Case Study Human Resource Management - Best Practice at Air India

History

Air India is India's national flag carrier. Although air transport was born in India on February 18, 1911 when Henri Piquet, flying a Humber bi-plane, carried mail from Allahabad to Naini Junction, some six miles away, the scheduled services in India, in the real sense, began on October 15, 1932. It was on this day that J.R.D. Tata, the father of Civil Aviation in India and founder of Air India, took off from Drigh Road Airport, Karachi, in a tiny, light single-engined de Havilland Puss Moth on his flight to Mumbai (then known as Bombay) via Ahmedabad. He landed with his precious load of mail on a grass strip at Juhu. At Mumbai, Neville Vintcent, a former RAF pilot who had come to India from Britain three years earlier on a barn-storming tour, during which he had surveyed a number of possible air routes, took over from J.R.D.Tata and flew the Puss Moth to Chennai (then Madras) via Bellary. Following the end of 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. On 8 June 1948, a Lockheed Constellation L-749A named Malabar Princess(registered VT-CQP) took off from Bombay bound for London via Cairo and Geneva. This marked the airline's first longhaul 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.

Its Mascot- Maharajah

We call him a Maharajah for want of a better description. But his blood isn't blue. He may look like royalty, but he isn't royal.' These are the words of Bobby Kooka, the man who conceived the Maharajah. This now familiar lovable figure first made his appearance in Air India way back in 1946, when Bobby Kooka as Air India's Commercial Director and Umesh Rao, an artist with J.Walter Thompson Ltd., Mumbai, together created the Maharajah. The Maharajah began merely as a rich Indian potentate, symbolizing graciousness and high living. And somewhere along the line his creators gave him a distinctive personality: his outsized moustache, the striped turban and his aquiline nose. What began as an attempt as a design for an inflight memo pad grew to take Air India's sales and promotional messages to millions of travellers across the world. Today, this naughty diminutive Maharajah of Air India has become a world figure. He can be a lover boy in Paris, a sumo wrestler in Tokyo, a pavement artist, a Red Indian, a monk... he can effortlessly flirt with the beauties of the world. And most importantly, he can get away with it all. Simply because he is the Maharajah! He has completed 56 years and become the most recognizable mascot the world over. His antics, his expressions, his puns have allowed Air India to promote its services with a unique panache and an unmatched sense of subtle humour. In fact he has won numerous national and international awards for Air India for humour and originality in publicity. And as with all great men, he too has had his critics. But the millions of travellers whose lives he has touched far outnumber them. In fact, to them, the Maharajah with his

inimitable style, charm and wit is a very real person. He's almost like a friend to every Air India traveller. A friend who reaches out with warmth and hospitality, even to the farthest corners of the world. Introduction Air India is India's finest flying Ambassador. The urge to excel and the enthusiasm, which characterized Air India's first flight, way back on October 15, 1932, is quintessential even today - thanks to Air Indians who have kept alive the tradition of flying high. The merger of Air India and Indian, the countrys leader in the domestic sector, has helped the airline to emerge as a major force in the airline industry. The rebranding exercise is currently underway and passengers are getting to see the unified face of the new invigorated Air India. Air India has two major domestic hubs at Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. An international hub at Dubai International Airport is currently being planned

SWOT Analysis:

Strengths:

The ability to travel comfortable for long distance travel Has large capacity to transport large amounts of people in short time Low cost of usage Fast during peak hours Already has a vast number of loyal passengers Environmentally friendly, especially during these times of Global awareness. Promotes the use of transit Access to instant pricing with real time reservation, creating a convenient, trouble-free booking process. No need to waste precious vacation time waiting on line at the station to get your ticket, Fast booking experience The ongoing recession puts direct financial constraints or at least concern on many people. Naturally, riding intercity train or bus is an economic way to commute or travel individually. Go Train is the healthiest public transportation system in Canada. It has the highest revenue to cost ratio in the sector (83.6%) and generates significant sundry revenue which covers 4.8% of the operating cost. Creates new economic opportunities Builds communities by linking them together economically Reduces consumption of oil Increases Productivity The rising fuel cost (though reversed somehow by the recent recession) makes driving in and out the metropolitan area much more expensive than riding train or bus.

Weaknesses

High initial investment for building new rail system Buses and trains do not run 24hrs compared to municipal transit such as TTC Cost of Go Transit fares is much higher than those of other public transit due to the expenses to make their consumers comfortable. Has a history of timing issues; trains do not run on schedule most of the time. Need to increase the size of parking lots Slow in some areas during severe weather Limited to certain areas Noise may be a concern Creates a load on the electricity grid Will need a expansion of electricity production Limited competition in the bidding process for buying trains, making them cost more Go Trains existing operations heavily rely on the railway systems owned by Canadian National and Canadian Pacific. Expenditure on access to railways and railway crews is the largest portion of Go Trains operating expense. Will need to build new transportation infrastructure The changes of accountability have added difficulties in continuously improving the infrastructure and operations of Go transit.

