Indian Airlines - cost and budget analysis

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COST AND BUDGET ANALYSIS OF THE INDIAN AIRLINES

A REPORT SUBMITTED TO IIMT, GREATER NOIDA As a part fulfillment of full time Post Graduate Diploma in Management

Submitted to: Director (Academics) IIMT, Greater Noida.

Submitted By: Devashish Srivastava ENR NO. - 13032 Batch: 13th

Ishan Institute of Management and Technology 1A, Knowledge Park-1, Greater Noida, Distt.- G. B.Nagar (U.P.) Website: www.ishanfamily.com, E-mail: ishan_corporate@yahoo.com1

PREFACE As a student of management, apart from theoretical studies we need to get a deeper insight into the practical aspects of those theories by working as a part of organization during our summer training. Training is a period in which a student can apply his theoretical knowledge in practical field. Basically practical knowledge and theoretical knowledge have a very broad difference. So this training has high importance as to know, how both the aspects are applied together. The study of management acquires most crucial position in the business administration. In order to be successful, it is necessary to give priority to the management in an organization. But it cant be denied that the study of management would be more educational, materialistic and even more interesting, if it is to be paired with the work in organization as an employee. The training session helps to get details about the working process in the organization. It has helped me to know about the organizational management and discipline, which has its own importance. The training is going to be a life long experience. Management in India is heading towards a better profession as compared to other professions. The demand for professional managers is increasing day by day. To achieve profession competence, manager ought to be fully occupied with theory and practical exposure of management. A comprehensive understanding of the principle will increases their decisionmaking ability and sharpens their tools for this purpose. During the curriculum of management programmers a student has to attain a practical

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exposure of an organization on live project in addition to his/her theoretical studies. This report is about the practical training done at Indian airlines. New Delhi during the curriculum of PGDBM from IIMT, Greater Noida.

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CERTIFICATE

This is to certify that the project work done on cost and budget analysis of the Indian Airlines submitted to Ishan Institute of Management and Technology, Greater Noida by Devashish Srivastava in partial fulfillment of the requirement for the award of degree of PG Diploma in management, is a bonafide work carried out by him under my supervision and guidance .This Work has not been submitted anywhere else for any other degree/diploma. The original work was carried during 5th may 2008 to 5th July 2008.in Indian Airlines.

Date

seal/stamp of the organization

Name of the guide Address:

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ACKNOWLEDGEMENT

A project starts with an objective but it is accomplished only with enormous efforts and tremendous support and guidance. It has been an utmost pleasure for me to work with Indian Airlines. The cordial environment here has always made me feel to be a part of the organization. The process of completion of project report involves creation of debt towards innumerable persons. For this I owe a deep sense of gratitude to Mr. A. Jayachandran-G.M. Finance (Northern Region) IAL who allowed me to pursue my training. I am grateful to Mr. Daleep Kumar (Deputy Manager Finance) who gave me time from his busy schedule & under whose guidance this project has been successfully completed.

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DECLARATION

I, Devashish Srivastava, student of PGDBM 2nd Semester in Ishan Institute of Management & Technology, ENR. NO. 13032, hereby declare that, this Project Report under the title Cost and Budget analysis of Indian Airlines is the record of my original work under the guidance of Mr. Daleep kumar, Deputy Manager (Finance), Indian Airlines. This report has never been submitted anywhere else for award of any degree or diploma.

Place : New Delhi Date : DevashishSrivastava

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TABLE OF CONTENT1 2

PAGE NO. 08 09 09 09 09 20 23 24 26

Executive Summary Company Profile (a) Name of company (b) Head Office (with address) (c) Branch Office (with address) (d) Historical Background (e) Vision and Mission Statement Trade Policies (a) Main Business (b) Ancillary Business

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4 5 6 7 8

Competitors 33 Promoters and Background 41 Vendors/Suppliers analysis 46 R&D Activities 58 Key Staff 61 (a) Managerial Hierarchy 65 (b) Duties and Responsibilities of Key Staff 66 HR Policies Marketing Policies Attractive Feature of the Company Government Policies related to the Business Job Profile and Assignment Profile Finding and Limitation Suggestions/Recommendation Conclusion Bibliography 68 82 88 97 107 143 169 175 176

