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A Case on Air India’s Pilot Strike of May
                 2012

CONTENTS


    1) Company background of Air India

    2) History

    3) The merger into Air India

    4) Financial Crisis of Air India

    5) The chronology of the Air India strike may 2012

    6) Highlights of the strike: Management’s view and the Union’s view

    7) Causes for the strike

    8) Effects of the strike

    9) Interview of former executive director of Air India: Jitender Bhargava

    10) Conclusion: My understandings from the case

    11) References




Submitted By:

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Batch (2)



Company Background

Air India is the flag carrier airline of India. It is part of the government of India owned Air
India Limited (AIL). The airline operates a fleet of Airbus and Boeing aircraft serving Asia,
Europe and North America. Its corporate office is located at the Air India Building at
Nariman Point in South Mumbai. 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.

Air India has the fourth largest share in India's domestic air travel market, behind Jet
Airways, IndiGo and SpiceJet, as of May 2012.Following its merger with Indian Airlines, Air
India has faced multiple problems, including escalating financial losses, discontent amongst
employees, and poor customer service. Between September 2007 and May 2011, Air India's
domestic market share declined from 19.2% to 14%, primarily due to stiff competition from
private Indian carriers. In August 2011, Air India's invitation to join Star Alliance was
suspended due to its failure to meet the minimum standards for the membership. In October
2011, talks between the airline and Star Alliance have resumed. In April 2012, the Indian
government granted another bailout package to Air India, including Rs300 billion ($5.8
billion) of subsidies.

Early years

Tata Sons, a division of Tata Sons Ltd. (now Tata Group) was founded by J. R. D. Tata in
1932. Tata Airlines initially consisted of one Puss Moth aircraft, one Leopard Moth, one
palm-thatched shed, one whole time pilot assisted by Tata and Vintcent, one part-time
engineer and two apprentice-mechanics.

Initial service included weekly airmail service with a Puss Moth aircraft between Karachi and
Madras via Ahmedabad and Bombay, covering over 1,300 miles. In its very first year of
operation, Tata Airlines flew 160,000 miles, carrying 155 passengers and 10.71 ton of mail.
In the next few years, Tata Airlines continued to rely for its revenue on the mail contract with
the Government of India for carriage of surcharged mail, including a considerable quantity of
overseas mail brought to Karachi by Imperial Airways. The same year, Tata Airlines
launched its longest domestic flight - Bombay to Trivandrum with a six-seater Miles Merlin.

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In 1938 it was re-christened as Tata Air Services and later same year was renamed as Tata
Airlines. By this time Delhi and Colombo were also serviced.

Post-war expansion

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 Heathrow via Cairo
and Geneva. This marked the airline's first long-haul 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. At the same time all
domestic services were transferred to Indian Airlines (now renamed as Indian). In 1954, the
airline took delivery of its first L-1049 Super Constellations and inaugurated services to
Bangkok, Hong Kong, Tokyo and Singapore.

Early 1990s

In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-400
named Konark (registered VT-ESM) made history by operating the first non-stop flight
between New York City and Delhi. In 1994 the airline was registered as Air India Ltd. In
1996, the airline inaugurated service to its second US gateway at O'Hare International Airport
in Chicago. In 1999, the airline opened its dedicated Terminal 2-C at the renamed Chhatrapati
Shivaji International Airport in Mumbai.

2000 – present

In 2000, Air India introduced services to Shanghai and to its third US gateway at Newark
Liberty International Airport in Newark. In May 2004, Air India launched a wholly owned
low cost airline called Air-India Express. Air India Express connecting cities in India with the
Middle East, Southeast Asia and the Subcontinent. In 2004 Air India launched flights to its


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fourth US gateway at Los Angeles International Airport in Los Angeles (which has since
been terminated) and expanded its international routes to include flights from Ahmedabad,
Amritsar, Bangalore and Hyderabad.

On 1 December 2009, Air India introduced services to its fifth US gateway at Washington
Dulles International Airport in Washington, D.C., accessed via a stopover at JFK Airport in
New York City. This service has been terminated.

Re-privatisation plans

In 2001, the Government of India put forward plans on privatizing Air India. One of the bids
was by a consortium of Tata Group-Singapore Airlines. However the re-privatisation plans
were shelved after Singapore Airlines pulled out and the global economy slumped.

Merger with Indian Airlines

In 2007, the Government of India announced that Air India would be merged with Indian
Airlines. As part of the merger process, a new company called the National Aviation
Company of India Limited (NACIL) was established, into which both Air India (along with
Air India Express) and Indian Airlines (along with Alliance Air) will be merged.

