SUBMITTED BY :

CHARU JAGWANI
DIVYA JAIN
PAYAL AGARWAL
PALAK MANDHYAN
HARSH PAREKH
DIVYA LOHIYA
RITIKA YADAV
MANALI KANTHARIA

Contents
INTRODUCTION OF AIR INDIA4
VISION................................................................................................................. 5
MISSION.............................................................................................................. 5
ORGANISATIONAL STRUCTURE

MARKET SHARE OF AIR INDIA

MARKET REPUTATION.......................................................................................... 8
On-Board Service.................................................................................................... 9
Network................................................................................................................ 9
Price..................................................................................................................... 9
Catering................................................................................................................ 9
Entertainment....................................................................................................... 10
Ground Service and baggage..................................................................................... 10
Premium Classes & Lounges..................................................................................... 10
Economy Class...................................................................................................... 10
Frequent Flyer Programme....................................................................................... 11
Corporate Culture.................................................................................................. 11
Safety................................................................................................................. 11
Air India - Rating................................................................................................... 11
CONTRIBUTION TO GDP:..................................................................................... 12
SWOT ANALYSIS 12
Strengths in the SWOT analysis of Air India.................................................................12
Weaknesses in the SWOT analysis of Air India.............................................................13
Opportunities in the SWOT analysis of Air India...........................................................13
Threats in the SWOT analysis of Air India....................................................................14
CORPORATE SOCIAL Responsibility (CSR)

15

Environment protection........................................................................................... 16
Environment management system.............................................................................. 16
EU-ETS.............................................................................................................. 17
Encouragement/assistance to small scale industrial units...................................................18
CASES OF AIR INDIA

19

AIR INDIA DREAMLINER GROUNDED FOR 9 MONTHS, WITH 400 PARTS MISSING....19

AIR INDIA ENGINEERS THREATEN TO DRAG MANAGEMENT TO COURT.................19

Air India grounds 125 overweight cabin crew..............................................................20
FLIERS AND REVENUE INCREASE AS AIR INDIA JOINS STAR ALLIANCE.................21
FUTURE MARKETING STRATEGIES 23
Air India, Others Plan Direct Flights To Top Global Destinations.....................................23
Air India May Add 4-5 New European Destinations, Opt For Bigger Aircraft......................24
Air India Chalks Out Two-Pronged Strategy To Up Share In Domestic Skies......................26
CONCLUSION AND RECOMMENDATION
REFERENCES

30

29

INTRODUCTION OF AIR INDIA

Air India is the flag carrier airline of India owned by Air India Limited (AIL), a Government
of India enterprise. It is the third largest airline in India (after Indigo and Jet Airways) in
domestic market share, and operates a fleet of Airbus and Boeing aircraft serving various
domestic and international airports. It is headquartered at the Indian Airlines House in New
Delhi. Air India has two major domestic hubs at Indira Gandhi International Airport
and Chhatrapati Shivaji International Airport, and secondary hubs at Netaji Subhas Chandra
Bose International Airport, Kolkata and Chennai International Airport. The airline formerly
operated a hub at Frankfurt Airport which was terminated on account of high costs. However,
another international hub is being planned at the Dubai International Airport.
Air India was once the largest operator in the Indian subcontinent with a market share of over
60%. Indifferent financial performance and service, labor trouble pushed it to fourth place in
India, behind low cost carriers like Indigo, Spicejet, and its full service rival Jet Airways.
Between September 2007 and May 2011, Air India's domestic market share declined from
19.2% to 14%, primarily because of stiff competition from private Indian carriers. However,
after financial restructuring and enforcement of strict rules and regulations, the airlines
showed signs of turning around. In March 2013, the airlines posted its first
positive EBITDA after almost 6 years. The airlines bolstered its financial and physical
performance with a 44 per cent slash in its operating losses in 2013-14 and an almost 20 per
cent growth in its operating revenue since the previous financial year. As of January 2014,
Air India is the third largest carrier in India, after IndiGo and Jet Airways with a market share
of just above 19%.
The airline was invited to be a part of the Star Alliance in 2007. Air India completed the
merger with Indian Airlines and some part of the agreed upgrades in its service and
membership systems by 2011. In August 2011, Air India's invitation to join Star Alliance was
suspended as a result of its failure to meet the minimum standards for the
membership. However, in October 2011, talks between the airline and Star Alliance resumed.
On 13 December 2013, Star Alliance announced that Air India and the alliance have resumed
the integration process and the airline became the 27th member of Star Alliance on 11 July
2014.

