07-07-2022

Case study on FOCUSSES ON:

How poor management, especially in the human resources area, could spell doom even
Air India for a Rs 40 bn monopoly

And Why and how Indian Airlines was constantly plagued by HR problems

It’s HR problems how IA's lackadaisical handling of its HR problems contributed to the overall mess
27 January 2022 Air
India has been
Examines the causes of the HR problems faced by Indian Airlines. welcomed back to
2007 the Tata company
Poor management and stubborn work force can drive a monopoly into losses

Other lapses such as poor canteen management and payment of excessive allowances.
By
Puspendra kumar Rana
Sonali Barve
Shubham Bhoyar
(MBA 1st year)

 Could not sustain competition :

 Formed in May 1953 with the nationalization of the airlines industry through the
Air Corporations Act •By 1999 the losses touched Rs 7.5 bn
•Market share reduced to 47%
 Merger with VAYUDOOT in 1990

INCREASED  Network ranged from Kuwait in the west to Singapore in the east, covering 75  Human resource problems : Lack of MANPOWER PLANNING
PUBLIC destinations
Gross periodic and realistic assessment of the manpower needs
Mismana - RESENTMENT  PRIVATISATION in 1994 need-based recruitment
gement TOWARDS  a mass exodus of its pilots to private airlines optimum utilization of the recruited personnel
THE AIRLINE abolition of surplus and redundant posts
 Competitive strategies

a new image building advertisement campaign

Strict adherence to flight schedules
Frequent better in-flight and ground services No proper mechanism to handle the labour relations particularly the
Strikes by
IA pilots strikes and also the compensation claims WRT to overtime allowances
etc.

 In 2007 the decision to merge Air India with Indian Airlines to form NACIL (National Aviation Company of
India Ltd) was taken.
 IA's eight unions
Use of unscrupulous methods to force the management It is widely considered that the merger was a failure, and the reasons are mentioned below.
Pressurizing IA for more money  Instability at the top
From November 1989 to June 1992, there were 13  Analysts noted that the people heading the airline were more interested in making  The employee headcount
agitations by different unions peace with the unions than looking at the company's long-term benefits.  The difference in the work culture
 working days
 The agitation in April 1995 by PILOTS  Russy Mody (Mody), joined IA as chairman in November 1994, made efforts to  The pilots promotion
demanding higher allowances for flying in international appease the unions by
 ground handling
sectors Raised questions
refused to fly with people re-employed  proposing to bring their salaries on par with those of Air India employees  manager/supervisor coordination
On IA's  Dharmadhikari Committee (in 2012 on HR Issues of merged AI)
 1997 vulnerability increase the age of retirement from 58 to 60 to control the exodus of pilots

 strike for foreign allowances, fixed flying hour, free  Probir Sen (Sen) took over as chairman and managing director
meals & wage parity.
the pilot emoluments on par with emoluments other airlines
 False medical claims
created Alliance Air, a subsidiary airline company where the re-employed people were
utilized
The combined losses of Air India (which was making profits
 April 2000 GO SLOW AGITATION by engineers before the merger) and India Airlines in FY 07 was 770 Cr
pay revision which ballooned to Rs.7200 Crore after the merger by FY 09.
change in the career progression pattern Source- money control

1
 07-07-2022

 INCREASE IN LOSSES DUE TO PLI

A COMPARISON OF VARIOUS AIRLINES
7.1
The Brar committee attributed abnormal increase in staff costs to :
7

6.9 inefficient manpower planning,

Name of Airlines Number of aircraft in fleet No. of employees Employees per aircraft
6.8  unproductive deployment of manpower and
Rs. In billion unwarranted increase in salaries and wages of the employees.
6.7
Singapore Airlines 84 13,549 161
6.6
Analysts criticized the way posts were created in IA
6.5

6.4
Thai Airways International 76 24,186 318 In 1999, Six new posts of directors were created of which three were created by
1995 - 99 1999 dividing functions of existing directors
Indian Airlines 51 21,990 431
 In 1998, IA tried to persuade employees to cut down on PLI and overtime to help the airline no basic educational qualifications prescribed for senior executive posts: a matriculate
weather a difficult period -- efforts failed Gulf Air 30 5,308 177 could become a manager, by acquiring the necessary job-related qualifications &
experience
Kuwait Airways 22 5,761 261
 A net loss of Rs 641.8 mn was registered during the period 1995-99.
Jet Airways 19 3,722 196
 IA had the maximum number of employees per aircraft.

 PROBLEM 1: The management of IA aims at problem solving for short period of time. Also the trade unions seem to be  the management should get into long term alignments/contracts with the trade unions and make them bind with the terms and conditions
much in power and the organizations doesn’t seem to be management driven of the contract so signed.

 PROBLEM 2 : No check on employees with regard to their performance and output during the stipulated time period  employees need to be given targets which have to be achieved within a specific time period and also the implementation
of employee or performance management systems would help keep a check on every one’s output .
 PROBLEM 3 : there were no limits as to which these emoluments and pli schemes were being withdrawn and the costs
were raising  the management should decide a budget with regard to such pli schemes or incentive schemes that are fixed during a time
period for a particular grade and job. For each job the targets as well as the range of earning incentives should be clearly
 PROBLEM 4: The problem of social obligation and less management freedom defined.

 The management should have more powers with itself to take the major decisions regarding technical assistance and
cabin crew so that trained professionals join and perform the tasks.

 A strict check on the various allowances being paid to the employees and their authenticity to be checked.

 The staffing of professionally qualified people suitable for each job such as that of pilots or cabin crew etc should be
hired and if possible they should be hired after signing bonds with the organization.