On 27 February 2011, Air India and Indian Airlines merged along with their subsidiaries to
form Air India Limited.

Financial crisis

Around 2006-2007, the airlines began showing signs of financial distress. The combined
losses for Air India and Indian Airlines in 2006-07 were 770 crores (7.7 billion). After the
merger of the airlines, this went up to 7,200 crores (72 billion) by March 2009.This was
followed by restructuring plans which are still in progress. In July 2009, SBI Capital Markets
was appointed to prepare a road map for the recovery of the airline. The carrier sold three
Airbus A300 and one Boeing 747-300M in March 2009 for $18.75 million to survive the
financial crunch.

As of March 2011, Air India has accumulated a debt of Rs. 42,570 crores (approximately $10
billion) and an operating loss of Rs. 22,000 crores, and is seeking Rs. 42,920 crores from the
government. For the past three months (June, July, August 2011), the carrier has been
missing salary payments and interest payments and Moody’s Investor Service has warned


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that missing payments by Air India to creditors, such as the State Bank of India, will
negatively affect the credit ratings of those banks. A report by the Comptroller and Auditor
General (CAG) blamed the decision to buy 111 new planes as one of the major causes of the
debt troubles in Air India; in addition it blamed on the ill timed merger with Indian Airlines
as well.

Due to high fuel and loan costs, Indian government has already pumped 32 billion rupees into
Air India since April 2009 and in March 2012 government bailed out Air India Ltd. With
67.5 billion rupees ($1.4 billion) which the amount almost double of the federal government
has spent on new hospitals over the past three years. Air India's corporate headquarters is
located at the Air India Building at Nariman Point in South Mumbai. The airline moved there
in 1970. The Air India Building also serves as a regional office for Indian. As of 8 May 2012
the carrier invited offers from banks to raise up $ 800 million via external commercial
borrowing and bridge financing. This was stated in the documents put up on the carrier's
website.




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THE CHRONOLOGY OF THE AIR INDIA STRIKE MAY 2012


1)        On May 8, 2012 about 100 pilots went on medical leave as a mark of protest while
                        their talks with the management were still on.


     2)     The reason the pilot members of IPG went on mass sick leave, protesting the
     move to provide Boeing-787 Dreamliner training to pilots from the erstwhile Indian
                                           Airlines


 3)        Later, the same day it sacked ten agitating pilots and de-recognized their union
                   after 160 pilots failed to join duty by the given deadline


4)        After putting forth an original list of 14 demands, the aviators are now asking for
                         reinstatement of their 101 sacked colleagues


 5)       On the 15th of May, the Union Civil Aviation Minister Ajit Singh stated that the
 Government was giving Air India one last chance and that it must perform in order to
                                     qualify for a bailout.


6)        On May 26, 2012 Aviation minister Ajit Singh announced that he would go ahead
                      and hire new pilots if the strike did not end soon.


7)        While, AI management gave an assurance to Delhi High Court that it would look
  into the hardships of the pilots sympathetically, the striking pilots have decided to end
                              the 58 day old strike immediately.




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8)       Due to pilots' strike Air India suffered a loss of 500 crores (US$90.5 million) in 45
days. Eventually, following the intervention of the Delhi High Court, the pilots called off
                               their 58 day strike on 4 July 2012.




HIGHLIGHTS OF THE STRIKE

These are the critical events and features that happened during the course of the strike. It
includes the actual dialogues and excerpts as quoted to the press media including personal
interview, online interview and other sources

     1) Air India pilots' strike the longest pilot stir in 40 years.
     2) Strike of Air India pilots illegal: Ajit Singh
     3) Air India crisis: Government in no mood to reinstate all sacked pilots
     4) Pilots' strike: Air India loses Rs 500cr, extends contingency plan till July
     5) Air India management could have prevented the strike
     6) Air India has been harmed by its owner, the government
     7) Air India suffers loss of Rs 600 crores due to 58-day pilots strike: Ajit Singh
     8) Air India pilots end strike after 58 days
     9) The Reason behind Air India Despair




     (A) AIR INDIA PILOTS' STRIKE THE LONGEST PILOT STIR IN 40 YEARS.
        The hunger protest by the pilots of Air India (AI) entered its sixth day on Friday (29TH
        June 2012). The pilots have been on strike for more than 50 days now, making it the
        longest running pilots' strike in the last 40 years. They went on strike on May 8 to
        protest against the airline's decision to train the erstwhile Indian Airlines (IC) pilots
        for the soon-to-be inducted Dreamliner aircraft. The union of the AI pilots, Indian
        Pilots' Guild (IPG) was derecognised by the airline when they went on strike.
        UNIONS VIEW:
        The derecognised unions released a press note saying that the strike is the longest
        strike in the last 40 years. In 1993, pilots of IC had gone on strike and the airline had
        adopted the same indifferent approach. To replace the pilots, the airline recruited
        more pilots from Uzbekistan airways.