VISION
To be the leader in Indian aviation and Indias Ambassador to the world.

MISSION
Leadership
Customer
Provide safe, reliable and on-time services
Deliver the highest quality of service around the world
Be the epitome of Indian hospitality
Processes
Continuously improve standards of safety and efficiency
Operate and maintain a young and modern fleet
Provide the best and most efficient network
Create economic value
People
To be the employer of choice
Build a highly motivated and professional team
Maintain highest degree of transparency and ethics
Be a responsible corporate citizen
Indias Ambassador
Be Indias flag carrier in spirit and action
Provide seamless travel within India and the world
Connect Indians worldwide
Values

 Zeal to excel and zest for change

Integrity and fairness in all matters
Respect for dignity and potential of individuals
Strict adherence to commitments
Ensure speed of response
Foster learning, creativity and team-work
Loyalty and pride in the Company

ORGANISATIONAL STRUCTURE

MARKET SHARE OF AIR INDIA

Air India was once the largest operator in the Indian subcontinent with a market share of over
60%.[7]Indifferent financial performance and service, labor trouble pushed it to fourth place in
India, behind low cost carriers like IndiGo, SpiceJet, and its full service rival Jet Airways.
Between September 2007 and May 2011, Air India's domestic market share declined from
19.2% to 14%, primarily because of stiff competition from private Indian carriers. However,
after financial restructuring and enforcement of strict rules and regulations, the airlines
showed signs of turning around. In March 2013, the airlines posted its first positive
EBITDA after almost 6 years. The airlines bolstered its financial and physical performance
with a 44 per cent slash in its operating losses in 2013-14 and an almost 20 per cent growth in
its operating revenue since the previous financial year. As of January 2014, Air India is the
third largest carrier in India, after IndiGo and Jet Airways with a market share of just above
19%.
In 2015 the market share of Air India with respect to the other domestic flights is as follows:

MARKET REPUTATION
The

market

reputation

field

has

evolved

from

the

marriage

of

the

fields

of reputation management and brand marketing. In the socially connected world of the new
millennium a brand's reputation is vetted online nearly in real-time by consumers leaving
online reviews and citing experiences on social media websites.

Market reputation of Air-India in context with the different catergories related to air-lines
industry:

On-Board Service
Air India was once a by-word for poor service. Not only were aircraft interiors filthy but staff
were rude, lazy and typically invisible. International flights even carried rats and cockroaches
on board. Service has improved immensely and passengers can now expect reasonable
standards. Premium passengers are treated better than others but some staff still have a
superiority complex over passengers. Crews are colourfully attired in an unmistakably Indian
uniform.

Network
Air India has a comprehensive point to point domestic network and also flies to a large
number of international destinations especially to the Persian Gulf region. Air India has lost a
considerable amount of business to its superior Indian competitors; Kingfisher Airlines and
Jet Airways and have withdrawn from many routes.

Price
Whatever price Air India is charging it is difficult to be convinced buying a ticket on them is
a value for money proposition. Air India is never the best airline on any route. On domestic
legs no-frills competitors are cheaper and quality airlines are better. To the Gulf region almost
any other airline is better than Air India, providing far superior service and on long distance
international legs Air India are beaten for value and service by competitors.

Catering
Premium passengers get excited when staff actually deliver the drink theyve requested made
correctly. As for their meals, they are poorly presented and of a very average quality.
Economy passengers do get fed, but the Indian style meals are sloppily presented and not
very exciting. However as Air India meals are prepared by different catering companies
around the world they do vary and some are quite satisfactory. Passengers are extremely
unlikely to get Delhi belly from Air India cuisine. Surprisingly even Maharajah
(Business)Class get plastic cutlery.

Entertainment
Newer larger aircraft typically on longer legs have the latest in-flight entertainment systems
with individual seat back screens playing a wide selection of current Hollywood and
Bollywood movies together with plenty of audio channels. Older aircraft will have the single
large screens at the front, but these are progressively being updated with individual
entertainment units. Smaller aircraft on short legs will have nothing but the in-flight
magazine. Staff is unapologetic if the entertainment is broken.

Ground Service and baggage

In general ground service at Indian airports is superior to that provided at most American,
Australian and European airports. Security is better, staff is more abundant and queues are
shorter. Baggage is well handled and transfers are completed efficiently. Indian check-in staff
are quite pleasant, well-educated and multi-lingual.

