Tushar project report

A PROJECT REPORT
ON
“A STUDY OF PORTFOLIO MANAGEMENT ON AIR
INDIA LIMITED”
Submitted in partial fulfillment of the requirements
for the award of the degree of
Bachelor of Business Administration (BBA)
To
Guru Gobind Singh Indraprastha University, Delhi
Submitted To -
Anchal Tehlan
AssistantProfessor
VIPS
Submitted by:
Tushar Goyal
Roll No.:01229801714
Vivekananda Institute Of Professional Studies
Outer Ring Road, AU Block, Pitampura, Delhi, 110034
Batch (2014-2017)

CERTIFICATE
I, Mr. Tushar Goyal Roll No. 01229801714 certify that the Project
Report/Dissertation (BBA-310) entitled “A Study of Portfolio Management on
Air India Limited” is done by me and it is an authentic work carried out by me at
___________________________ (Name of the organisation or of the Institute).
The matter embodied in this project work has not been submitted earlier for the
award of any degree or diploma to the best of my knowledge and belief.
Signature of the Student
Date:
Certified that the Project Report/Dissertation (BBA-310) entitled “A Study of
Portfolio Management on Air India Limited” done by Mr.Tushar Goyal, has
completed under my guidance.
Signature of the Guide
Name of the Guide:
Designation:
Date:
Countersigned
Director/Project Coordinator

ACKNOWLEDGEMENT
I offer my sincere thanks and humble regards to Institute of Information
Technology & Management, New Delhi for imparting us very valuable professional
training in BBA.
I pay my gratitude and sincere regards to “Ms. Antriksha Negi”, my project Guide
for giving me the cream of her knowledge. I am thankful to her as she has been a
constant source of advice, motivation and inspiration. I am also thankful to her for
giving her suggestions and encouragement throughout the project work.
I take the opportunity to express my gratitude and thanks to our computer Lab staff
and library staff for providing me opportunity to utilize their resources for the
completion of the project.
I am also thankful to my family and friends for constantly motivating me to complete
the project and providing me an environment which enhanced my knowledge.

Summer Training Appraisal
I have taken efforts in this project. However, it would not been possible without
the kind supportand help of many individuals and organization. I would like to
extend my sincere thanks to all of them.
First and foremost, I would like to express my sincere gratitude to my industry
mentor and guide Mr. Lovlish Kumar, Finance Manager for giving me the
opportunity to understand the project and for providing me the necessary
information wherever required, without whose support and encouragement I would
not have been able to complete my project.
Tushar Goyal
BBA (Bachelors Of Business Administration)

DECLARATION
I hereby declare that this Project Report titled “A STUDY OF PORTFOLIO
MANAGEMENT ON AIR INDIA LIMITED”
submitted by me to Vivekananda Institute Of Professional Studies is a
Bonafide work undertaken by me and has not been submitted to GURU GOBIND
SINGH
INDRAPRASTHA UNIVERSITY.
Name – Tushar Goyal
Enrollment No. -01229801714
BBA(Gen)

Table Of Contents
S.NO TOPIC Remarks
1 Certificate
2 Summer Training Appraisal
3 Acknowledgement
4 Declaration
5 Executive Summary
6 Company Profile
7 Hierarchy of the Organization
8 Introduction
9 Product Profile
10 Recognition
11 Limitation of product promotion
12 Brands
13 Detail of work Assigned
14 Findings of the Study
15 Conclusion
16 Bibliography

Chapter - 1
INTRODUCTION
About the industry
Aviation is the practical aspect or art of aeronautics, being the design, development,
production, operation and use of aircraft, especially heavier-than-air aircraft. The
word "aviation" was coined by French writer and former naval officer Gabriel La
Landelle in 1873, from the verb "avier" (synonymous flying), itself derived from the
Latin word "avis" ("bird") and the suffix "ation".
Indian Aviation Industry
Introduction
India‘s civil aviation industry is on a high-growth trajectory. India aims to become the
third-largest aviation market by 2020 and the largest by 2030.
The Civil Aviation industry has ushered in a new era of expansion, driven by factors
such as low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in
domestic airlines, advanced information technology (IT) interventions and growing
emphasis on regional connectivity. India is the ninth-largest civil aviation market in
the world, with a market size of around US$ 16 billion.
―The world is focused on Indian aviation – from manufacturers, tourism boards,
airlines and global businesses to individual travellers, shippers and businessmen. If
we can find common purpose among all stakeholders in Indian aviation, a bright
future is at hand,‖ said Mr. Tony Tyler, Director General and CEO, International Air
Transport Association (IATA ).
Market Size
In the second quarter of 2015, domestic air passenger traffic surged 19.2 per cent to
20.3 million from 17 million in the corresponding period a year ago. Total passenger
carried in June 2015 increased 13 per cent Y-o-Y to 8.8 million from 7.8 million in
June 2014. International and domestic passenger traffic grew 5.3 per cent and 16 per
cent, respectively, in June 2015.

In June 2015, total freight carried rose 5.4 per cent Y-o-Y to 222,990 tonnes vis-à-vis
211,590 tonnes in June 2014. International freight movement witnessed higher growth
(7.1 per cent) compared with domestic freight movement (2.6 per cent).
In June 2015, total aircraft movements at all Indian airports stood at 141,620, which
was 8 per cent higher than June 2014. International and domestic aircraft movements
increased 6.5 per cent and 8.4 per cent, respectively, in June 2015.
Over the next five years, domestic and international passenger traffic are expected to
increase at an annual average rate of 12 per cent and 8 per cent, respectively, while
domestic and international cargo are estimated to rise at an average annual rate of 12
per cent and 10 per cent, respectively.
The airlines operating in India are projected to record a collective operating profit of
Rs 8,100 crore (US$ 1.29 billion) in fiscal year 2016, according to Crisil Ltd.
Investment
According to data released by the Department of Industrial Policy and Promotion
(DIPP), FDI inflows in air transport (including air freight) between April 2000 and
May 2015 stood at US$ 573.18 million.
Key investments and developments in India‘s aviation industry include:
 Airbus, the world‘s leading aircraft maker, expects India‘s aviation industry to
grow at over 10 per cent annually in the next decade, almost double the
average growth rate of the global aviation industry.
 Eyeing large orders from Indian airlines, Airbus has committed to source
products worth US$ 2 billion cumulatively over the next five years from India;
the company plans to provide customised maintenance and other services
closer to the base for all its airline customers in India.
 French drone-maker LH Aviation signed a Memorandum of Understanding
(MoU) with India‘s OIS Advanced Technologies on June 19, 2015to
manufacture tactical drones in India through an industrial license.
 Mahindra Group expanded its partnership with GE Aviation by signing an
agreement to manufacture aero structures at the Group‘s new aerospace
facility in Bengaluru.

