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