Premium Classes & Lounges

Air India has lifted its game with the arrival of Kingfisher Airlines and Jet Airways and it
seems most of their premium passengers have flocked to the newer, better carriers. Air India
simply cannot compete with these more sophisticated airlines together with the infinitely
superior service to be found on the likes of Singapore Airlines, Emirates and Etihad. The only
thing that Air India can offer premium passengers is a cheaper ticket price. Interiors are OK,
service is alright and meals are not too bad. It is simply impossible to WOW over anything.
As for Air Indias five Maharajah Lounges; they are quite nice with a distinctive Indian
flavour about them, nice colours but are surpassed by more luxurious airlines.

Economy Class
Paying a little bit extra will typically buy Economy passengers a far nicer experience on a
better airline. Within Indias competitive domestic market there are plenty of better airlines,
and on shorter routes Indias Railways remain highly competitive and efficient. The busy
India Gulf sectors are well served by several quality airlines which not only provide good
prices but more comfort. If tourists wish to begin their Indian holiday at the city of departure
then Air India promises to deliver. Economy passengers can expect a basic onboard
experience and a crowded flight that will touch down in India with floors littered with
rubbish and toilets overflowing with filthy water and stinking like a sewer. Long distance Air
India flights for Economy passengers can be unpleasant.

Frequent Flyer Programme

With Air India admitted to Star Alliance there seems no point in being a member of their
frequent flyer programme as other airline membership cards will earn points on their airline.
Air Indias loyalty scheme is called Flying Returns and in keeping with most other frequent
flyer programmes points are almost worthless and members need to do a considerable amount
of flying before any benefits will accrue.

Corporate Culture
In the past Air India can lay claim to being one of the most corrupt airlines in aviation.
Managers accepted bribes from passengers to take excess baggage. Bribes were made to
accept extra passengers who were on-loaded as infants and senior management knew,
tolerated and participated in all manner of bribe taking, corruption and nepotism. The airline
has lifted its game, however many of these culprits are still working in aviation and Air India
has never exorcised itself of these demons. Management remain incompetent, dishonest and
boastful of their own and the airlines abilities. Most staff are too grateful for their job to do
anything about it. Airbus and Boeing ought to see the colour of Air Indias money before the
airline takes delivery for equipment. They are notoriously difficult to get money out of.

Safety
Air India has had approximately 10 fatal accidents; its worst a terrorist bomb in 1984. The
airline has an unenviable safety and maintenance record but has recently improved its
performance from sub-standard to satisfactory. Terrorist related security at Indias airports is
so excellent passengers will realise how pathetic American measures are in comparison, but
baggage remains the weak link. Air Indias engineering facilities have an ISO9002 rating
which is meant to mean it meets international standards. But corruption in the airline raises
concerns over aircraft spare parts and accuracy of record keeping concerning aircraft
checking.

Air India - Rating

A terrible reputation it earned through delivering consistently inferior service at an average
price.
CATEGORIES

RATINGS

Food & Beverages

Inflight Entertainment
Seat Comfort
Staff Service
Value for Money

3/5
2/5
4/5
3/5
3/5

AVERAGE RATE

6/10

CONTRIBUTION TO GDP:
Air India contributed .0096% out of the total share in GDP in the last financial year of the
country.

SWOT ANALYSIS
Strengths in the SWOT analysis of Air India
Air India has been the largest air carrier in India in terms of traffic volume and company
assets.
It owns the most updated fleet and competent repairs and maintenance expertise.
Its information systems are advanced and compatible with its operation and service.

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.
Has financial backing of the Government

Weaknesses in the SWOT analysis of Air India

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.
Low profitability and utilization of capacity. Growing Competitor base and entry of LowCost Carriers (LCCs)
The airlines high-cost structure and the compulsions of being a public sector unit are the
reasons and it had been making a loss and shall continue to make losses for some more
quarters.