 IndiGo plans to file documents for an initial public offering within the next
two months to raise US$ 400 million by selling 10 per cent stake.
 SpiceJet plans to enter a deal with Boeing Co. and Airbus Group SE to buy
80-120 jet airplanes which would help to expand their fleet and rebuild its
business..
 Air India, India‘s national airline, has started to shift its IT operations to cloud
and is exploring the use of iPads for work, as it plans to upgrade its technology
to maintain pace with the competition.
 The Airports Authority of India (AAI) and Kannur International Airport Ltd.
(KIAL) signed a MoU for 26 per cent equity in the greenfield airport worth Rs
1,892 crore (US$ 295.62 million) being built at Mattannur in Kannur.
 Hindustan Aeronautics Ltd. (HAL) signed an agreement with French engine
manufacturer Turbomeca for maintenance, repair and overhaul (MRO) of
Shakti helicopter engine, which would power a fleet of 1,000 Indian military
choppers over the next 10 years.
Government Initiatives
Government agencies project that around 500 brownfield and greenfield airports
would be required by 2020. The private sector is being encouraged to become actively
involved in the construction of airports through different Public Private Partnership
models, with substantial state support in terms of financing, concessional land
allotment, tax holidays and other incentives.
Some major initiatives undertaken by the government are:
 Gujarat is expected to get a second international airport at Dholera. The state
government has formed Dholera International Airport Co. Ltd. and is
obtaining approvals from the union government.
 The Directorate General of Civil Aviation (DGCA) has given its approval to
Air India‘s maintenance, repair and overhaul (MRO) unit.
 The Government of India has decided to award airports in Kolkata, Chennai,
Jaipur and Ahmedabad on management contract. AAI has issued the ‗Request
for Qualification‘ document for these four airports.

 The Government of India plans to form a committee comprising bankers,
aviation experts and technocrats to help turn around and privatise the national
airline, Air India.
 The Government of India approved a proposal to set up a second airport in the
National Capital Region.
 The Government of India expects to finalise the new aviation policy and
revised international flying norms for domestic carriers soon; the government
may remove the ‗5/20‘ norms for domestic airlines in this new policy.

i ndia Regionali ndia Exp ei ndia
ABOUT ORGANIZATION/COMPANY PROFILE
AIR INDIA LTD.
Air India Limited is a company that was formed as National Aviation Company of
India Limited by the government of India to oversee the merger of Air
India and Indian. The company was renamed as Air India Limited on 26 October
2010. It was incorporated under the Companies Act 1956 on 30 March 2012 and was
owned by the Government of India based at the Air India Building in Nariman
Point, Mumbai The Company was created to facilitate the merger of the two main
state-owned AIRLINES IN INDIA Air India, with its subsidiary Air India
Express and Indian, together with its subsidiary Alliance Air (now called Air India
Regional)
Upon completion of the merger on 26 February 2011 there is now one primary airline,
Air India, with two subsidiary carriers providing regional and low-cost, point-to-point
services and a third subsidiary for cargo operations:
Air India Limited
Fig. 1.1: AIL carriers connect 93 destinations (60 domestic and 33 international) in 24
countries as of February 2011
Subsidiaries
Air India Cargo
Cargo Airbus A310-300F
In 1954, Air India Cargo started its freighter operations with a Douglas DC-3 Dakota
aircraft, giving Air India the distinction of being the first Asian airline to operate
freighters. The airline operates cargo flights to many destinations. The airline also has
ground truck-transportation arrangements on select destinations. A member of IATA,
Air India carries all types of cargo including dangerous goods (hazardous materials)

and live animals, provided such shipments are tendered according to IATA Dangerous
Goods Regulations and IATA Live Animals Regulations. At the warehouse in
Mumbai, Air India has developed a system of inventory management for cargo
handling of import/export functions. This takes care of the entire management of
cargo, supports Electronic Data Interface (EDI) messages with Indian Customs and
replaces to a great extent existing paper correspondence between Customs, airlines,
and the custodians. This also replaces manual handling and binning of cargo at
the warehouse in Mumbai by Air India. In 2012, as a part of the restructuring plan, the
airline wound up its loss-making cargo business and sold its entire fleet of six Boeing
737-200 freighters.
Air India Regional
Air India Regional was started as a low-cost arm of Indian as Alliance Air As part of
Indian's merger with Air India, it was renamed Air India Regional. It operates 357
weekly flights to 25 domestic destinations as a subsidiary of Air India. Its main hub is
Delhi's Indira Gandhi International Airport. As Alliance Air, the airline operated a
fleet of 12 Boeing 737-200aircraft. All these aircraft were phased out post the merger.
Air India Regional now operates a mixed fleet of ATR 42-300,ATR 72-600
and Bombardier CRJ700 aircraft.
Air India Express
Air India Express is the airline's low-cost subsidiary headquartered in Mumbai,
operating mainly from Indian state of Kerala. It operates services mainly to
the Middle East and Southeast Asia. The airline belongs to Air India
Charters Limited, a whole owned subsidiary of Air India Limited. Today Air India
Express operates nearly 100 flights per week, mainly from southern states of Tamil
Nadu and Kerala in India. Air India Express operates flights from airports in Kerala,
Punjab and Mangalore to Kuwait, Dubai, Abu Dhabi, Al Ain, Muscat and Salalah in
the Middle East and Singapore in the east. The airline was established in May 2009,
after a long demand from Malayalee expatriate communities living in Middle East.
Air India Charters Limited
Air India Charters Limited (AICL) is another Public Sector Undertaking of the
Government of India. Headquartered in Mumbai, India, this subsidiary of Air India

operates low cost carrier Air India Express from India to the Gulf and Southeast Asia.
AICL operates flights from airports in Kerala, Punjab and Mangalore to Dubai, Abu
Dhabi, Al Ain, Muscatand Salalah in the Middle East and Singapore in the east. AICL
has charters flying throughout India. It works with other charter companies
including Vibha Lifesavers for air ambulance and Hi Flying aviation for its general
charters in India.
Air India Air Transport Services
Air India Air Transport Services Limited (AIA TSL) is a Public Sector Undertaking of
the Government of India. AIATSL is a subsidiary of Air India and is headquartered
in Mumbai, India The company provides ground handling services (cargo, passenger,
baggage) at various airports in India. The Chief Operating Officer (COO) of the
company was Captain Gustav Baldauf. Captain Gustav Baldauf resigned as COO of
AIATSL during February 2011 citing his remarks against the government of India.
The Company has authorised Share Capital of Rs. 5 billion divided into 425,636,820
Equity Shares of Rs. 10/- and 7,436,318 Redeemable Prefrerence Shares of Rs. 100/-
each and present paid-up capital comprises 153,836,427 fully paid equity shares of
Rs. 10/- each amounting to Rs. 1538.4 million.