The continuous budget deficit of the provincial government and many of the municipal governments makes the funding for Go Transit quite difficult. Especially, any long-term improvement or expansion plans are quite questionable under the deficit condition. The current conservative federal government is not in favor of giving funding to Go Transit, which is a commitment made by form liberal federal government. in order to work effectively high speed rail must be backed up by a decent urban/light rail transit system

Opportunities

Ability to expand to other markets surrounding Ontario, (US and Quebec) Internet friendly bookings and access on trains Received funding from the federal and provincial government to help boost the economy; this will create new opportunities for jobs Loyal consumers are likely to try new services offered by Go Transit commuters are willing to pay for faster services No other service can compete with high speed train in terms of speed and efficiency Advertising on board will increase revenue Gas prices rise causing a increase of customers The Greater Toronto Area is in need of a transit link between cities Massive increase in Jobs for local manufactures Private-Public partnership to establish more efficiency in timing and customer service The large population and high population density can become an excellent market for intensive intercity transit system.

Threats

Government may not fund the train Gas prices drop, making it cheaper for commuters to drive People may appose the building of rail lines near their home Weather Condition of Canada may effect the speeds and quality of service Noise Pollution may concern people Airlines tightening up procedures to get people through airports faster and will encourage airports to have better city links Existing transit operators might introduce an upgrade in their services and take customer away from us Inflation will increase costs, which are passed on to commuters Union operated trains have risks of strikes Local transit operators will get priority over funding compared to GO transit Massive Construction required to build railway, my damage countryside environment

Achievements Of Air India Air India was also ranked as the Most Trusted Brand in the aviation sector in the country in the Economic Times Brand Equity Survey 2010. This is for the fifth year that the airline has won the top honour. Air India has won the Galileo Express Travel World Award 2008 for the Best Short-Haul International Airline. Air India has previously been a recipient of the Galileo Express TravelWorld Award for the Best International West Bound Airline out of India for three successive years as well as for launching the Best Corporate Social Responsibility Initiative. Air India was also conferred the prestigious Amity Corporate Excellence Award instituted by the Amity International Business School, Noida, Uttar Pradesh to honour Corporates with distinct vision, innovation, competitiveness and sustenance. It also won the Special category Award which recognizes the Most significant corporate Social Responsibility initiative (CSR) taken by an organization. Air India had won four other prestigious awards in 2006: 1) Dun and Bradstreet (D&B) which ranked the airline as the first in terms of revenue out of the top airline companies out of India; 2) Readers Digest Trusted Brand Award; 3) CNBC Awaaz Consumer Award 2006; and 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.

Organizational strategies
Porter generic strategies

According to Porter (1980) generic strategies (Lynch, 2003), AI comes under differentiation and focused cost leadership due to the following reasons: AI along with jet airways has the monopoly in Indian international market as they are the only ones who fly international routes.AI is differentiated as it offers expanded network, for example gulf regions are still not open for Jet Airways but AI has a monopoly there. (Ministry of civil aviation reports, 2006) AI is the national flag carrier of India. It has brand name which is represented by its mascot called Maharajah which impersonates India and its culture. This feature really differentiates it from other industry players. AI last point of differentiation is it being the oldest airline as per the year 2006 its seventy four years old. It really makes it a well known brand, creates trust in the minds of its customers due to its long operation and its service to its customers. (Tourism India, 2007) Air Indias has new subsidiary AI Express being the countrys only international low cost carrier which also operates in domestic market. This strategy of AI can be called as focused cost leadership as they are marketing middle class passengers who want to travel internationally at a low cost. (Tourism India, 2007) Bowmans Strategy clock According to Bowmans Clock AI lies between 4th point which is Differentiation and 5th point which is focused Differentiation as already seen above in porters strategies it has many differentiated aspects like being a national carrier, oldest airline and its monopoly in Indian international market and AI can be also called focused differentiation as it majorly focuses on international travel market instead of domestic.

Ansoff Matrix
Market Penetration

Companion free scheme- To promoting high yield traffic, AI has re-launched this scheme between India- USA/Canada/UK/Europe. This scheme is valid on IATA published fares in all classes for both one way and round trip.

Student fares- Passengers on student visa can avail special discounted fares for travel like from India to many destinations for travel. Students can also avail discounts on excess baggage.

Auction through IndiaTimes.com- AI auctioned seats of economy class through indiatimes.com a leading internet portal, this scheme has also been used for some domestic sectors as well.

Flying Returns Program- The flying returns is a frequent flyer program. This program is spread across 19 countries, it is designed to recognize and reward frequent flyers. Various benefits and privileges are provided to the members.

Aircraft Cabin Up gradation- The up gradation of its old carrier like A310-300 by painting, seat refurbishment and upgrading entertainment system to solid state digital audio system which provides improved sound quality and other features.

Market Extension

Medical Tourism- AI has tied up with M/s Vedic India to tap growing medical tourism market, Medical packages including airfares are offered to all those who are willing to undergo treatment in India.

