration. Combined

with strong local and international support, these tools help make the operating system a true

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enterprise-class platform for critical workloads. ―In our limited experience, the support from

SUSE has been great,‖ said Sanjay Agarwal. ―It is vital for us to ensure exceptional

performance and constant uptime for our 10,000-plus email users, so we absolutely need an

operating system that is up to the task. With SUSE Linux Enterprise Server for System z, we

need only two personnel to manage this whole environment, which is a great advantage from

the perspective of operational costs.‖

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FAILED PROJECT OF AIR INDIA.

This case is about human resource management issues at Air India (AI) after its merger. AI

was the merged body of Air India Limited (AIL) and Indian Airlines Limited (IAL). The

merger was approved in 2007 and the merged body was called the National Aviation

Company of India Limited (NACIL). There were various HR issues and other reasons which

led AI into a crisis. The merger was initiated with the aim of making profits and gaining high

market share for the airline. But because of post-merger HR issues like compensation, career

progression, and salary payment, promotion issues, and employee strikes, the merger did not

yield the intended objectives.

The following are the factors that dragged the airlines down and possible fixes:

1. LEADERSHIP

Praful Patel, the aviation minister who led the Air India-Indian Airlines merger in 2007, has

been keeping a low profile since a pilot strike stalled the airline's cash making international

operations.

Current Aviation Minister Ajit Singh pulls his punches when he talks of coalition colleague

Patel: "In retrospect, it is easy for people to say things. At the time of the merger it must have

seemed the right thing to do." But others point out Air India has had four chairmen in the last

six years with no one biting the bullet on tough decisions.

"How can you think of achieving success with such instability at the top," asks Kapil Kaul,

CEO-South Asia, Centre for Asia Pacific Aviation.

SOLUTION:

Appoint a professional CEO backed by a strong board of directors and give him a free hand

(Accenture, the consultant at the time of the merger, had recommended a minimum five year

tenure). In effect, the government will have to cede control of day-to-day running of

operations and appoint independent directors (an experiment attempted earlier).

2. BLOATED HEADCOUNT

The merger brought together two disparate entities and created a behemoth with 30,517

employees - 214 per plane. Singapore Airlines has 161 while British Airways has 178.

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Air India's high employee-aircraft ratio is expected to come down to 110 per aircraft once

19,000 employees are transferred to two new proposed units - one for ground handling and

the other for maintenance, repair and overhaul (MRO) operations. But, even here, workers

want to be deputed rather than transferred.

SOLUTION:

Carry out the planned spin-off of the ground handling and maintenance, repair and overhaul

operations. Offer a voluntary retirement scheme if still necessary.

3. HR INTEGRATION

If the jumbo-sized staffs were not enough of a headache, the way the management went made

for a perfect storm. No attempts were made to standardise hiring policies for the rank and file.

Air India has a five-day week; Indian Airlines has a six-day week. Indian Airlines pilots were

promoted unconditionally once in six years while Air India pilots complained they got their

turn after 10 years - if there was a vacancy. The ground handling teams of the two airlines

continue to operate separately.

"Before the merger, due diligence on HR issues was very poor," says CAPA'S Kaul. Some of

the gaps are being addressed but the process has been painfully slow. Five years after the two

airlines merged, staffers below the level of deputy general manager have still not been

integrated.

SOLUTION:

Air India will have to cut layers of management, align staff by role, bring in lateral hires,

overhaul customer facing functions, and implement a massive training exercise. And, rein in

pilots and engineers, even if it means a partial lockout. Minister Singh's answer was a

noncommittal "I hope not", when asked about such a possibility.

4. AIRCRAFT, TICKETING

Look at any modern airline operation and you notice the obsessive attention to pare costs.

And, one way airlines have success fully worked at eliminating expenses without hurting the

service experience is to have a fleet with a single aircraft type.After the merger, Air India

continues with both Boeing and Airbus-made planes: the international operations are run

mostly by wide-body Boeing 777 jets, while domestic routes mostly use A320S. The result:

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high operations, maintenance, and manpower costs. Air India was also hurt by the delay in

integrating the two airline reservation systems. A single system allows it to sell tickets under

one airline code, join alliances and ink code-share agreements. It took until February 2011 for

a common reservation system to come up.

SOLUTION:

There are airlines that run successfully with two or more aircraft types. But India is a price-

sensitive market, and a model built around a single aircraft-type makes compelling sense.

IndiGo, India's only profitable airline, uses 56 Airbus made jets to fly to places as diverse as

Bangalore and Bangkok. Airline mergers the world over have had abysmal success

rates. Even the Delta Air Lines and Northwest Airlines merger in the US, considered

successful, took more than two years to start operating as a single carrier.

5. LEAKY FINANCIALS

No business enterprise, not even one backed by the sovereign, can survive years of loss with

no turn around visible. The airline's total debt, as of financial year 2011, was Rs 44,000 crore.

About half of that is from long-term loans for aircraft purchase. A CAG report termed

the purchases a "recipe for disaster" . While acquiring some 110 new planes may have made

strategic sense for the national carrier in the mid-2000s, Air India did not have the financial

health to sustain a spend of Rs 40,000 crore.

SOLUTION:

Turning Air India around will be a long haul. The government and the airline should be clear

that the odds of its survival are slim. But together with incentives, a charismatic leader and

conditional support from the government, Air India could fly again.

The flag carrier did so well in the 1960s and 1970s that a certain fledgling airline from

Singapore came visiting to learn from it and grew into the feted Singapore Airlines of today.

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REFERENCES Projects : Air India Project | The World Bank. 2015. Projects : Air India Project | The World Bank.

[ONLINE] Available at: http://www.worldbank.org/projects/P009596/air-india-project?lang=en.

[Accessed 09 December 2015].

Air India-Indian Airlines merger: A study on how not to merge two entities . 2015. Air India-Indian

Airlines merger: A study on how not to merge two entities . [ONLINE] Available

at:http://www.businesstoday.in/magazine/features/air-india-indian-airlines-merger-makes-for-

great-case-study/story/185157.html. [Accessed 09 December 2015].

Air India Story. 2015. Air India Story. [ONLINE] Available at: http://airindiastory.blogspot.in/.

[Accessed 09 December 2015].