ORGANIZATION STRUCTURE CHART

LITERATURE REVIEW
The extensive literature review was performed upon our literature search in the field
of project management, project portfolio management, and particularly project
portfolio selection. The search engine of Google Scholar (http://scholar.google.com/)
and the database search facilities were used to find relevant books, theses,
dissertations periodicals, scholarly and peer reviewed papers such as Academy of
Management Journal; Journal of Management Decision; Harvard Business Review;
MIT Sloan Management Review; Academy of Management Review, International
Journal Project Management; etc., in the database of universities, academic
publishers, professional societies, EBSCO, Emerald, Blackwell Synergy, JSTOR, and
Science Direct. Besides, the handouts and teaching notes provided by professors
during the whole MSPME course (Master of Science in Strategic Project Management
- European) have also been referenced. The extensive review of literature is aimed at
improving our understanding of theoretical and practical concepts underpinning the
process of project portfolio selection. During the literature review, eight main
academic and practical areas pertinent to our research question have been identified,
examined, and presented in the next sections:
a. Relevant definitions
b. Strategies for project portfolio selection
c. Decision making process supporting project portfolio selection
d. Constrained Resources / Theory of Constraints (TOC) and project selection
11

Relevant Definitions
Corporate Strategy
There are a number of various definitions of strategy in the literature; and in practice,
strategy exits in every organization (Yelin, 2010). However, the following definitions
found are relevant to the discussion context in this dissertation:
Minztberg et al. (1998, pp. 10-15) provided interesting discussions on strategy
understanding which is known as:
Plan: some sort of consciously intended course of action, a guideline (or a set of
guidelines) to deal with a situation; intended strategy,
Pattern: consistency in behavior, whether or not intended; realized strategy
(Combination of the plan and pattern concepts explains deliberate strategy (intentions
that existed previously were realized) and emergent strategy (patterns developed in
the absence of intentions or despite them which went unrealized),
Position: a means of locating an organization in external environment,
Perspective: seeking to look inside the organization, indeed inside the heads of the
collective strategist, and
o Ploy: a specific ‗maneuver‘ intended to outwit an opponent or competitor.
Similarly relevant to the context of this dissertation, Johnson et al. (2011, p. 9)
defined strategy as the direction and scope of an organization over the long term,
which achieves advantages in a changing environment through its configuration of
resources with the aim of fulfilling stakeholder expectations; adding that strategic
management includes understanding strategic position of an organization, strategic
choice for the future and turning strategy into action.
Project Portfolio Selection Process
Project portfolio selection has become increasingly popular during the past decade.
More recent literature has been dedicated to the subject. Both academics‘ and
practitioners‘ literature review reveals that selecting projects and optimizing the
project portfolio that best align with the organization‘s strategic priorities is the
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essential focus of project portfolio selection (see literature review). As explained
previously, this dissertation focuses on the process of project portfolio selection as
project portfolio management or partial element of project portfolio management.
Therefore, the following definition by PMI (2011) of project portfolio selection
process is relevantly applicable and adaptable:
o Project portfolio management or project portfolio selection is formally defined as a
dynamic decision process whereby a business‘s list of active projects is constantly
updated, revised. In this process 10 new projects are evaluated, selected and
prioritized; existing projects may be accelerated, killed, or de-prioritized and
resources are allocated and reallocated to active projects (Cooper et al., 2001b).
Many scholars and practitioners (e.g. Dye &Pennypacker, 1999; Sommer, 1999;
Cooper et al., 2001a) claim that decision-making, prioritization and reprioritization,
strategic alignment and realignment, allocation and reallocation of resources are the
ongoing processes of project portfolio management. APM (2011) defines:
o Process as a set of interrelated resources and activities which transform inputs into
outputs. In addition, as a guide, PMI (2011) defines:
o Project as a temporary endeavor undertaken to create a unique product, service, or
result,
o Portfolio as a collection of projects or programs (whether interdependent or not) and
other work that are grouped together to facilitate the effective management of that
work to meet strategic business objectives; adding that projects and programs are
known as portfolio components
About the Topic/Strategies for Project Portfolio Selection
What is a right project portfolio?
Addressing the vital question which projects are worth of time, cost and investment
performance? is strategic to any organizations in their selection and management of
project portfolio. Both academic researchers and practitioners highlight the
importance of project selection and prioritization process in project portfolio
management (Cooper et al., 1997a, 1997b, 1998; Archer & Ghasemzhadeh, 1999;
Dye & Pennypacker, 1999; Sommer, 1999; Artto et al., 2009; Morris & Jamieson,
13

2009; PMI, 2011). They argued that cooperative efforts made in order to select the
right mix of projects require consideration of internal capabilities and external
possibilities (Mintzberg et al., 1998) and leverage of strategic resources (Hamel
&Prahalad, 1993 and Kendall & Rollins, 2003) for the benefits of individual projects
and overall project portfolios.
Literature in Project Portfolio Management increasingly discussed the requirements
that a project portfolio must meet in order to achieve the corporate strategy. All
literature (Ghasemazadeh et al, 1999; Sommer, 1999; Rădulescu1 &Rădulescu, 2001;
Cooper et al., 2001b; Yelin, 2010; Better & Glover, 2011; and PMI, 2011) shared the
same common critical requirements including:
a. Alignment with corporate strategy: this is a very important criterion for
achieving corporate strategy. As discussed above, strategy is implemented by projects
so if these projects are not aligned with strategy they will not contribute to the
implementation of strategy. Cooper et al. (2000) argued that corporate strategy must
be reflected in the project portfolio and resource allocation to projects.
b. Maximizing the value: resources of organization are limited, the target of
organization is to utilize them effectively to achieve the maximum value of project
portfolio. Normally, the organization used financial indicators such as NPV, ROI.
Sometimes, such as in weighted scoring model, organization can pre-develop criteria
to score and rank the project based on the maximum score of portfolio. However,
according to Blomquist& Müller (2011), the later method lacks acceptance because it
is poorly crafted or outdated criteria.
c. Balancing: like financial investment, project portfolio requires balanced (Cooper et
al., 2000). The main purpose is balancing risk and return; long and short term
benefits, time-to-completion, competitive impact and others.
In addition, Levine (2010) added some more requirements for the project portfolio
that include:
d. Appropriate to organization‘s value and culture;
e. Directly or indirectly contribute to cash flow;
f. Most efficiently utilize the resources (capital, human resource, physical);
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g. Projects not only contribute to short term business but also long-term development.
Through literature review, it is evidently argued that PPM is a ―bridge between
strategy and operation‖ and enables organizations to transform the organization‘s
vision into realities or successfully implement their corporate strategies (Morris &
Jamieson, 2009; and Dey, 2011). For instance, growth in every organization is
resulted from its set of successful projects generating new products, services
(Englund& Graham, 1999). Cleland (1999) argued that projects are building block in
designing and implementing corporate strategy. Sharing this opinion, Wheelwright &
Clark (1992) identified the importance of the right set of projects in project portfolio
for a company‘s future or market growth overtime. However, it is not easy to evaluate
the rightness of the project portfolio in aspect of contributing to corporate strategy
since strategies are dynamic and change over time. The concept of strategy itself is
also ambiguous and abstract. Kendall & Rollins (2003) says that strategic objectives
of a business can take many forms such as improving profitability, increasing market
share, compliance with mandated regulations or improving services, penetrating new
market.
From strategy perspective, Dietrich &Lehtonen (2010) argued that the success of
project portfolio is ultimately judged through the achievement of the sustainable
competitive advantage. Nevertheless, it is not easy to achieve a right project portfolio
in reality. Literature shows the following problems in selecting its project portfolio:
Firstly, projects have conflicts in objectives; some are tangible and some intangible so
it is not easy to compare and select (Archer &Ghasemzhadeh, 1996 and
Ghasemzhadeh& Archer, 2000). Secondly, there are uncertainties associated with
project parameters, cost, and risk (Rădulescu1 &Rădulescu, 2001). It is challenging to
select right projects which contribute to successful implementation of the corporate
strategy. Thirdly, some projects are highly inter-independent. This means the
organization cannot compare one project to the others but a set of projects to the
others (Ghasemzadeh et al., 1999).
Systemic Approach to Project Portfolio Selection
In order to ensure successful selection of right project portfolio(s) to sustain
organizations‘ competitive advantages, a systemic approach should be captured in
project portfolio selection. This systemic approach is understood as harmony
15