9 10 11 12 13 14 15 16

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EXECUTIVE SUMMARYWhenever competition is feasible it is, for all its imperfections, superior to regulation as a means of serving the public interest. Alfred Kahn AIRLINES around the world braced for slower growth, tighter earnings and deeper cost-cutting as oil prices surged and the biggest carrier by revenue. Indian Airlines have been constantly innovating and upgrading its fleet and today is one of the largest domestic airlines in the world with the fleet of 74 (+43 in orders) aircrafts including A320s A300s and Boeing 737s. Indian Airlines operates 260 flights everyday carrying more than 20,000 passengers on its network. It connects 63 domestic and 19 international stations like Singapore, Kuala Lumpur, Bangkok, Katmandu, Kuwait, Sharjah and Muscat etc. The focus of our project is to study that as to INDIAN AIRLINE is the oldest aviation industry of India then Why company goes in loss in the past years.?? . By this we can give analyses where the company save there cost and give more output to earn more profit. Financial data of the companies was collected from Regional head officesof company, the annual reports of the companies and through relevant websites. For interpretation of data, various financial tools and techniques mainly cost sheet and ratio analysis. On the basis of analysis and the interpretation of the results obtain certain recommendations and conclusions have been derived that can help Indian airlines to cut off there cost and to increase there profit.

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COMPANY PROFILE INDIAN AIRLINES HEAD OFFICE:Air India Building, Nariman Point, Mumbai - 400 021

REGISTERED OFFICE:113, Gurudwara Rakabganj Road, New Delhi 110001

HISTORICAL BACKGROUND:Indian Airlines came into being with the enactment of the Air Corporations Act 1953 and was entrusted with the responsibility of providing air transportation within the country as well as to the neighbouring countries. Indian Airlines was given the task to assimilate various dimensions of the eight private airlines, which were nationalized to provide well coordinated, adequate, safe, efficient and economical air services. The airlines began its operation on 1st August, 1953. At the time of nationalization, Indian Airlines inherited a fleet of 99 aircraft consisting of various types of aircraft which were gradually replaced by Viscount, F27 and HS748. Nineteen hundred and sixty four (1964) was the beginning of the jet era in Indian Airlines when the Caravelle aircraft was inducted into the fleet. Between9

1970 and 1982 Indian Airlines started inducting first batch of wide bodied Airbus A320 aircraft (19 aircraft) in June, 1989. Latest acquisition in IAL's fleet, the Airbus A319, was inducted in December, 2005. Today, Indian Airlines, together with its fully owned subsidiary Alliance Air, has a fleet of 70 aircraft (3 wide bodied airbus A300s, 47 fly-by-wire airbus A320s, 3Airbus A319s, 11 Boeing 737s, 2 Dornier Do-228 aircraft and 4 ATR-42. IA has already placed order for 43 new aircraft ( i.e. 19 A319s, 4 A320s & 21 A321s ), and their induction in IAL is expected to commence w.e.f. November, 2006. Indian Airlines has been setting the standards for civil aviation in India since its inception in 1953. It has many firsts to its credit, including introduction of the wide bodied A300 aircraft on the domestic network, the fly-by-wire A320, domestic shuttle service, walk in flights and easy fares. Its unique logo emblazoned on the tails of all its aircraft has become synonymous with service, efficiency and reliability. Air transport is the most modern, the Quickest and the latest addition to the modes of transport. Because of speed with which aero planes can fly, travel by air is becoming increasingly popular. As far as the world trade is concerned it is still dominated by sea Transport because air transport is very expensive and is also unsuitable for Carrying heavy, bulky goods. by air transport. In 1929, Neville Vincent, a former RAF pilot came to India from Britain, Joined TATA Sons and made a survey of all possible air routes. He presented the scheme to Director of TATA Sons. In Oct 1932 TATA Sons Ltd, which later becomes Air India International commenced weekly airmail services between Karachi and Madras via Allahabad and Mumbai.10

However, transportation

of high value light Goods and Perishable goods are increasingly being done

Later two more airlines came -The Indian National Airways came into existence in 1933 and Air Services of India into 1937. After the 2nd World War, the Government of India announced a new policy for the Development of Air Transport Services. In the first two years, it came into existence; the Government gave license to 11 companies to operate air services in different Regions. At the time of independence there were 9 airlines operating with and beyond the frontiers of the country carr