Opportunities in the SWOT analysis of Air India

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.
Worldwide deregulations make the skies more accessible; the route agreement is easier to be
achieved. The number of foreign visitors and investors to India is increasing rapidly.
Complementary industry like tourism will increase demand for airline service. The Civil
Aviation Ministrys strong regulation and protection provides opportunities for consolidation
and optimization.
Customers are getting wealthier, tend to be less price-conscious and prefer to choose quality
service over cost. Best time for introducing LCCs

Threats in the SWOT analysis of Air India

Air India faces imminent aggressive competition from world leading airlines and price wars
triggered by domestic players.
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

CORPORATE SOCIAL Responsibility (CSR)

Corporate social responsibility (CSR, also called corporate conscience, corporate
citizenship or responsible business) is a form of corporate self-regulation integrated into
a business model. CSR policy functions as a self-regulatory mechanism whereby a
business monitors and ensures its active compliance with the spirit of the law, ethical
standards and national or international norms. With some models, a firm's implementation
of CSR goes beyond compliance and engages in "actions that appear to further some social
good, beyond the interests of the firm and that which is required by law." CSR aims to
embrace responsibility for corporate actions and to encourage a positive impact on the
environment and stakeholders including consumers, employees, investors, communities,
and others.
Air India Company has taken up several projects for CSR involving Environment,
Education, and Sports. The Department of Quality Management System has been
entrusted with the task of handling the CSR activities carried out by the Company. The
Company is in the process of signing MoU with Tata Institute of Social Sciences (TISS)
for working on the project of CSR in Andaman & Nicobar Islands.

Environment protection
Environment management system
Various initiative were introduced for reducing Carbon Dioxide emission through
initiating changes in policies and procedures across operation, Engineering ground
handling,etc., initiating tree plantation and commencement of document management
system to reduce use of paper in office.
Air India has, up to 57,381,004 Kgs in 2008-09 fuel saved and the saving went to
76,939,253 kgs in 2010 and the figure raised more in 2015. Also in march 2012, reduced
carbon emission to the tune of 66,79,27,566 kgs and in 2015 The state-run airline could
add at least 20 fuel-efficient planes by leasing, or swapping existing orders with plane
makers. All efforts are being continued to make Air India the Green Airline in India.

EU-ETS
Various procedures were adopted in operational areas, which helped the company reduce
carbon emissions. The European Union Trading Scheme (ETS) has mandated for the
aviation industry that all flights with origin or destination in the European Union would
have to be necessarily covered by the scheme. Air India submitted the ETS required plans
for the annual emission and tone kilometer monitoring in August 2009 and from then
company is associated with ETS.
Air India has successfully cleared the EU-ETS audit and verification process, which was
conducted by M/s. Bureau Veritas from 22 March to 25 March 2011. The verification
report and data was submitted to the Environment agency of UK on 31 march 2011.
In line with the directive issues by the ministry of civil Aviation, Government of India, Air
India decided not to participate in EU-ETS and forward the correspondence on EU-ETS
directly to the Ministry. Environment Agency has also been advised accordingly. However,
the tools and methodology of EU-ETS have been adopted by Air India to ensure that the
carbon Di-oxide emission is monitored regularly. Quarterly reports for environment
Management has been initiated which are being sent to all stations to obtain feedback on
all energy consumption. Summarized Energy report is submitted to DGCA.

Encouragement/assistance to small scale industrial units

In accordance with the government guidelines issued from time to time, the company
continued to support the SSI units/social welfare/Charitable organizations. The
procurement from SSI unit during the year amounted to approximately Rs. 54.86 million
and the selective sourcing/procurement from social/charitable organization amounted Rs.
1.21 million.
Air India Distributed study Material to differently abled and under privileged
children.
Noble cause: In commemoration of the fourth anniversary, Air India SATS Airport
Services Private Limited (AISATS) Thiruvananthapuram (TRV) organization voluntary
Corporate Social Responsibility (CSR) program which aims to promote education,
including special education and employment enhancing vocational skills among
differently-abled and underprivileged education among the differently- abled children of
the Government School for the Visually Impaired, Vazhuthacaud and the children of Our
Lady of Fatima Orphanage, Thumba. AISATS TRV employees actively volunteer to
engage in community service that reflects the companys vision to be socially responsible
and one that believes in empowering children for a brighter future. The event was held at
Our Lady of Fatima Convent at Thumba, Thiruvananthapuram. The day started with
AISATS TRV employees organizing recreational activities for the children followed by a
series of entertainment programs. The children too performed entertainment programs
with much enthusiasm, making the day more memorable. AISATS TRV also contributed
study materials and educational support items to the orphanage students and technology
devices specially designed to help the learning process for the visually impaired students.
AISATS is committed towards making a meaningful contribution to our society. We are
mindful of the support that we have received from the Thiruvananthapuram community
and we will continue to associate ourselves with such noble causes in the future.