involvement of three main factors, namely people or decision makers; selection tools,
techniques, and models; and selection process or framework (Archer and
Ghasemzadeh, 2000 and Cooper et al., 2000, 2001a, 2001b). These are discussed in
details in sections 2.3, 2.6 and 2.7 respectively.
Furthermore, the systemic approach requires active adaptation of best practices
derived from academic research or professional practices in the sector or industry
such as Bottom-Up or Top-Down Approach to Strategy Formulation, Balanced
Scorecard, Weighted Scoring Models, etc.; and proactive development of ―signature
process‖ defined as ―processes which are idiosyncratic and unique to individual
organizations are the secret to sustainable competitive advantage‖ (Gratton&Ghoshal,
2011, p. 5), for example the performance of 3M‘s action teams (Unknown, 1997). The
difference between best practice and ―signature process‖ is summarized below:
Best practice
Origin: „bringing the outside in‘: starts with external and internal search for
bestpractice processes .
Development: Needs careful adaptation and alignment to the business goal.
Core: Share knowledge from across the sector.
Signature Processes
Origin: ‗bringing the inside out‘: evolves from a companyspecific history.
Development: Needs championing by executives.
Core: Values.
Source: Gratton&Ghoshal (2010, p. 52)
Agreeably, organizations should both adapt best practices and create signature
processes to stay unique and sustainably competitive (Gratton & Ghoshal, 2010).
However, they should put more efforts and focus on strategic creativity to develop
their own systemic approach to project portfolio selection through signature
processes. Repeating best practices (with successful adaptation though) possibly
keeps the organizations one step behind in its competition with the rivals as their
16

rivals may have reached higher levels of competition. More importantly, in the same
light of discussions on understanding and application of dynamic capabilities
(Eisenhardt & Martin, 2000), this systemic approach to project portfolio selection can
ensure creation of dynamic capabilities in dynamic changing business environment.
Project Portfolios Selected as Real Options
The empirical studies show that one of the critical factors leading to the failure of
projects to deliver business strategies is the selection and implementation of too many
projects beyond the organizations‘ capability and capacity (Wheelwright & Clark,
1992; Archer & Ghasemzadeh, 1999; Englund& Graham, 1999; Cooper et al, 2000;
Yelin, 2010; Crawford et al., 2011; and Blichfeldt & Eskerod, 2012). Thus, short-term
and long-term strategies should be taken into account in the process of selecting
projects to deal with the challenge that availability of scarce resources entails strategic
alignment of resources with business strategy delivery in terms of real options.
Contributing to the appreciation of this approach, Luehrman (1998b) used the
interesting metaphor of a tomato garden i.e. ―options as tomatoes‖ to implicitly
describe the process of creating, evaluating and selecting projects as options. The
process is illustrated by the depiction of experienced gardeners cultivating better
crops in the garden of tomatoes (i.e. preparing land, seeding tomatoes, watering,
fertilizing, weeding) and reaping the harvest in time (i.e. ignoring rotten or bad
tomatoes, picking the ripened or good ones, and leaving the inedible or in-between
ones for later pickup).
According to Luehrman (1998b), the garden of tomatoes is considered as option space
with two option-value metrics inclusive of value-to-cost (net present value) metric
and volatility metric in which tomatoes as projects are classified and located in the six
region for selection and investment decisions (Figure 1). The discussion about
calculating option value and exercising option prices is also mentioned in the article
of ―Investment Opportunities as Real Options: Getting Started on the Numbers‖ by
Luehrman (1998a) which is, however, beyond the scope of this thesis.
More recently, contributing one chapter about project selection to the book of Project
Management Toolbox by Milosevic (2003), Martino also discussed project selection
as real options or selection of financial options, which is understood as considering
future opportunity of investment for a profitably promising project. Within this
17

perspective, real options are interestingly resulted from selecting the best combination
of alternatives or projects whose upside and downside risks are identified and
reduced.
Apparently, this approach of project selection as real options ensures the business
strategy is successfully implemented in an effort of showing that a right project with
the right scope should be selected at the right time to add its right value to the
portfolio; and that ‗not-right-enough‘ projects should be chosen for ‗nurturing‘ to
reach its full potential to become a candidate for the portfolio value or ―benefit
pipeline‖ (Gardiner & Carden, 2009).
Furthermore, opportunity costs i.e. potential greater benefits with other opportunities
or options sacrificed due to decisions of choice/alternative (Leiginger, 1977) and
transaction costs e.g. commission, tax, cost of assets, expenses occurred due to bad
project selected, etc. (Williamson, 1981; Collins & Fabozzi, 1991; and Byers et al.,
1997) would complement further understanding of project selection as real options.
More interestingly, instead of being too much concerned about the current inadequate
capability and capacity, the project selection team should be also aware of potential
internal and external resources in relation to business strategy when evaluating and
selecting projects (Englund& Graham, 1999). Similarly, Frame (1994, p. 181) makes
the following argument for project selection:
―Abig problem with offhand project selection is that it leads to the ineffective use of
resources. Support of a project to satisfy short-term exigencies may lead to long-term
fiascos. Those making the decisions often forget that by committing resources to a
poorly conceived project idea, they are tying up those resources. They have not taken
into account the opportunity costs of their decision. If a truly good project prospect
arises in the future, they may no longer have the resources to pursue it because their
resources are tied up in marginal undertakings‖.

Chapter- 2
RESEARCH METHODOLOGY
PURPOSE OF THE STUDY
The primary objective of my project is to study the distribution network of aviation
industry.
To add a broader perspective to portfolio investment we have considered 3 types
of investors:
1) Aggressive: The type of portfolio constructed for an aggressive investor
would include majority of its investments into equities as shown.
2) Moderate: This type of portfolio would see a striking balance of investments
between equities, mutual funds, gold etc.
3) Defensive: This type of portfolio will have a stable return with minimum
risk involved with most of the investments in FD‘s, bonds etc, however in our
portfolio due to the high risk free rates, the investments are diversified into
equities across sectors.
We have also designed an ideal portfolio according to our analysis and the industry
feedback that we received after the surveys and interviews. The ideal portfolio is
modeled on the aggressive portfolio due to high rewards and sustainable risk.
The basic idea of the report is to communicate the basis on which portfolio is built
considering various factors such as; risk appetite, desired returns, key players
involved behind constructing a portfolio, market fluctuations, calculation of returns
and finally zeroing on the optimum portfolio. Thus there are 4 portfolios been
designed and the last portfolio is the ideal one according to the analysis, surveys and
industry opinion.
The investment in construction accounts for nearly 11 per cent of Indian‘s Gross
Domestic Product (GDP) and nearly 50 per cent of its Gross Fixed Capital Formation
(GFCF). It accounts for nearly 65 per cent of the total investment in infrastructure and
is expected to be the biggest beneficiary of the surge in infrastructure investment over
the next five years. The present study has been carried out with the objective to
24

