AIR INDIA CRISIS

BY

PINKAL PATEL

ANKIT CHAUHAN
History

Founder

Air transport
was born in
India on
February 18,
1911
Mr. J R D Tata
Company Perspectives

Air-India is India's fnest yin!

Ambassador" #$e do to e%ce& and t$e
ent$usiasm w$ic$ c$aracteri'ed Air-
India's frst i!$t way bac( on
)ctober 1*, 19+, is -uintessentia&
even today--t$an(s to ei!$teen
t$ousand Air Indians w$o $ave (ept
a&ive t$e tradition o. yin! $i!$/
HI1#)23 )F AI2 I45IA
In 1932,
Air India began its journey under
the aegis of Tata Airlines, a division
of Tata Sons Ltd. (no Tata !rou"#.
$olloing %orld %ar II in 19&',
regular (o))er(ial servi(e as
restored in India and Tata Airlines
be(a)e a "ubli( li)ited (o)"any
under the na)e of Air India. *nder
the Air +or"orations A(t of 19,3,
the !overn)ent nationalised the air
trans"ortation industry and Air
India International Li)ited as
born.
In 19'-,
Air India flew its first
international flight to New
York via London. In 1962, Air
India became the worlds first
all!"et airline and its name
was officiall# tr$ncated to Air
India
Company Perspectives

Air-India is India's fnest yin!

Ambassador" #$e do to e%ce& and t$e
ent$usiasm w$ic$ c$aracteri'ed Air-
India's frst i!$t way bac( on
)ctober 1*, 19+, is -uintessentia&
even today--t$an(s to ei!$teen
t$ousand Air Indians w$o $ave (ept
a&ive t$e tradition o. yin! $i!$/
In ,667,

IndiaandIndian Airlinesmer!ed
into one air&ine, wit$ its name
remainin! Air India" Air India is now a
part o. 1tar A&&iance and is supposed
to be 8oined by A&&iance Air and Air
India 9%press soon"
./AS01 $0.
AI. I12IA
+.ISIS
.eason for Air India +risis

The real reasons behind the

present financial crisis are the
interest burden , repayment and
overhead expenses.
P : & ;a&ance s$e
et
A((ording to Ti)es of India
nes"a"er till 1 ee3 ago

Annual Losses of Rs. !!! cr and total

accumulated loss of Rs "#!!! cr.

$t compensation Rs. "%!! cr to state o&n airport

operator.

Air $ndia has "!' of total (lobal airlines revenue

losses

Air $ndia is facin( a ti(ht financial situation and is in

tal)s &ith leaders to restructure its debt of Rs. %!) cr.

As of March *!"", Air $ndia has accumulated a debt of

Rs. %*,+! cr and an operatin( loss of Rs. **,!!! cr,
and is see)in( Rs. %*,,*! cr from the (overnment. -or
the past three months .June, July, Au(ust, *!""/, the
carrier has been missin( salary payments and interest
payments

A report by the 0omptroller and Auditor 1eneral .0A1/

blamed the decision to buy """ ne& planes as one of
the ma2or causes of the debt troubles in Air $ndia.
The (auses

3ad mana(ement and unreliably policies

has brou(ht Air $ndia crisis level

Complete lack of ownership

La)e of responsibility for results and

failures.

Deeply in(rained corruption in all levels.

4nioni5ed stri)e &ith political financial support

has physical disability of Air $ndia.

The Top 3oss of Air $ndia not havin( decision

po&er as there &ill be ministry interventions &hich
leads to la)e of cohesiveness, focused, proactive
and lon( term business plannin(.
!overn)ent Turnaround Strategy of Air
India

3ail 6ut plan for Rs."!!! cr 7 Rs. !!!

cr. as e8uity infusion and the balance as
soft loan &ith lon( term repayment period
and subsidi5ed interest rate.

$mproved defined &or) methods &hich

could lead to substantial cost reductions
.evival Strategies
The cash strapped Air $ndia revival strate(ies can be comprehensively
dra&n out on short term , medium term and lon( term basis. The Area of
9trate(ic $nterest should be on follo&in( business. The most important
aspect to address &ould be team&or) and response spontaneity.

Air $ndia the international brand

". -ull service hi(h value travel
*. 3usiness 0lass travel

Air $ndia 7 the national brand

". -ull service hi(h value travel
*. 3usiness 0lass travel

The 0ar(o 9ervices

.evival Strategies

9hort term strate(y &ould in evaluatin( and reor(ani5in( in other strate(y

area and existin( operation &hich are to be completed in : to # months time

Medium term strate(y &ould be in $nternational , ;ational and 0ar(o service

&ith an comprehensive analysis of se(mentation of mar)et to be executed in #
to "* months

Lon( term strate(y &ould be online of (lobal perspective to the aviation

business and developin( further future strate(y to be considered for "* months
and beyond periods.

The main values for revival strate(ies should be a(ility , team &or) and
response spontaneity to services.
#$an(
3ou