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And Its HR Problems
INTRODUCTION
IA-Formation May-1953 (ACA)Two Entities-Indian Airlines & Air
IndiaMerging Vayudoot in-1990 IA’s Network,75 Destinations-59 in
India &16 Abroad. IA & Alliance Air carried 75 million
passengers annually.
IA’s fleet strength – 55 Aircrafts, 11 Airbus A300s, 30 Airbus A320s, 11 Boeing B737s & 3 Dorniers D0228.
In 1994 entry of private players Increased competition, launching of
new aircraft ,advertisement campaigns.
17% increase in passenger revenues.
Market Scenario
In 1994 – Sahara & Jet AirwaysPvt. Players East West, NEPC &
DamaniaLosses due to inefficiency and excess
expenditure Increase in staff cost during 1994-98Co. facing frequent lossesLosses touching 7.5 billion in 1999Govt. interference
In 1994-98 losses reached 5.9bn and in 1998-99 it reached 7.5bn
0 1 2 3 4 5 6 7 8
1994 - 98
1998 - 99
in billion
Market Share of IA v/s Pvt. Players
Shares
Shares
IA 47%
Pvt. Players 53%
PROBLEMS
Civil Aviation Ministry:- Interference in decision making. Increased in subsidized fares.
Union:- 8 unions strikes, go-slow agitation, wage
negotiations. 13 agitations – 1989 – 92.
Pilots:- 1993 - 46 days strike. 1994 – Nov., in 1995 – Apr. faced an
evident agitation. 1996 – demands for high wages. 1997 – strike for foreign allowances, fixed
flying hours, free meals & wage parity. Engineers:- Apr. 2000 - go –slow agitation demands for pay revision & change in
career b progression
Actions Taken
Russy Mody:- 1994 – chairman of IA. Committee under chairmanship under
Vijay Kelkar. Recommendations for financial aid by
the Govt. Equalization of salary with Air India. Proposal for increase in age of
retirement. Evaluation by P.S. Brar: IA would “go down the drain” &
massive cost cutting & HR management. Received severe criticism.
Probir Sen:- He brought pilot emoluments
on par with other airlines. Creation of Alliance Air, a
subsidiary airline company for re-employment
Substantial wage hike for employees by 10%.
Productivity Linked Scheme(PLI)
Persuade pilots to fly more & to increase aircraft utilization.
Grossly misused by Engg. Dept. – Airbus.
Pilots – misuse of flying hours. Increase in annual wage bill by 1.8 bn.OTA increased by 109% in 1993 – 99.91 – 92 & 95 – 96 increase pay &
allowances by 842% & 134%.
Impact of Staff Cost Hike in Fare Increase(%)
Improvement shown. 1997 – 98 – 140 mn profit. 1999 – suffered losses.
Date of fare increase Impact(%)
25/07/1994 16.22
1/10/1995 25
22/09/1996 36
15/10/1997 13.44
1/10/1998 8.8
Increase in Staff CostYear Staff
costing Rs. Bn)
No. of employee
Per Employee costing mn)
Total Expenditure in Rs. Bn)
Staff cost as percentage of total operational exp)
Effective Fleet Size.
1993-94 2.85 22182 0.13 20.75 15% 54
1994-95 3.74(31.18 %)
22683 0.16 22.59 19% 58
1995-96 5.71(52.59%)
22582 0.25 26 25% 55
1996-97 7.10(24.35%)
22153 0.32 29.29 26% 40
1997-98 8.17(15.03%)
21990 0.37 32.21 27% 40
1998-99 8.75(7.12%)
21922 0.39 34.31 28% 41
Increase in losses due to PLI
6.4
6.5
6.6
6.7
6.8
6.9
7
7.1
1995 - 99 1999
Rs. In billion
Comparison of Various Airlines
Name Of Airlines
No. 0f aircraft in fleet
No. of Employees
AT Km( in Million)
AT Km per Employee
Employees per aircraft
Singapore Airlines
84 13549 14418.324
1064161 161
Thai Airways International
76 24186 6546.627 270678 318
Indian Airlines
51 21990 2113.671 398204 431
Gulf Air 30 5308 1416.235 245831 177
Kuwait Airways
22 5761 345.599 92853 261
Jet Airways
19 3722 1094.132 49756 196
680 mn. Of wage bill doubled in next 3 years.
150 employees earning about 0.3 mn. Per annum.
Compared 1994 – 95, employees increased by 2109 in 1997 – 98.
P.S. Brar committee attribution.
Suggestions
No qualification bar for Senior Executive's
Lack of Continuity in planning.There was no fixed pricing strategy.Lack of performance evaluation.Underutilization of Manpower.
Our Team…
Nima Nisha Rachel Jackline Alifiya Vidhi Rajni Asmita Priya Reha
Thank You
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