evaluate the investment performance of selected cement companies, which are
deemed to be major players in Indian Aviation sector, namely; Associates Indian
Aviation Company Porter‘s Five Forces analysis is a useful methodology and a tool to
analyze the external environment in which any industry operates. The key aspect
about using Porter‟s Five Forces for the airline industry in the United States is
that the airline industry has been buffeted by strong headwinds from a host of
external factors that include declining passenger traffic, increasing operating
expenses, high fuel prices, and greater landing and maintenance costs, apart
from intense competition from low cost carriers that has led to a cutthroat price
war which has led the industry severely affected. Indeed, it can be said that the
airline industry globally is in a ―death spiral‖ and more so in the United States where
several prominent carriers were either forced into bankruptcy or had to merge with
other airlines just to stay afloat.
Supplier Power: The power of suppliers in the airline industry is immense because of
the fact that the three inputs that airlines have in terms of fuel, aircraft, and labor are
all affected by the external environment. For instance, the price of aviation fuel is
subject to the fluctuations in the global market for oil, which can gyrate wildly
because of geopolitical and other factors. Similarly, labor is subject to the power of
the unions who often bargain and get unreasonable and costly concessions from the
airlines. Third, the airline industry needs aircraft either on outright sale or wet lease
basis which means that the airlines have to depend on the two biggies, Airbus, and
Boeing for their aircraft needs. This is the reason the power of the suppliers in terms
of the three inputs needed for them is categorized as high according to the Porter‘s
Five Forces framework.
Buyer Power: With the proliferation of online ticketing and distribution systems,
fliers no longer have to be at the mercy of the agents and the intermediaries as
well the airlines themselves for their ticketing needs. Apart from, the entry of low
cost carriers and the resultant price wars has greatly benefited the fliers. Moreover,
the tight regulation on the demand side of the airline industry meaning that passengers
and fliers have been protected by the regulators means that the balance of power is
tipped in their favor. All these factors make the airline industry cede power to the
consumers and hence, the power of buyers is moderate to high as per Porter‘s Five
Forces methodology. Apart from this, the buyers can engage in ―price discovery‖
25

meaning that price fluctuations do not deter them as they have multiple channels
through which they can book their tickets.
Entry and Exit Barriers: The airline industry needs huge capital investment to
enter and even when airlines have to exit the sector, they need to write down and
absorb many losses. This means that the entry and exit barriers are high for the
airline industry. As entry into the airline industry needs a high infusion of capital, not
everybody can enter the industry, which in addition, needs sophisticated knowledge
and expertise on part of the players, which is a deterrent. The exit barriers are also
subject to regulation as regulators in the United States do not let airlines exit the
industry unless they are satisfied that there is a genuine business reason for the same.
Moreover, the airline industry leverages the efficiencies and the synergies from the
economies of scale and hence, the entry barriers are high. Therefore, applying Porter‘s
RESEARCH OBJECTIVE OF THE STUDY
To analyze study of portfolio management on Air India.
SUB OBJECTIVE:-
 To identify the leading company.
 To identify best promotional method.
 To calculate the return of various companies.
 To calculate the risk of various companies.
 To calculate the portfolio return of different portfolios designed for the
combination of various companies.
 To understand, analyze and select the best portfolio.
Major Objective:
Due to the objectives of the research it is more qualitative and exploratory in nature
and the base of research is to study.
 To analyze the evolution and growth of portfolio management market in India
with particular reference to Air India.

 To study the Indian aviation industry stocks, understand the working of the sector
as a whole in today‘s economy and analyze the stocks on the basis of relevant
parameters.
 To perform a fundamental and technical analysis for specific Air India.
Hypothesis
1) There exist a potential growth in the portfolio management industry
2) Existing customers are satisfied with their portfolio management in Air India.
RESEARCH METHODOLOGY
This dissertation work is on Indian Aviation Sector specifically portfolio management
in Air India. There are different companies‘ uses their different strategies to grab the
market which increases the potential customer as well as market share. A Research
Methodology defines the purpose of the research, how it proceeds, how to measure
progress and what constitute success with respect to the objectives determined for
carrying out the research study. The appropriate research design formulated is detailed
below.
Exploratory Research: this kind of research has the primary objective of
development of insights into the problem. It studies the main area where the problem
lies and also tries to evaluate some appropriate courses of action. The research
methodology for the present study has been adopted to reflect these realties and help
reach the logical conclusion in an objective and scientific manner. The present study
contemplated an exploratory research. So research methodologies are described
below:
RESEARCH DESIGN:
General methodology adopted for this project was completely based on primary or
secondary data in the first stage gathering information about the general Air India in
portfolio management what are the general promotion pattern, what type of Incentive
schemes the different brand are using. The second stage comprised determining the
objective of the study drafting the questionnaire.

DATA COLLECTION TECHNIQUES
Primary Data: Data which is collected through direct interviews and by raising
questionnaires
Secondary Data: Secondary data that is already available and published .it could be
internal and external source of data.
Internal source: which originates from the specific field or area where research is
carried out e.g. publish broachers, official reports etc.
External source: This originates outside the field of study like books, periodicals,
journals, newspapers and the Internet.
Primary Data: Collected through structured questionnaires, personal interviews/
discussions with the top portfolio management of the portfolio management firms and
the private sector banks with focus on his/ her choice before availing for the service.
Survey Method: - Basically my survey method focused into interview, secondary
data collection from the competitors, vendors and suppliers. The brief description are
enlisted below:-
 Interview- Interview has been conducted to different clients, distributors
in aviation industry, financial departments. This entails: -
 Questioning (face to face)
 Basic Methods to Get employer feedback
 Financial department Satisfaction in Air India Officers.
 Customer Service
 Data Collection- Secondary data for Indian Aviation industry in Air
India sector has been collected from Annual Reports, Journals, Websites,
Working Files, Speech, Competitors‘ News etc.

INSTRUMENTS USED
 WEB SEARCH PORTFOLIO MANAGEMENT IN AVIATION INDUSTRY
 COMPLIANCE REPORT
 NEWS & PRESS RELEASE
FINANCIAL RESEARCH
Financial research can be sub divided into two parts.
1. Observation
2. Survey
The brief description of all the methodologies is enlisted below:
1. Observation: - Here I used some of the observations methods. These are
enlisted below briefly: -
Communication and conversational analysis
Investigation of the patterns in the organization of people's interaction (it would
be possible to use the principle of analyzing a conversation between two
travelers, or one traveler and one transport enquiry office operator in real
situations, in order to identify the needs for the traveler in specific contexts,
what are the difficulties encountered, how a system could resolve these
difficulties,...). One of these methods is the language / action approach which
considers the language as a means by which people act. Advantage of this
method: it provides a complete and logical conceptual frame in order to
investigate all kinds of conversation. Disadvantage of this method: many
situations are characterized by subtle communication processes not taken into
account by the model. There is also a difficulty in labeling an interaction and a
message especially if they do not fit into the request or promise categories.
Participant observation
The investigator takes part in the tasks alongside other operators. It may be a
useful data collection approach if skilled financial performance is such that

actions are "semi-automatic" in which case users may find it difficult to
verbalize how they are achieving the task goals. This type of observation can
also be useful if aspects of team Air India Financial performance are being
investigated to understand how the team members are organized and perform
their tasks.
Passive observation
At the simplest level passive observation, where the person conducting the
observation quietly observes and records the user activity, can be used to record
some details of the processes which the user undertakes. Passive observation
has the advantage that it minimizes the intrusion which the user experiences.
One problem with passive observation is the practical difficulty in recording
sufficient detail of the activity. This can be overcome through the video
recording of user activity which, after transcription into textual form, can
provide a highly detailed analysis.
Usability Testing
Usability testing is a technique to evaluate the ease of use or ease of learning of
an interactive system. During a usability test a real future user uses (a prototype
of) the system while one or more observers look at how this is done. Usability
tests are often task-oriented, i.e. the test user receives a set of predefined tasks
to perform. Usability tests often use the think aloud technique, i.e. the test user
is asked to say aloud what he thinks while using the system. It has 2 types.
 Obtrusive observation: -
 Think about what you want to ask before the test
 Ask open questions
 Don't blame the test user
 Don't ask the test user for design solutions
 Unobtrusive observation: - Observe: be quiet, watch, understand.
 Don't explain