CASES OF AIR INDIA

AIR INDIA DREAMLINER GROUNDED FOR 9 MONTHS, WITH 400 PARTS

MISSING
Air India has kept an aircraft from its prized Dreamliner fleet grounded since January of this
year.The aircraft that costs around Rs 1,400 crore has been grounded as it has around 400
parts missing. There have been problems related to the supply of spare parts and Boeing has
still not been able to deliver the necessary fittings, claims the report.The airline currently has
21 dreamliners in its fleet. However, this is not the first time an Air India Dreamliner has
been grounded. In April 2014, Air Indias Boeing 787-8 Dreamliner VT-ANI was grounded
for what the airline termed reliability improvement retrofit (modification).
Another Air India Dreamliner had to be grounded in Hong Kong (HK) in July 2014 after the
aircraft (VT-ANK) sprang an oil leak.The Dreamliner boasts a state-of the-art in-flight
entertainment system, flat-bed recline, reading lamps, large LCD screens and enhanced
gaseous filtration system that mitigates dizziness and headaches inside the aircraft.

AIR INDIA ENGINEERS THREATEN TO DRAG MANAGEMENT TO

COURT
A section of Air India Engineers have threatened to take the airline management to court if it
does not reverse its decision to absorb 50 odd Air India Express (AIE) engineers into
subsidiary AIESL on the ground that the move would adversely impact their career prospects.
Air India Engineering Services Ltd (AIESL) currently has 900 aircraft maintenance engineers
(AME) with 500 of them from erstwhile Indian Airlines (narrow-body fleet) and the rest from
Air India (wide-body fleet).
The

protesting

AMEs

is

from

erstwhile

Indian

Airlines,

sources

said.

On the other hand, Air India Express has a total of around 105 engineers. Of these 55 are of
Air India Express itself and the remaining 50 on deputation from Air India.
"AI management has issued transfer letters to all 55 AMEs of Air India Express, placing their
services with the AIESL from September. We are opposed to these transfers as it would have
a direct bearing on our career progression," Air India engineering sources told PTI.

They claimed engineers coming from Air India Express, who have been getting early
promotions, would get seniority upon transfer thereby adversely affecting the career
prospects of AI engineers.Air India had hived off its engineering and cargo businesses into
two separate subsidiaries-- AIESL and Air India Transport Services Limited (AITSL)--in
2013.
"The absorption of these engineers from AIE into the AIESL would further block our
promotion avenues. Hence we are > protesting the decision and would soon move Mumbai
High Court seeking a stay," they said.
These engineers were initially hired on a temporary basis on the condition that their services
will be regularized only after five years and that too depending on the performance. "But
throwing rules to the wind their services were made permanent after a year," sources said.

Air India grounds 125 overweight cabin crew

Air India has identified 125 staffers, most of whom are airhostesses, as unfit to function as
cabin crew members because they have been found to be overweight. These staffers will now
be assigned ground duty or asked to take voluntary retirement. The national carrier officials
said that the staffers are being grounded because they failed to maintain the weight
requirements prescribed by aviation regulator Directorate General of Civil Aviation (DGCA).
Last year, at least 600 cabin crew staffers in Air India were found to be overweight as per the
DGCA standards, and were given a chance to shed the extra kilos. The DGCA guidelines say
that overweight staffers should not be allowed to continue as flight steward or airhostess as it
hampers flight safety. "Of these 600 cabin staffers, around 125, including airhostesses, have
failed to maintain the required weight standards. Now we have no option but to take them off
from flying duties permanently," an Air India official said. The airline has 3,500 cabin crew
staff, of whom 2,200 are permanent employees and the rest are on contract.
In June, Air India faced a severe crew shortage and decided to get those who were grounded
for being overweight back on flights for the next three months. "The airline is expected to
complete the hiring and training of new crew members by the end of this month. We have
decided to ask the 125 to either work as ground staff or take voluntary retirement," a senior
Air India official said.

As per the DGCA regulations issued in May last year, a body mass index (BMI) of 18-25 is
normal for male cabin crew members, while for a female crew member, it is recommended to
be 18-22. A BMI of 25-29.9 for male crew members is considered overweight, and 30 and
above is obese, while for females BMI of 22-27 is overweight and 27 and above is classified
as obese.