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The airline, then, started dialogue with the pilots on strike and they were back to work
        in a week. ""This means that if the airline wants, it can open dialogue with the pilots.
        The idea is to resolve differences, improve working conditions and service more
        passengers,"" an airline official said.




    (B) STRIKE OF AIR INDIA PILOTS ILLEGAL: AJIT SINGH
        LUCKNOW: Terming the strike of Air India pilots as illegal, Union civil aviation
        minister Ajit Singh appealed the pilots to resume work. Speaking to reporters on the
        sidelines of the inauguration of new terminal at Amausi airport, Ajit Singh said that
        the ministry will solve the problems within a period of three months.
        The government has already given a package of Rs 30,000 crores for the revival of
        Air India. But, money alone cannot solve the problem. The airline has to be
        competitive and pay attention to the cost, he said, and added that no solution is
        possible by creating loss or causing inconvenience to the passengers. The government
        will not adopt a victimisation policy, and whatever problems they have will be sorted
        out in three months, he said.


        MANAGEMENT’S VIEW: "Efforts are being made to resolve the situation. It is my
        appeal to the pilots that they should think about the passengers," the civil aviation
        minister said, and added, "If passengers are unhappy, it would create more problems
        in days to come. If the airline does not survive, then there is no meaning of other
        things like salary, promotion or increment."


        The on-going protest by the Air India pilots had forced the carrier to curtail its
        international flight operations, particularly those to North America and Europe. It was
        following the protest that the ailing national airline lost around Rs 200 crores.
        Saturday was the 12th day of strike called by pilots.
        Ajit Singh also expressed his concern over the high taxes on aviation turbine fuel. The
        fuel invites a tax of 40% to 50% in India, whereas in foreign countries it is around
        35%. It is the cost of fuel that needs to be looked into considering the passenger
        traffic and rising trade, he said.




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(C) AIR INDIA CRISIS: GOVERNMENT IN NO MOOD TO REINSTATE ALL
        SACKED PILOTS
        Even as the Delhi High Court on Monday pulled up the Air India management for
        delaying reinstatement of the 101 sacked commanders out of the 450 striking pilots,
        the government remains firm that restoration of jobs of the terminated pilots would be
        on a case-to-case basis.


        The court has asked Air India to seek direction from the Centre and respond by
        Wednesday (July 18) on whether the committee set up to look into the reinstatement
        of sacked pilots can resolve the issue within four weeks.
        One of the members of the Indian Pilots Guild, the union that went on strike on May
        7, said the court accused Air India of "sitting on conciliatory proceedings," adding
        that it was a very good day for them.


        However, the government remains stiff on its earlier stance that the cases of pilots
        will be looked into individually. "Air India has been asked to respond on considering
        reinstatement of sacked pilots. Consideration doesn't mean taking everyone back," a
        senior official from the civil aviation ministry.


        Such a response comes in the wake of government's plan to rationalise Air India's
        international operations further, leading to a reduction in the total number of pilots for
        overseas routes by 40%.


        "There were a total of 750 pilots for flying on international routes before the strike
        and we never needed so many. Now the requirement is for only 400-450 pilots as per
        our new plan," another official from the aviation ministry said. During the nearly two-
        month-long strike, the AI management had sacked 101 of the 450 pilots and currently
        the agitators and the company are negotiating over how to reinstate them.


        Sector players say the airline is not only using this opportunity to cut excess flab but
        also send out a message that the government will be tough on those who jeopardise
        operations, especially at a time when the airline is struggling to stay afloat and has
        just received Rs 30,000-crores bailout funds.



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According to Air India officials, it's not just the fact that the airline would now require
        fewer pilots, but many of them also stand to lose their licences if they are unable to
        clear the medical tests the company plans to put them through.


        "Pilots who have claimed sickness for two months have been asked to submit medical
        reports. But verification of the two-month long sickness and related tests and reports
        may catch pilots on the wrong foot," a company official said on anonymity.


        As per Rule 42 (2) of the Aircraft Rules, 1937, the holder of a licence shall not
        exercise the privileges of his licence without being declared fit after a fresh medical
        examination in the event of his having "a sickness or injury involving incapacity for a
        period of fifteen days or more for which he is licensed..." According to a letter by the
        Director-General of Medical Services (Air), prescribing the procedure on sickness
        examination, the medical department of Air India will apply for a no-objection
        certificate (NOC) to Director of Medical Services at DGCA for each pilot.