New Product Development

The Maharajah Club (TMC) and The Leading Edge Club (LEC) - TMC and LEC are two elite clubs of air India. Membership to both the clubs is by invitation only with certain criteria laid down. Members enjoy exclusive value added benefits and of value added partnership alliances.

E-Marketing- As Iata wants to discontinue conventional paper ticketing, AI is working on it and according to project it will also invest in E-Marketing.

Wi-Fi Internet Access- In the mumbai maharaja lounge and the transit lounge wifi internet access is provided along with network printing facility.

SMS Alert in case of Rescheduling of Flights- Arrangements have been made to generate SMS messages automatically to all Indian mobile numbers indicated in PNRs to alert passengers in case of rescheduling of flights.

Wholesale Travel Discounts- A special scheme is their for passengers travelling frequently to south east Asia by offering them substantial saving on bulk purchase of tickets for travel.

ATC Mode-S Elementary Surveillance and Enhanced Surveillance Functionality- AI on installing these to ground station, which will enhance better control of aircraft navigation.

Diversification AI Express of AI is for new market that is the middle class who wants to travel internationally and is definitely a new product as it is a low cost, low fare and no frill carrier.

AI besides AI Express has more fully owned subsidiaries which offer other services such as Hotel Corporation of India, AI Air Transport Services Limited and AI Engineering Service Ltd. (

Growth Methods/ Operations - The fleet size of AI in 2001-02 was 29 which have grown up to 30 in 2005-06 which shows growth from previous years and AI has future plans to expand their

fleet size drastically. However in the present scenario on comparisons with its full service players like jet, the fleet size is less.

The number of flights per day operated by AI in international routes is 64 which is the highest among its competitors and domestic is 30 per day which is relatively low.

However we can also see the growth in the passenger traffic and passenger load factor on all routes and services over past five years which has gone up to 43.62 lakh. The destinations which AI flies have increased from 32 to 46 presently.

Human Resource AI needs to reconsider at its HR policies. The numbers of employees per aircraft in AI are 418 which are way too high as compared to others industry players. According to Startrax rating ( www.airlinequality.com) the staff is really unprofessional and even blogs state that staffs are rude, non consistent, poor check in etc. Since its a government organization staff is too laid back not being afraid of losing their jobs, they ask for commissions from passengers which are not acceptable at all. (IndiaToday, 2000)

In the second chart distribution of personnel of AI and Jet Airways is clearly shown, it can be seen that AI staff is more in comparison in almost all the departments even though Jet Airways fleet size is higher. On having a look at the revenues and expenses of AI staff, it can be clearly analyzed from the chart that expenses per employee are more than revenue which is really a bad situation. But if seen over the last ten years in appendix 7 theres growth. (DGCA, 2006)

The attrition among pilots and cabin crew is as high as 46 per cent. Moreover, maximum attrition is observed in employees in age group of 26 to 30 years with experience of two to four years.

In employees view, AI according to naukrihub survey of aviation sectors best employers has ranked it at second position after Jet airways, with a balance scorecard having all the aspects rated, details in appendix 5. This position is because of staff having security of job in AI, salaries in line with the industry, government job facilities and other reasons clearly mentioned in appendices 5,7,8,9.

Indian Airlines HR Problems FLYING LOW Indian Airlines (IA) the name of Indias national carrier conjured up an image of a monopoly gone berserk with the absolute power it had over the market. Continual losses over the years, frequent human resource problems and gross mismanagement were just some of the few problems plagued the company. Widespread media coverage regarding the frequent strikes by IA pilots not only reflected the adamant attitude of the pilots, but also resulted in increased public resentment towards the airline. IAs recurring human resource problems were attributed to its lack of proper manpower planning and underutilization of existing manpower. The recruitment and creation of posts in IA was done without proper scientific analysis of the manpower requirements of the organization. IAs employee unions were rather infamous for resorting to industrial action on the slightest pretext and their arm-twisting tactics to get their demands accepted by the management. During the 1990s, the Government took various steps to turn around IA and initiated talks for its disinvestment. Amidst strong opposition by the employees, the disinvestment plans dragged on endlessly well into mid 2001. The IA story shows how poor management, especially in the human resources area, could spell doom even for a Rs 40 bn monopoly. BACKGROUND NOTE IA was formed in May 1953 with the nationalization of the airlines industry through the Air Corporations Act. Indian Airlines Corporation and Air India International were established and the assets of the then existing nine airline companies were transferred to these two entities. While Air India provided international air services, IA and its subsidiary, Alliance Air, provided domestic air services. In 1990, Vayudoot, a lowcapacity and short-haul domestic airline with huge long-term liabilities, was merged with