Based on periodic medical reports, the cabin crew would have to be categorised by
designated doctors as 'fit', 'temporarily unfit', and 'permanent unfit', according to the
guidelines. A cabin crew member found overweight is termed as temporarily unfit and given
three months' time to reduce weight.

A cabin crew member can continue with flying duty for up to 19 months with the temporarily
unfit tag, but if he/she fails to reduce weight to meet the required BMI during this period,
he/she will be deemed permanently unfit and grounded - like these 125 have been found to
be.
The All India Cabin Crew Association had declared the DGCA rules as illegal, saying there
was no provision for the aviation regulator to issue medical guidelines for cabin crew in both
the Aircraft Rules 1937 and Aircraft Act of 1934. "Rule 39B and 39C of the Aircraft Rules
only prescribe medical tests for flight crew who are licensed. Cabin crew have not been
issued with a license number despite DGCA saying it would in 2010. First they brought in
medical rules without applying thought. Now they want to bypass the same rules," said the
crew members.

FLIERS AND REVENUE INCREASE AS AIR INDIA JOINS STAR ALLIANCE

Joining the Star Alliance, a global group of 28 international carriers, has paid rich dividends
to flag carrier Air India (AI) as passenger transfers from group members have more than
doubled and revenues from such transfers witnessed more than two-fold increase.
A transfer happens in case a passenger is going to a location AI does not service. AI will take
the passenger to a location nearest to the destination from where a different airline will ferry
the passenger. The revenue is shared between the two airlines.

Established in 1997, Star Alliance is the biggest of the three global airline alliances with the
other two being SkyTeam and oneworld. AI completed a year in the alliance on July 11. AI is
the first Indian carrier to be inducted into Star Alliance. AI was originally accepted as a future
member of Star Alliance in December 2007, but the integration process was halted in July
2011.
Joining Star Alliance has allowed AI passengers to use Stars facilities such as airport
lounges, fly on a network of around 20,000 daily flights to over a thousand airports in over
190 countries, and redeem air miles on airlines such as Lufthansa and Singapore Airlines,
said aviation expert Rajji Rai.
The revenues and transfers should increase substantially as we are in advanced talks with at
least 14 foreign airlines for code share agreements. A majority of these belong to Star, said
an AI official.

Code-share is a ticket-selling agreement between two airlines whereby one airline can market
and sell the flights of another airline and provide seamless travel to multiple destinations
where it doesnt fly.
At a time when Gulf carriers have managed to corner the biggest pie of the Indian
international market around 40% of all international traffic from the country is West Asian
bound many international carriers want code-shares with AI.

FUTURE MARKETING STRATEGIES

Air India, Others Plan Direct Flights To Top Global Destinations

These are some of the hottest international destinations and 2.42 million people visit these
from India every year. But passengers flying to these 15 - San Francisco, Los Angeles,MilanMalpensa, Washington-Dulles, Vancouver, Boston, Rome-Fiumicino, Jakarta, Seattle, Lagos,
Manila, Tel Aviv, Brisbane, Auckland and Barcelona - are forced to take transit flights from
other

international

hubs

in

the

absence

of

direct

flights

from

the

country.

That is set to change soon, with state-owned Air India(armed with its Dreamliners) and some
other leading international airlines negotiating with Delhi International Airport Ltd (DIAL) to
operate direct flights to seven of these destinations - Milan-Malpensa, Rome-Fiumicino,
Jakarta, Lagos, Manila, Tel Aviv and Barcelona - and cash in on the large untapped market.
So far, flyers from India to the US' western coast, Europe, Africa, Southeast Asia and
Australia have to transit via other international hubs. According to Centre for Asia-Pacific
Aviation (Capa), close to 40 per cent of India's international traffic reaches its final
destination via an intermediate offshore airport - almost half of the traffic takes transit flights
from West Asian hubs.

The top among these destinations is the US' western coast (San Francisco, Los Angeles and
Seattle), which accounts for a little over 33 per cent of India's international flyers. Every day,
as many as 1,100 people from India travel to these places, taking transit flights from Dubai,
London, Singapore, Amsterdam or Hong Kong.