 Don't ask the test user's opinion
 Don't defend the design
 Don't apologize
 Don't suggest Don't contradict the test user nor agree with him/her:
stay neutral
SAMPLE DESIGN
POPULATION: The Employees & Officers of the work in Air India.
SAMPLE SIZE: 55 Respondents.
SAMPLING METHOD: The sample is drawn on non-probability sampling
basis i.e. non- random sampling technique has been used. The list of target
population is definite and already decided in advance.
METHOD OF DATA COLLECTION: The primary data was collected
with the help of survey information. A concise questionnaire was prepared
keeping in mind the information specifications.
INSTRUMENT FOR DATA COLLECTION
The research approach: Survey Method.
The research instrument: Questionnaire.
DRAFTING OF A QUESTIONNAIRE
The following are the main steps in the drafting of questionnaire.
LIMITATIONS
 Time Constraint: The time period given for the preparation does lack some
estimation as the progress of the report is dependent on the appointment so
given by the professionals and the customers to be surveyed. Moreover being
a MBA student regular assignment, projects, studies are part and parcel of life
hence to chalk out time for extra activities become a bit difficult, but still I am
trying hard to cope up with this constrained and to give my 100%.
31

 Possibility of Sampling Error: The sample though selected through simple
random basis but still there is a possibility that the sample may suffer through
judgmental error or any other error. The sample selected for study may give
wrong information or sample selected may not be right for study. Though
proper and sufficient steps have been taken to control these errors but still
there is some possibility that the survey report may not reflect the true feelings
of the respondents.
32

Chapter-3
DATA PRESENTATION & ANALYSIS
1. Do you believe that portfolio management has increasingly becoming a
booming Aviation industry in India?
 Yes ---------------------------------------------
 No ------------------------- --------------------
 Do not know /Cannot say -------------------
87 percent
9 percent
4 percent
90%
80%
70%
60%
50%
40% Yes
No
30% Do not know /Cannot say
20%
10%
Fig. & Graphs: 4.1 Booming Aviation industry in India
Interpretation: The summary of the response was that portfolio and disposable
income are growing substantially. We are also noticing that for the first time the
ability to earn and save are slightly different. Earlier you just put away your money in
some guaranteed products. Today, when even the government is withdrawing from
those products ( it recently stopped the maturity bonus on post-office savings),
investors, whether they be doctors, architects or anyone else, need professional help.

2. Is portfolio management only for the wealthy?
 Yes -------------------------------------------
 No --------------------------------------------
 Do not know/ Can not say -----------------
23 per cent
71 per cent
06 per cent
80%
70%
60%
50%
40%
30%
20%
Yes
No
Do not know
/Cannot say

Fig. & Graphs: 4.2 Portfolio management only for the wealthy
Interpretation: Only 23 percent of the respondents were of the opinion that yes
portfolio management industry is only for those who are having enormous portfolio.
But a massive 71 percent felt that it is for everybody. The person who is earning Rs
30,000 per month also needs this advice. For instance, if there is a 25-year-old guy
who earns this sum, his first priority is to buy a house for, say, around Rs 20 lakh. He
has to now protect this property from, say, flood, cyclone or other natural disasters.
You have building insurance that doesn't cost more than Rs 800-1,000. only 6 percent
responded in terms of do not know/ can not say.
3. Which is your Air India main market?
 Stock options ------------------------------------ 65 per cent
 Expansion of business -------------------------- 32 per cent
 Do not know/ Can not say --------------------- 03 per cent
70%
60%
50%
Stock options
Expansion of business
40%
Do not know/ Can not say
30%
20%
Fig. & Graphs: 4.3 Air India main market
Interpretation: 65 percent prefer getting stock options. 32 percent operate on the
expansion of business and entrepreneurial capacity. 3 percent responded in terms of
do not know/ can not say.

10. What value-added services do you provide?
 Financial planning---------------------- 88%
 Individual requirements---------------- 12%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
financial planning
individual requirements
Fig. & Graphs: 4.4 Value-added services do you provide
Interpretation:
88 percent responded that their managers offer complete financial planning. They are
able to give the customers advice on equity investment, debt, commodities, art,
insurance, international investment, which home loans to take and why, tax planning,
estate planning, filing tax returns, superannuation, real estate, and do a cash-flow
analysis. 12 percent responded that they are specialized to meet the individual
requirements of the customers i.e. in portfolio management.
11. How much do you charge and on what basis?
These charges are over and above any other charges like an entry and exit load
charged by portfolio managements when the customers invest in them.
Fees: They are based on an hourly rate, a flat rate, or on a percentage of your assets
and/or income. At times, it is on the nature of the work done.
Combination of fees and commissions: Here you are charged fees for the amount of
work done to develop the financial plan and commissions are received from any
products sold.

12. Do you recommend your own products?
 Yes--------------------------- 79%
 No---------------------------- 11%
 Not sure--------------------- 10%
80%
70%
60%
50%
yes
40% no
not sure
30%
20%
10%
0%
Fig. & Graphs: 4.5 Recommend your own products
Interpretation:
Assuming the four main asset classes are stocks, bonds, alternative investments (such
as real estate and private equity) and cash, how should ones investments be allocated
if he is 50 years old or if he is 65 years old and newly retired?
The respondents think the total amount of the estate (portfolio) should enter into the
determination of asset allocation, along with the health and the expected lifespan of
the individuals. The appetite for risk is another consideration, as is the ability to deal
with contingencies. After saying all that, I would allocate 65% to stocks for the 50-
year-old and 55% for the 65-year-old. I would use alternative investments only if the
total amount was very substantial and the individuals had some expertise in that field.
Bonds and cash would be divided so that there would be enough cash for about six
months' spending, with the balance in bonds.
39

12. Should the allocation change be based on economic conditions?
 Yes -----------------------------------
 No ------------------------------------
 Not sure ------------------------------
56 per cent
30 per cent
14 per cent
60%
50%
40%
yes
30% no
not sure
20%
10%
0%
Fig. & Graphs: 4.6 The allocation change be based on economic conditions
40