IA. IAs network ranged from Kuwait in the west to Singapore in the east, covering 75 destinations (59 within India, 16 abroad). Its international network covered Kuwait, Oman, UAE, Qatar and Bahrain in West Asia; Thailand, Singapore and Malaysia in South East Asia; and Pakistan, Nepal, Bangladesh, Myanmar, Sri Lanka and Maldives in the South Asian subcontinent. Between themselves, IA and Alliance Air carried over 7.5 million passengers annually. In 1999, the company had a fleet strength of 55 aircraft - 11 Airbus A300s, 30 Airbus A320s, 11 Boeing B737s and 3 Dorniers D0228. In 1994, the Air Corporation Act was repealed and air transport was thrown open to private players. Many big corporate houses entered the fray and IA saw a mass exodus of its pilots to private airlines. To counter increasing competition IA launched a new image building advertisement campaign. It also improved its services by strictly adhering to flight schedules and providing better in-flight and ground services. It also launched several other new aircraft, with a new, younger, and more dynamic in flight crew. These initiatives were soon rewarded in form of 17% increase in passenger revenues during the year 1994. However, IA could not sustain these improvements. Competitors like Sahara and Jet Airways (Jet) provided better services and network. Unable to match the performance of these airlines IA faced severe criticism for its inefficiency and excessive expenditure human resources. Staff cost increased by an alarming Rs 5.9 bn during 1994-98. These costs were responsible to a great extent for the companys frequent losses. By 1999 the losses touched Rs 7.5 bn. In the next few years, private players such as East West, NEPC, and Damania had to close shop due to huge losses. Jet was the only player that was able to sustain itself. IAs market share, however continued to drop. In 1999, while IAs market share was 47%, the share of private airlines reached 53%. Unnecessary interference by the Ministry of Civil Aviation was a major cause of concern for IA. This interference ranged from deciding on the crews quality to major technical decisions in which the Ministry did not even have the necessary expertise. IA had to operate flights in the North-East at highly subsidized fares to fulfill its social objectives of connecting these regions with the rest of the country. These flights contributed to the IAs losses over the years. As the carriers balance sheet was heavily skewed towards debt with an equity base of Rs 1.05 bn in 1999 as against long term loans of Rs 28 bn, heavy interest outflows of Rs 1.99 bn further increased the losses. IA could blame many of its problems on competitive pressures or political interference; but it could not deny responsibility for its human resource problems. A report by the Comptroller and Auditor General of India stated, Manpower planning in any organization should depend on the periodic and realistic assessment of the manpower needs, need-based recruitment, optimum utilization of the recruited personnel and abolition of surplus and redundant posts. Identification of the qualifications appropriate to all the posts is a basic requirement of efficient human resource management. IA was found grossly deficient in all these aspects.

FIGHTER PILOTS? IAs eight unions were notorious for their defiant attitude and their use of unscrupulous methods to force the management to agree to all their demands. Strikes, go-slow agitations and wage negotiations were common. For each strike there was a different reason, but every strike it was about pressurizing IA for more money. From November 1989 to June 1992, there were 13 agitations by different unions. During December 1992-January 1993, there was a 46-day strike by the pilots and yet another one in November 1994. The cavalier attitude of the IA pilots was particularly evident in the agitation in April 1995. The pilots began the agitation demanding higher allowances for flying in international sectors. This demand was turned down. They then refused to fly with people re-employed on a contract basis. Thereafter they went on a strike, saying that the cabin crew earned higher wages than them and that they would not fly until this issue was addressed. Due to adamant behaviour of pilots many of the cabin crew and the airhostesses had to be off-loaded at the last moment from aircrafts. In 1996, there was another agitation, with many pilots reporting sick at the same time. Medical examiners, who were sent to check these pilots, found that most of these were false claims. Some of the pilots were completely fit; others somehow managed to produce medical certificates to corroborate their claims. In January 1997, there was another strike by the pilots, this time asking for increased foreign allowances, fixed flying hours, free meals and wage parity with Alliance Air. Though the strike was called off within a week, it again raised questions regarding IAs vulnerability. April 2000 saw another go-slow agitation by IAs aircraft engineers who were demanding pay revision and a change in the career progression pattern[1]. The strategies adopted by IA to overcome these problems were severely criticized by analysts over the years. Analysts noted that the people heading the airline were more interested in making peace with the unions than looking at the companys long-term benefits. Russy Mody (Mody), who joined IA as chairman in November 1994, made efforts to appease the unions by proposing to bring their salaries on par with those of Air India employees. This was strongly opposed by the board of directors, in view of the mounting losses. Mody also proposed to increase the age of retirement from 58 to 60 to control the exodus of pilots. However, government rejected Modys plans[2]. When Probir Sen (Sen) took over as chairman and managing director, he bought the pilot emoluments on par with emoluments other airlines, thereby successfully controlling the exodus. In 1994, the IA unions opposed the re-employment of pilots who had left IA to join private carriers and the employment of superannuated fliers on contract.