Among other places, close to 200,000 passengers fly from Indian cities to Milan every year.
The plan is to connect Malpensa in Milan and Delhi with a direct Air India Dreamliner flight.
Some other top cities being considered for direct connectivity from Delhi are Flumicino and
Jakarta, where 146,000 and 138,700 passengers, respectively, fly from India every year.
Besides, talks are also on for Air India flights to the Spanish cities of Barcelona and Madrid.
DIAL, which runs the Delhi airport, is also in discussions with other airlines to operate direct
flights to Lagos, Manila (Malindo Air could start a direct flight) and Tel Aviv. Besides, Cairo,

where an average 103 people travel from India every day, may also get a direct link.

Kiran Jain, head of airline marketing & route development at DIAL, says: "There is a
sizeable traffic on these routes. But passengers have to transit via other hubs as there are no
direct flights to these centers from Delhi. On routes where direct flights are launched, the
number of passengers typically increases 25-30 per cent over the initial estimated traffic, as
passengers from other nearby areas also get to avail of better travel options."
The move to directly connect Delhi with these seven destinations is also expected to help the
airport increase its share of transit traffic. Dial expects transit passengers to account for more
than a quarter of its total traffic by 2015-16, compared with 17.8 per cent estimated by the
close of this financial year.
Air India May Add 4-5 New European Destinations, Opt For Bigger Aircraft
Air India may start flying to four or five new destinations in Europe and is also looking at
the possibility of getting six Boeing 787-900 aircraft which are more spacious than the
current B 787-800 in its fleet.
A source said today that the idea of clubbing two destinations in a country while launching
flights was a bad one and needs to be corrected. Air India launched operations to Sydney and
Melbourne in Australia, Rome and Milan in Italy and to Moscow in 2013-14 with disastrous
results.
So the Australian operations are being restructured wherein three flights a week would fly to
Sydney and four to Melbourne or vice-versa. Similarly, the operations to Italy are being
restructured where instead of every flight doing both Rome and Milan, one will be thrice
weekly and the other four times a week. The flights to Moscow are already down to two a
week till at least July, when Air India feels aircraft loads may rise again, from four a week
earlier.
This source said there is now a move to launch four or five new destinations in Europe to
expand Air India's international footprint. He said these were discussed by the airline's board
of directors and some changes were sought. But no final decision has been taken till now.
This development comes even as Air India is mulling whether to take the more spacious
Boeing 787-900 aircraft instead of the 787-800 aircraft which are already on order. The B
787-900 aircraft can seat more people and are capable of flying beyond 9 hours. Air India had

ordered 27 Dreamliners of which 19 have been delivered, 20th is expected next month. Any
changes in aircraft can be made only for the remaining six which will get delivered later.
In reply to a question in Rajya Sabha this week, Minister of State for Civil Aviation Mahesh
Sharma said Air India has constituted an inter departmental committee for evaluating this
option to exercise the model substitution rights on merit.
A senior captain with the airline said that there has been some talk of replacing the last batch
of six Dreamliners already on order with the 787-900 configurations but again, no final
decision has been taken on the matter. He said if the airline does decide to substitute the
Dreamliners with more spacious aircraft, it could mean significant fuel savings on ultra-long
haul routes to the US as the older fuel guzzlers would be replaced.
So why does Air India want to expand international operations, which anyway bleed it dry? It
is the longest serving legacy Indian carrier flying to marquee destinations abroad but its
domestic operations are earning far better. At least the latest numbers say so. The airline
deployed just a fourth of its capacity on domestic routes in 10 months of last fiscal between
April and January, but these flights generated 40% of its total revenues. In fact, a domestic
yield (which means revenue per passenger) were much higher at over Rs 6 when international
yields languished at around Rs 3.50.
Instead of mindless overseas expansion, the airline needs to consolidate its grip on the
domestic market if it wants to survive the onslaught of competing airlines like indigo (already
a formidable force on domestic routes), Jet (which is strengthening domestic operations) and
new airline Vistara.
The Delhi-Moscow service was not even meeting its variable costs - this means flights on this
sector were not meeting even their fuel costs! The Moscow route was opened in July last
year, marked resumption of services by AI after 15 years. So the halving of frequencies, from
four flights a week to just two a week, shows poor planning and ground work before
launching this flight.
Then, Air India has also withdrawn a flight on the Delhi-Dhaka route because this flight was
not meeting even cash costs.
According to the latest data available with us: 3 in 4 flights on the Air India network were
destined for foreign shores between April and January last fiscal but they brought in less than
two-thirds of the airline's revenues. During the 10 months under review, the airline lost close
to Rs 500 crore on the Ahmedabad-Mumbai-Newark connection alone. Another about Rs 200

crore was lost on the Delhi-Sydney-Melbourne flight. The Ahmedabad-Mumbai-London

flight, which is obviously flying a busy route, raked in losses of over Rs 250 crore. Another
flight to London, the Amritsar-Delhi-London one, made losses of well over Rs 200 crore. In
fact, 39 international flights brought in over 70% of the operational loss in 2014-15.
It is interesting to note that the Dholakia Committee, which recommended that flights which
are unable to meet their variable costs be either axed or restructured, found that this single
step will get Air India maximum annual cost savings of Rs 580 crore each year.