13. With interest rates so low and the stock market perhaps overvalued, where
should one invest today?
 Domestic Market ----------------
 Foreign Market ------------------
 Both -------------------------------
55 percent
38 percent
7 percent
60%
50%
40%
domestic market
30% foreign market
both
20%
10%
0%
Fig. & Graphs: 4.7 The stock market perhaps overvalued, where should one
invest today
14. Why should one choose to invest in a portfolio management?
For a retail investor who does not have the time and expertise to analyze and invest in
stocks and bonds, portfolio managements offer a viable investment alternative. This is
because:
 Portfolio managements provide the benefit of cheap access to expensive stocks
 Portfolio managements diversify the risk of the investor by investing in a basket
of assets
 A team of professional fund managers manages them with in-depth research
inputs from investment analysts.
 Being institutions with good bargaining power in markets, portfolio managements
have access to crucial corporate information which individual investors cannot
access.
41

15. Can portfolio managements be viewed as risk-free investments?
 Yes -----------------
 No ------------------
 Not sure------------
80%
70%
60%
50%
40%
30%
20%
10%
0%
12 percent
80 percent
8 percent
yes
no
not sure
Fig. & Graphs: 4.8 Risk-free investments
16. How does one invest money in portfolio managements?
One can invest by approaching a registered broker of Portfolio managements or the
respective offices of the Portfolio managements in that particular town/city. An
application form has to be filled up giving all the particulars along with the cheque or
Demand Draft for the amount to be invested.
17. What are the parameters on which a Portfolio management scheme should
be evaluated?
Performance indicators like total returns given by the fund on different schemes, the
returns on competing funds, the objective of the fund and the promoters image are
some of the key factors to be considered while taking an investment decision
regarding portfolio managements.
20. What are the different types of plans that any portfolio management scheme
offers?
The summary of the response was that it depends on the strategy of the concerned
scheme. But generally there are 3 broad categories. A dividend plan entails a regular
payment of dividend to the investors. A reinvestment plan is a plan where these
42

dividends are reinvested in the scheme itself. A growth plan is one where no
dividends are declared and the investor only gains through capital appreciation in the
NAV of the fund.
The plan one should choose depends on his investment object, which again depends
on his income, age, financial responsibilities, risk taking capacity and tax status. For
example a retired government employee is most likely to opt for monthly income plan
while a high-income youngster is most likely to opt for growth plan.
21. What are the benefits of systematic investment plan?
A systematic investment plan (SIP) offers 2 major benefits to an investor:
 It avoids lump sum investment at one point of time
In a scenario of falling prices, it reduces your overall cost of acquisition by a process
of rupee-cost averaging. This means that at lower prices you end up getting more
units for the same investment
43

22. What proportion of one‟s investment should be invested in portfolio
managements?
 Major portion ------------------------------------------
 Minor portion ------------------------------------------
 Depends on the economic position of the investor------
23 percent
20 percent
57 percent
60%
50%
40%
30%
20%
major portion
minor portion
depends on economic
position of investor
10%
0%
Fig. & Graphs: 4.9 Investment should be invested in portfolio managements
23 What are the types of Air India portfolio management available to NRIs?
Non-Resident External [NRE] Rupee savings account
Your funds in NRE savings accounts are held in convertible rupees - principle and
interest are fully reparable. Interest income is fully exempt from tax in India. The
savings account can be opened jointly with a Non-Resident individual.
Non-Resident External [NRE] Rupee fixed deposit
Fixed deposit in Indian rupees where the principle and interest are fully repatriable.
All interest earned is fully exempt from tax in India. The account can also be opened
jointly with a non-resident.
Non-Resident Ordinary [NRO] Rupee savings account
Your funds in Non Resident Ordinary (NRO) savings account are held in India, in
Indian rupees. The NRO account can be funded through NRI income in India. Only
the interest in an NRO account is repatriable. Interest income on this account is liable
for Indian Income Taxes. Non-Resident Ordinary [NRO] Rupee fixed account .
Fixed deposit in Indian rupees where the earnings in India can be deposited. The
interest is repatriable [after payment of tax].
44

FINDINGS AND SUGGESTIONS
FINDINGS
The major findings of the project are enumerated as follows:
 The summary of the response was that portfolio and disposable income are
growing substantially. We are also noticing that for the first time the ability to
earn and save are slightly different. Earlier you just put away your money in some
guaranteed products. Today, when even the government is withdrawing from
those products ( it recently stopped the maturity bonus on post-office savings),
investors, whether they be doctors, architects or anyone else, need professional
help.
 Only 23 percent of the respondents were of the opinion that yes portfolio
management industry is only for those who are having enormous portfolio. But a
massive 71 percent felt that it is for everybody. The person who is earning Rs
30,000 per month also needs this advice. For instance, if there is a 25-year-old guy
who earns this sum, his first priority is to buy a house for, say, around Rs 20
lakh. He has to now protect this property from, say, flood, cyclone or other natural
disasters. You have building insurance that doesn't cost more than Rs 800-1,000.
only 6 percent responded in terms of do not know/ can not say.
 65 percent prefer getting stock options. 32 percent operate on the expansion of
business and entrepreneurial capacity. 3 percent responded in terms of do not
know/ can not say.
 The response was that basically, the service the foreign airlines offer is transaction
oriented. Most of them offer some mutual funds and some equity advice. But
someone who has between Rs 2 crore to Rs 25 crore don't want this. Whereas
Indian airlines have a customer-centric model. They work with customers and
offer them a range of services — investment advisory — in debt, equity, mutual
funds, derivatives, besides tax advisory, succession planning, insurance advisory,
etc.
57

Chapter-4
SUMMARY AND CONCLUSIONS
Summary
In this paper a data mining approach for classification of stocks into clusters is
presented. After classification, the stocks could be selected from these groups for
building a portfolio. It meets the criterion of minimizing the risk by diversification of
a portfolio. The clustering approach categorizes stocks on certain investment criteria.
We have used stock returns at different times along with their valuation ratios from
the stocks of Bombay Stock Exchange for the fiscal year 2013-2014. Results of our
analysis show that K-means cluster analysis builds the most compact clusters as
compared to SOM and Fuzzy C-means for stock classification data. We then select
stocks from the clusters to build a portfolio, minimizing portfolio risk and compare
the returns with that of the benchmark index, i.e. Sensex. A portfolio could be build
up by investment analysis, which is very common with most institutions, whilst an
individual will consult a financial advisor, or financial institution that offers portfolio
management services. The whole idea is to diversify your investments so as minimize
risk and maximize returns. The portfolio manager is responsible for the account
investments. In fulfilling this responsibility, the portfolio manager must chose
investments that are suitable for the account. In making these choices, the portfolio
manager keeps in mind the investment management objective for the account while
operating within defined risk parameters. In order to achieve the identified objectives,
each account‘s needs should be defined as specifically as possible. The account
administrator generally identifies these needs and the account objectives. Once the
needs have been established and the account objectives identified, the portfolio
manager can then design a portfolio that will achieve the desired rate of return,
keeping within an acceptable level of risk.
Well, this is one avenue of finance where there is so much ambiguity about its
existence with various fund or portfolio managers. An individual can have n number
of portfolios built up through various managers, all viable. This is the beauty of
portfolios. Thus it is defined as “Collection of investments held by individual or
institution”.
58