Sen averted a crisis by creating Alliance Air, a subsidiary airline company where the reemployed people were utilized. He was also instrumental in effecting substantial wage hikes for the employees. The extra financial burden on the airline caused by these measures was met by resorting to a 10% annual hike in fares. (Refer Table I) TABLE I IMPACT OF STAFF COST HIKE IN FARE INCREASE (%)
Date of fare increase Impact (%)

25/07/1994 1/10/1995 22/09/1996 15/10/1997 1/10/1998

Source: IATA-World Air Transport Statistics

16.22 25 36 13.44 8.8

Initially, Sens efforts seemed to have positive effects with an improvement in aircraft utilization figures. IA also managed to cut losses during 1996-97 and reported a Rs 140 mn profit in 1997-98. But recessionary trends in the economy and its mounting wage bill pushed IA back into losses by 1999. Sen and the entire board of directors was sacked by the government. In the late 1990s, in yet another effort to appease its employees, IA introduced the productivity-linked scheme. The idea of the productivity linked incentive (PLI) scheme was to persuade pilots to fly more in order to increase aircraft utilization. But the PLI scheme was grossly misused by large sections of the employees to earn more cash. For instance, the agreement stated that if the engineering department made 28 Airbus A320s available for service every day, PLI would be paid. This number was later reduced to 25 and finally to 23. There were also reports that flights leaving 30 - 45 minutes late were shown as being on time for PLI purposes. Pilots were flying 75 hours a month, while they flew only 63 hours. Eventually, the PLI schemes raised an additional annual wage bill of Rs 1.8 bn for IA. It was alleged that IA employees did no work during normal office hours; this way they could not work overtime and earn more money. Though experts agreed that IA had to cut its operation costs. To survive the airline

continued to add to its costs, by paying more money to its employees. (Refer Table II). The payment of overtime allowance (OTA) which included holiday pay to staff, increased by 109% during 1993-99. It was also found that the payment of OTA always exceeded the budget provisions. Between 1991-92 and 1995-96, the increase in pay and allowances of the executive pilots was 842% and that of non-executive pilots was 134%. Even the lowest paid employee in the airline, either a sweeper or a peon, was paid Rs 8,000 10,000 per month with overtime included.

TABLE II INCREASE IN STAFF COSTS

Staff cost as Per Total percentag Staff No. of Effectiv employe expenditu e of total Year cost (in employee e fleet e cost re (in Rs operation Rs bn) s size (in mn) bn) al expenditu re

1993 2.85 -94

22182

0.13

20.75

15%

54

3.74 1994 (31.18% 22683 -95 )* 5.71 1995 (52.59% 22582 -96 ) 7.10 1996 (24.35% 22153 -97 ) 8.17 1997 (15.03% 21990 -98 ) 1998 8.75 21922 -99 (7.12%)

0.16

22.59

19%

58

0.25

26

25%

55

0.32

29.29

26%

40

0.37

32.21

27%

40

0.39

34.31

28%

41

Source: IATA-World Air Transport Statistics * Figures in brackets indicate increase over the previous year. # Excludes 4 aircraft grounded from 1993-94 to 1995-96 as well as 12 aircraft leased to Airline Allied Services Ltd. from 1996-97 to 1998-99.

In 1998, IA tried to persuade employees to cut down on PLI and overtime to help the airline weather a difficult period; however there efforts failed. Though IA incurred losses during 1995-96 and 1996-97 and made only marginal profits during 1997-98 and 1998-99, heavy payments were made on account of PLI. A net loss of Rs 641.8 mn was registered during the period 1995-99. PLI payments alone amounted to Rs 6.66 bn, during the same period. According to unofficial reports, arrears to be paid to employees on account of PLI touched nearly Rs 7 bn by 1999. Over the years, the number of employees at IA increased steadily. IA had the maximum number of employees per aircraft. (Refer Table III). It was reported that the airlines monthly wage bill was as high as of Rs 680 mn, which doubled in the next three years. There were 150 employees earning above Rs 0.3 mn per annum in 1994-95 and the number increased to 2,109 by 1997-98. The Brar committee attributed this abnormal increase in staff costs to inefficient manpower planning, unproductive deployment of manpower and unwarranted increase in salaries and wages of the employees. TABLE III A COMPARISON OF VARIOUS AIRLINES Name of Airlines Singapore Airlines Number ATKm No. of ATKm[3] Employees of aircraft per employees (in Million) per aircraft in fleet Employee 84 13,549 24,186 21,990 5,308 5,761 3,722 14418.324 1064161 161 6546.627 270678 2113.671 398204 1416.235 245831 345.599 92853 318 431 177 261 196

Thai Airways 76 International Indian Airlines Gulf Air Kuwait Airways Jet Airways 51 30 22 19