Air India Chalks Out Two-Pronged Strategy To Up Share In Domestic Skies

State-owned Air India which is set to face increased competition from full service carriers Jet
and soon to be launched Vistara in the coming months, has chalked out a dual-pronged
strategy to increase its market share in domestic skies.
Air India will deploy 787 Dreamliners to draw in corporate travellers on domestic routes.
Meanwhile, the 19 787 Dreamliners will be deployed for corporate travellers and A320s
would be used for economy passengerss the airline is in the process of leasing would be
utilised to add more capacity and services for economy class passengers.
Air India Chairman Rohit Nandan said: "We are looking at utilising the 787s more optimally
by deploying them more on domestic routes. There are many airlines which use A380s for 23 hour flights now (it is meant to be used for long-haul flights of eight hours). World over the
economics of operating an aircraft is important. If you use larger aircraft on short-haul routes,
the engine wears off faster. As long as that is factored in while working out the route
economics and you make money, its fine. Our route economics analysis takes into account the
expenses incurred in maintenance of engines."
The airline currently operates the 787s only on two domestic routes from Delhi to Bangalore
and Kolkata. AI's 787s have 256 seats each, 18 of the business class and 238 economy seats.
The deployment of 787s on domestic routes would help the airline to improve yields.
According to industry estimates, business class seats typically account for 8-10% of the total
domestic airline capacity but contribute 15-20% of its revenue. The average business class
fare is three to six times that of an economy seat. In other words, it means 18 business class
seats would give you the same revenue as at least 54 economy passengers. That obviously

increases the average yield per passenger. This makes it a lucrative business proposition if
leveraged effectively.
Nandan, however, clarified the airline in not looking at deploying the Dreamliners on
domestic routes in response to competition, "We are not responding to competition we have
been thinking of this for some time. The 787 on domestic routes will be a game changer and
will appeal to corporate clientele. We will charge the same as others in business class and
offer a better product. It will offer better service and this is our USP", he informed. While
Vistara is going to operate A320s on domestic routes, Jet Airways operates Boeing 737s.
Additionally, Air India is also in the process of leasing 19 A320s to increase capacity for
economy travel. "We will also intensify the use of A320s to other destinations. We have a
whole network ready to be exploited. We could not do so earlier because of insufficient
aircraft", added Nandan.
The 19 A320s being leased will replace a similar number of older aircraft the airline has in its
fleet. However, the new aircraft to be flown in all-economy configuration will offer more
capacity of 180 seats. The aircraft being phased out currently offer between 144 and 168
seats.
Nandan further said that the airline's prestige and acceptability has improved over the last
three years and particularly after induction into Star Alliance. Currently, only five per cent of
the airline's passengers come from the government sector. "The market has accepted us.
Travellers are satisfied with us. We get only five per cent of our passengers from the
government now, 95 per cent of our customers opt to fly with us voluntarily", he said.
Air India currently has 62 Airbus family aircraft (mix of a319s, A320s and a321s), used on
domestic routes and some short haul routes. AI's domestic market share has fallen from
19.8% in January to 16.2% in August and the airline has not made additions to its fleet. It also
has a shortage of Airbus A320 commanders.
At present Air India flies 16 Boeing 787s and flies these to Europe, Japan, Singapore and
Dubai. It also uses them on two domestic routes, Delhi-Kolkata and Delhi-Bangalore. It has
27 Boeing 787s on order and is expecting three additional planes till March 2015. It is
expected to use these to ply on other metro routes.

It has had some success and the 787s have helped it generate cash profits on some hitherto
loss-making European routes. However, the planes have also been plagued by snags and
glitches, leading to their frequent grounding and operational delays. Also, the airline has not
been able to get desired loads on its new 787 routes, to Australia, Rome-Milan and Moscow

CONCLUSION AND RECOMMENDATION

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