Conclusion
The FSCs categorize their seats into classes to create market segments. Air India
divides its market into segments through the following fare classes:
 Easy fares which are discounted fares with restrictions on refund
 Apex and summer fares which are promotional fares
 Normal fares
 Concessional fares
 Executive fares
Each fare class has a number of seats allocated at a time which varies based on status
of the flight and market conditions. The process of yield management at Air India is
manual compared to automated yield management at Jet and Air India.
B. PRICING
Air India offers the best fares on the day of the departure and the 45 day fare. The 45
day fares for Air India are even comparable with LCCs on some routes. The fares
offered by Air India vary less compared Jet Airways and Air India with respect to the
time of booking. Air India offers the best fare for the Delhi – Hyderabad route even
better than LCCs.
LCCs offer a fare advantage of around 30 percent compared to FSCs on the Delhi –
Mumbai route. But the difference is less on the Delhi – Bangalore route and even
lesser on the Delhi – Hyderabad. This can be linked to the capacity share of the LCCs
on the route. The capacity share of the LCCs is higher on the Delhi – Hyderabad than
Delhi – Bangalore route where the capacity is higher than Delhi - Mumbai. Thus the
difference in fares can be linked to the capacity of LCCs on route. LCCs would
charge nearer to the FSCs where they have higher capacity.
The fares offered by the LCCs are highly correlated and the difference in fares among
the LCCs is very low. The fares of FSCs especially for Air India and other FSCs in
comparison show no correlation. The range of fare offered by the FSC is also higher.
Promotions
The promotional schemes offered by the FSCs primarily comprise of coupon
schemes, concessional fares, and segment specific discount. Air India offers leads
among the FSCs in terms of the promotional schemes offering the best coupon
schemes and a wider range of segment specific discounts. Air India promotional
schemes covers group travels and delegations, government employees, corporate,
59

business travelers and segments like senior citizens, etc. Air India also promotes net
ticketing through 10 percent and the Get Lucky offer.
All the FSCs offer a structured FFP program with clearly defined benefits. The benefit
offered by FSCs is similar to each other and other FFP programs across the globe. The
differentiation comes from the reach and partners of the FFP program. Air India lags
behind Jet and Air India in terms of airline and non airline partners. Air India and Jet
offer wider range of partners.
Air India offers the widest range of holiday packages covering higher number of
destinations and options in terms of duration, choice of hotels and price. The price
offered is also competitive.
Air India portfolio managers are beginning to investigate innovative segmentation
methods to manage the changing client profile. Over the next 20 years Air India
portfolio managers will hone their segmentation methods Air India portfolio managers
will develop segmentation as a service efficiency initiative. Segmentation models will
apply holistic criteria to Air India portfolio management. The most important
segments globally will be entrepreneurs and SMES/ CEOs. Financial advisers will
become an important separate client segment for Air India portfolio managers The
organization of direct client ownership will also change Availability and flexibility
will become vital components of the business model Internal restructuring will aim to
integrate client services. The rise of the mass affluent represents an opportunity for
Air India portfolio managers in the medium term Air India portfolio managers will
capture the higher value mass affluent market by offering a scaled down Air India
portfolio management service. The mass affluent proposition will run along the lines
of the current Air India portfolio management service. Liability management is
currently not part of the Air India portfolio management agenda but has proven
potential. Clients in developed markets are seeking more holistic Air India portfolio
management services Liability management is clearly a profitable area with a proven
existing client base. The incorporation of lending into Air India portfolio management
will shift the focus of the service. Specialist forms of lending will also become
common additions to the offerings of many Air India portfolio managers. Some will
fail due to a persistence of the ―asset focused‖ service model and a lack of
commitment. There
60

BIBLIOGRAPHY
BOOKS REFERENCES
 Anthony Ingold, Ian Yeoman, Una McMahon-Beattie, Yield management,
Cengage Learning EMEA, 2000.
 Dieter Westermann (2010), (Realtime) dynamic pricing in an integrated
revenue management and pricing environment: An approach to handling
undifferentiated fare structures in low-fare markets, Journal of Revenue and
Pricing Management Vol. 4.
 Economic & Political Weekly - July-A ugust, 2012
 Finance India, July-2011
 How Mutual Funds Work - Fredman and Wiles
 Mutual Funds in India - H. Sadhak
 Kotler, Philip, Marketing Management, Delhi: Pearson Education, 2011
 Beri, G.C., Marketing Research, New Delhi: Tata McGraw Hill, 2011
 Marketing Research – Naresh Malhotra
 Marketing Management- Kotler
 Consumer Behaviour- Schiffman & Kanuk
 Various Reports on Indian Insurance Industry
 Personal Financial Planning by Aitken and Goodmen, Financial Planners
USA, 2010, Edition, 2010
Journals:
 ICFAI Journals
 Paper published by IIM Bangalore
 Strategic marketing IIM Kolkata
Magazines:
 Business World
 Business Today
 Pitch
 Career Economy
 Business & Economy by IIPM

News paper:
 Business Standard
 Economic Times
 The Hindu
 The Times Of India
Libraries:
 IME Library
Websites:
 http://goindigo.com/
 http://www.indianairlines.in/index.aspx
 http://www.jetairways.com/
 http://www.spicejet.com/
 http://www.airindiaholidays.in/
 https://www.flyingreturns.co.in/html/index.php
 http://www.indiastat.com/
 http://www.dgca.com/
 http://www.livemint.com/

Appendices
QUESTIONNAIRE
Survey format Date :
Name:
Place:
Contact #
1. Do you believe that portfolio management has increasingly becoming a
booming Aviation industry in India?
 Yes ---------------------------------------------
 No ------------------------- --------------------
 Do not know /Cannot say -------------------

2. Is portfolio management only for the wealthy?
 Yes -------------------------------------------
 No --------------------------------------------
 Do not know/ Can not say -----------------
3. Which is your Air India main market?
 Stock options ------------------------------------
 Expansion of business --------------------------
 Do not know/ Can not say ---------------------
4. What about competition from foreign and Air India Airline?
5. What are the emerging trends in portfolio management in India?
6. How is the private equity scenario developing?
7. What is the state of the portfolio management industry?
8. Is the client base expanding? Is it becoming more expensive for people to
mandate a private portfolio management in financial department manager?

63
9. How can a portfolio manager create a difference in prevailing market
conditions?
10. What value-added services do you provide?
 Financial planning----------------------
 Individual requirements----------------
11. How much do you charge and on what basis?
12. Do you recommend your own products?
 Yes---------------------------
 No----------------------------
 Not sure---------------------
12. Should the allocation change be based on economic conditions?
 Yes -----------------------------------
 No ------------------------------------
 Not sure ------------------------------
13. With interest rates so low and the stock market perhaps overvalued, where
should one invest today?
 Domestic Market ----------------
 Foreign Market ------------------
 Both -------------------------------
14. Why should one choose to invest in a portfolio management?
15. Can portfolio managements be viewed as risk-free investments?
 Yes -----------------
 No ------------------
 Not sure------------
16. How does one invest money in portfolio managements?
64

17. What are the parameters on which a Portfolio management scheme should
be evaluated?
20. What are the different types of plans that any portfolio management scheme
offers?
21. What are the benefits of s systematic investment plan?
22. What proportion of one‟s investment should be invested in portfolio
managements?
 Major portion ------------------------------------------
 Minor portion ------------------------------------------
 Depends on the economic position of the investor------
23 What are the types of Air India portfolio management available to NRIs?
Non-Resident External [NRE] Rupee savings account
65

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