1094.132 49756

Source: IATA-World Air Transport Statistics

Analysts criticized the way posts were created in IA. In 1999, Six new posts of directors were created of which three were created by dividing functions of existing directors. Thus, in place of 6 directors in departments prior April 1998, there were 9 directors by 1999 overseeing the same functions. There were 30 full time directors, who in turn had their retinue of private secretaries, drivers and orderlies. The posts in non-executive cadres were to be created after the assessment by the Manpower Assessment

committee. But analysts pointed that in the case of cabin crew, 40 posts were introduced in the Southern Region on an ad-hoc basis, pending the assessment of their requirement by the Staff Assessment Committee. Another problem was that no basic educational qualifications prescribed for senior executive posts. Even a matriculate could become a manager, by acquiring the necessary job-related qualifications & experience. Illiterate IA employees drew salaries that were on par with senior civil servants. After superannuation, several employees were re-employed by the airline in an advisory capacity. According to reports, IA employed 132 retired employees as consultants during 1995-96 on contract basis. With each strike/go-slow and subsequent wage negotiations, IAs financial woes kept increasing. Though at times the airline did put its foot down, by and large, it always acceded to the demands for wage hikes and other perquisites. TROUBLED SKIES Frequent agitations was not the only problem that IA faced in the area of human resources. There were issues that had been either neglected or mismanaged. For instance, the rates of highly subsidized canteen items were not revised even once in three decades and there was no policy on fixing rates. Various allowances such as out-of-pocket expenses, experience allowance, simulator allowance etc. were paid to those who were not strictly eligible for these. Excessive expenditure was incurred on benefits given to senior executives such as retention of company car, and room air-conditioners even after retirement. All these problems had a negative impact on divestment procedure. This did not augur well for any of the parties involved, as privatization was expected to give the IA management an opportunity to make the venture a commercially viable one. Freed from its political and social obligations, the carrier would be in a much better position to handle its labor problems. The biggest beneficiaries would be perhaps the passengers, who would get better services from the airline.

HR Challenges in the Airline Industry: The airline industry is perhaps one of the most volatile industries in the world. It is an industry whose way of doing business is constantly changing due largely in part to outside forces. Not only are they subject to regular bankruptcies, mergers and acquisitions, they are subject to such uncontrollable factors as the political and economic situation of society and its customer base. Thus, the human resources manager in an airline industry has the challenge of staffing for this ever-changing need. Because the airline's needs are in a constant state of flux, the first step the human

resources manager must take is to establish a system that allows for a regular evaluation of the need and then recruit based on the evaluated need. Within the industry there are numerous different levels of positions, from executives to pilots, from stewardesses to maintenance personnel. The human resources manager will only be able to successfully recruit and thus staff each of these diverse needs if they create a line of communications with each department in order to access their specific needs and then base the recruiting plan on the gathered information.

Second, the airline human resources manager must also have a strategic plan for reacting to an actual work stoppage, whether it occur because of an employee strike or due to a drastic event such as a crash or terrorist attack. Although the implementation of this human resources technology may result in a cutback in some human resources positions, it is demonstrative of the current trend to standardize many human resources functions in order to better serve the company's employees, improve job satisfaction and thus reduce turnover and the resulting need for constant recruitment and training, activities that are expensive. Because the industry is rapidly changing, job security is a regular question of an employee at any level. As the human resources manager in this volatile industry, it is imperative that one prepare for the worse. The software will now provide automated and standardized training, recruitment and staffing, along with technology and call-center support. For example, new technology is even effecting the role of the human resources manager in that many human resource function can now be, in a sense, outsourced to a technological program. The biggest and most damaging human relations issue that a human relations manager will face is the threat or, in a worse case scenario, the actual carrying through of an employee strike at any level of the airline's multi-faceted set-up. First, actual airline employees may become dissatisfied with both the terms of their current employment and the future implications of their position. "

This idea of outsourcing is not unique to the airline industry and often times does not necessarily mean outsourcing to a computer program. The human resources manager must have a plan in place to handle this worst-case-scenario that will allow for a quick resolution of the issues with minimal harm to the company's operations. challenge of the ever-changing need of the airline industry. This trend clearly effects the airline human resources manager's role in that instead of working to recruit, train and supervise multiple departments internally, they now have the role of receiving bids from private independent contractors, working with the legal team to develop a contractual agreement, and then ensuring that the private contracted company is meeting the

general need of the airline by working closely with the private service provider's human resources manager.

Recommendation, Implementation and Monitoring Adopt strict cost control measures AI should improve their overall efficiency and try to cut costs in all their operations, being a full service airline it has huge scope to cut costs compared to LCCs. There are costs that are external, which AI cannot do much about, however there are internal costs that can be dealt. AI needs to revise wages and implement multi-skill environment, cut on excess staff by implementing a policy where staff are fired if they lack performance (refer appendix 9) and a strict check on corruption needs to be there where some secret staff can be given the responsibility of checking and giving them benefits, all requisite clearances for fuel hedging should be taken and use it to save costs due to ATF, AI should focus on online ticketing and remove travel agents to cut on commissions. Instead of hiring expatriates pilots AI should make its own flight training schools and making the students have bonds with the company. Their will be basic resources needed, its just the management needs to plan and implement these strictly, and it should be started as soon as possible. Limit government control and policies for AI and its staff AI is in such bad condition as the government barely allows management of AI to make any important decisions. Political leaders still control critical issues like appointing managers, deploying aircraft and deciding routes. It can be suggested that government can offer portions of AI equity to the public while retaining the full management control; it can also divest 20 percent of AI by next year. This little mixture of public and private function will really help AI develop. Better services will motivate staff, but it needs to be regularly followed and monitored to prove to the government that it working better without their full control. Fleet size increase and invest in aircraft maintenance

AI is in a vacuum, the market is growing, its fleet is aging, and other airlines have started flowing into India, it desperately needs to acquire more fleet which should be a mix of wide and narrow body planes, and other updated versions should be purchased. The ageing fleet needs to be maintained by combining it to first class catering which will help in image building. AI should propose a float for MRO i.e. Maintenance, Repair and Overhaul to maintain its old fleet. This can be immediately started by firstly focusing on maintenance, and then purchasing in future.

Refresh and Rebrand the company AI and IA should get merged as; it will help it in expanding the fleet, rebranding the airline. They should redesign crew uniforms and retrain their employees. As AI really needs a fresh start, all the old methods needs to be changed or removed specially in area of HR policies with the help of this merger. They should be saving millions of dollars by creating operational synergies in network integration, information technology integration, improvement in schedules, the passenger loyalty program, marketing, ground handling and purchasing aircraft, and by getting rid of half of their employees. It can effectively deliver the classic hub and spoke system done by successful airlines. They will also help in saving costs by choosing better contracts for insurance, oil contracts etc. It will also bring in new product and new environment in AI. The only caution AI and IA needs to take are at the time of rationalization of staff and while changing the HR policy which needs to be done very importantly, if they do it well, the merged entity will bring in huge success. Follow differentiation AI needs to differentiate its product, as there is so much competition in the market. It can differentiate by serving non stop flights to routes which are not provided by others, flights to wide range of destinations as AI has the rights to follow so many destinations, it needs to use it to its benefit. They should be able to attract passengers from SAARC, Africa and Central Asia to fly them to other parts, instead of being just an Indo gulf

airline as it is also leading to inefficient usage of resources, by expanding fleet and destination by more code share arrangements and by joining Star alliance which is already under process. They need to highlight customer service as their USPs by provide best catering and good maintenance of rest room which will help go a long way in attracting customers; they need to give dual importance to domestic and international routes and combine both of their strengths. They need better trained staff to ensure better results through excellent customer service, punctuality, making the staff more accountable by rewarding points, etc. Air India needs to do innovative marketing, competitive pricing instead of just following marketing tactics of other players, the decision making needs to be quicker.

Examine each and every aspect of its functioning AI is known for indifferent passenger handling over years; it should set up a strategic business unit (SBU) for ground handling at airports. All airport functions that Air India used to perform like security and baggage handling would be done by this SBU and its focus would be on customer care and it can help them build the long lost trust in the eyes of customers. A-I should also reform its notorious reservation system and analyze its yield planning which should eliminate the scope of overpriced commission to travel agents as it would stop fictitious block bookings which lead to an artificial overbooking of AI flights, even though there aren't enough passengers. It needs to be regularly monitored by specific staff whose job description includes monitoring as their primary job; they should have processes to monitor each and every staffs productivity as the services provided by AI staff is non tolerable. They should be better utilization level of its fleet, their ROCE % is also gone down and it is causing major loss in market share.

Training In Air India

Mumbai: Air India may be roiled by losses, a cash crunch, and controversies over appointments, but the airlines new senior management wants to capture the lost glory of the Maharajah (the airlines mascot), according to a senior executive whose appointment, ironically, has also been controversial. In his first media interview after being appointed Air Indias chief training officer, Stephen Sukumar said the airline is in talks with some of the worlds best hotel chains to train its employees in an attempt to bring back some of the once legendary shine of Air India on-board service. And for ground staff, the airline has developed training programmes benchmarked to those of other Star Alliance members, he added. By the middle of next year, Air India will join Star Alliance, a global grouping of airlines with 27 members including Lufthansa German Airlines andContinental Airlines Inc. And the airline has renegotiated all its training contracts and lowered total training costs by 29%, when compared with the last fiscal year, according to Sukumar. However, the airlines annual report doesnt have a break-up of the amount spent on training. The appointment of Sukumar, the former chief training officer at German airline Deutsche Lufthansa AG, has been controversial and the government has appointed a two-member committee to review his appointment. Air India had made two key appointments on 28 Septemberof Sukumar and Air India Express chief operating officer Pawan Aroradespite objections being raised at the time by some members of the board. Under the guidance of its new board, Air India has prepared a turnaround plan to wipe out its accumulated losses and reduce its total debt of Rs. 40,000 crore. Sukumar indicated that the controversy is behind him. He said he was interviewed by Prashant Narain Sukul, joint secretary, ministry of civil aviation, and Air Indias independent director, F.H. Major, around a month ago. They found me suitable to be the chief training officer of Air India Ltd and they also wanted me to look after the Star Alliance project, he added. Sukumar is convinced the Star Alliance entry is critical to the airlines fortunes. We need worldwide access to other markets to participate in the global growth. Star Alliance offers nearly 2,000 destinations, and this will be an unbeatable advantage for Air India to outperform its local competitors. But it will not be easy to match their expectations, he added. Sukumar said the airlines immediate focus is to modernize Air Indias booking system, prior to joining Star Alliance, and having a single code for the airline instead of two different codes currentlyAI and IC (the code for formerlyIndian Airlines which merged with Air India). A senior Air India executive who did not want to be identified, said the airline would have a single code by February 2011.

According to experts, joining an alliance could lead to a 5% increase in passenger revenue. Several independent consultants said Air Indias service level has deteriorated due to various reasons, including shortage of personnel, low morale and the cash crunch. But many say it will be tough to reverse the situation as the airlines ownership is still with the government. One of the main drivers that led to privatization of British Airways was customer service; this is the case with Air India. Government ownership seems to be a critical constraint when it comes to making dynamic changes in the airline to adapt to new service levels, said Rishikesha T. Krishnan, professor of corporate strategy at the Indian

Recruitment Process: One of the most critical and high expertise demanding industry, Airline or Aviation sector is witnessing a surge of increasing interest and awareness. With global liberalization and opening up of sector for private players, the industry has gained momentum. This has contributed to a significant rise in the employee base in the airline industry and the industry is in need of a growing number of employees. Increasingly, more and more airlines are beginning to recognize the real cost of poor selection of candidate. Clients are avoiding the mistakes of hiring the unsuitable candidate (which results in high staff turnover with the consequential costs - wasted time, money, disruption and absent resources) and are hence now consulting the pool of psychologists and selection specialists to assist them with sourcing of a key executive or to conduct large scale recruitment campaigns. Over years of our experience in the aviation sector, our specialists have developed sophisticated systems and models for the assessment of candidates for various positions in cabin crew, flight crew, ground crew etc, either ab initio or in various recruitment phases. We select and recruit aviation personnel for a range of clients including civil, military and VIP corporate aircraft operators. We also provide our clients, who want to avail of our 'executive search' services for aviation personnel, with psychometric & psychological profiling

The Reasons for the Downfall of Air India Recruitment process can be as: 1) Air India recruitment process and performance appraisal system can be at fault Good

companies distinguish themselves by their quality people. The success of any organization comes through its people.Any HR expert will tell you that an organization needs to recruit good people who have the characteristics (talents) to win the market place. 2) Employees can be incompetent and may not have any sense of belonging. Air India might have not thought of cost leadership because of its employees low productivity and poor cost awareness. It employs 600 persons for running and maintaining one air craft whereas Singapore Airlines employs just 27 persons for a similar air craft. Yet Singapore Airlines is rated as No.1 airlines in terms of performance. 3) Ineffective Operations Main function of the Operations Management of any organization is to create a competitive edge by 15 20 % in terms of costs by operational excellence so that the organization can fight its competition in the market place effectively. This seems to be absent in Air India for the last 4 decades. 4) Lack of disciplinary action No disciplinary action was ever reported against the erring pilots who went on strike every time the Management attempted some disciplinary action as a result, the pilot associations /unions practiced their arm-twisting tactics as often as they could and brought the Management on their knees. Finally the management could never think of any disciplinary action against them at all.

5) No service orientationLike nationalized banks, customer service is something unknown to Air India employees. Instead, the pilots & air-hostesses were behaving like bosses and the passengers were virtually treated like slaves in the mid-air.

There may be many more reason because of which the bottom line may have got eroded. If the Organization would have been in profit it could have served the people in a better way, still we are way behind the developed countries in terms of air transport. There is little air connectivity within the cities across the country. Air transport is a basis infrastrure if we want the cities to grow and industrialization to happen across the

country. The responsibility lies majorly with Air India because the private players would be interested to operate only on profitable routs. Somebody needs to take the responsibility of providing air connectivity in / with all the major cities of Indi

Culture:

The picture that comes out of Air India after a long interview with its chairman and managing director Arvind Jadhav is that of a sadly undercapitalised company (debt:equity ratio of 40:1), a disempowered board with all key decision making vested in the government, excess staff (roughly 500 per aircraft as against the industry norm of 140 per aircraft) outdated legacy technology and organisational structure, warped incentives built into union agreements that have expired but live on, thanks to political patronage, and a surprising will to prevail against these odds. But by the end of January, many of these problems would be sorted out, he tells ET's Anindya Upadhyay & TK Arun.

Conclusion AIs objective should be to create world class airline in public sector in close cooperation with all its employees. With its mostly obsolete fleet, large work forces and managements whose decision-making is entangled with that of the government, Air India, the flagship overseas carrier, and its domestic counterpart, Indian Airlines, are rapidly losing market share to new competitors. Therefore AI needs to strictly follow the above recommendations to enhance its reputation and achieve its objectives and success of these will automatically help in monitoring