    (D) PILOTS'       STRIKE:        AIR      INDIA    LOSES       RS     500CR,      EXTENDS
        CONTINGENCY PLAN TILL JULY
        Cash-strapped Air India has suffered a loss of around Rs 500 crores due to the 45-
        day-old pilots' strike, forcing the airline management to extend its curtailed
        international flight plan till July 31.


        Air India has lost around Rs 500 crores in terms of revenue in the on-going strike, as
        the airline has been incurring losses to the tune of about Rs 10 crores per day, sources
        told PTI today, a day after Air India CMD Rohit Nandan said the national carrier was
        also "making some substantial savings". "It was not possible to calculate the savings
        now, as we have to fulfil our commitments to our vendors on quarterly or half-yearly
        basis. At least we are making savings on some of the flights like Delhi-Toronto, on
        which we were losing Rs 300 crores annually," he had said.
        The on-going stir has forced the airline management to extend its contingency plan
        for the fourth time, since the strike began on May 7, till July 31.


        "We have decided to extend our interim schedule for international flights, as part of
        our contingency plan, till July 31 or unless the strike is called off before that day," an

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Air India official said. Under the interim schedule, Air India would operate 38
        international flights per day instead of 45 that it operates under normal conditions.
        Domestic operations of Air India are also being run normally and there have been no
        disruptions due to the present agitation, he said.




    (E) AIR INDIA MANAGEMENT COULD HAVE PREVENTED THE STRIKE:
        The causes that triggered the strike

Cause 1 :The latest decision taken by the Air India management on the Boeing 787
Dreamliner issue is yet another example of mismanagement and political interference
involved in running of this government-backed carrier. It questions a critical decision taken
by the airline management which trigged off the 58-day pilots’ strike that wrecked the
airline's flight schedule during the peak travel season. The management were unable to
answer the following questios in light of the strike:

  i.    Why was the airline management in such a tearing hurry to send pilots from the
        erstwhile Indian Airlines (IC) to train on the B787 aircraft?

The first batch of IC pilots were sent by the airline management to Singpaore for B787
training on May 6. In response, the pilots from erstwhile Air India (AI) went on a strike from
May 7 onwards. Now the 32 IC pilots are back after completing their B787 training. But the
airline management has asked them to do a refresher course and go back to flying A320
aircraft, which is the one they flew before they were sent for the Dreamliner training.

 ii.    So what was the point in rushing the IC pilots for B787 training? Had the
        management not rushed with its decision to send IC pilots for B787 training, the AI
        strike would not have happened.




The B787 training had turned into a contentious issue as it was the first aircraft-type for
which the management decided that pilots from both the sides of the merged airline those
from the erstwhile Air India and Indian Airlines respectively, that is would be sent to train on
it and fly it. Since all the aircraft orders were placed before the merger the norm followed in



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the merged airline till then was that Indian Airlines pilots would train and fly the aircraft
ordered by Indian Airlines and vice versa.

Now, the B787s were ordered by the erstwhile Air India and so the airline management was
in talks with pilots from the erstwhile Air India to solve their career progression worries as
they would have to share their B787 pie with Indian Airlines pilots. But even before the talks
could reach a conclusion the management, without a warning, decided to rush IC pilots for
B787 training on May 6.

Cause 2: "That was the only reason the strike broke out. Had they reached an agreement with
the AI pilots on their career progression issue before sending the IC pilots for training the
strike would not have happened,'' said an airline top official. Had Air India been a private
airline then the officials who took the decision to send the IC batch of pilots to train on May 6
would have had some tough questions to answer. But it is a government-carrier and it has
taxpayer's money to bail it out. AI insiders contend that it's a give and take. After all, they
dish out a lot of freebies to the politicians and the government.




    (F) AIR INDIA HAS BEEN HARMED BY ITS OWNER, THE GOVERNMENT:
        An interview with the former executive director of Air India: Jitender Bhargava
       Why so many pilot strikes taken place in Air India lately? Has the management
        been insensitive to pilots’ concerns, forcing them into unreasonable behaviour?
        In the present case, what should the management do to appear reasonable in
        dealing with the pilots whose strike was declared illegal by the judiciary?

    Though AI has been reeling under heavy losses, there have been three strikes by pilots in
    the last three years. No demand, no matter how genuine, can justify a strike in today’s
    situation.

    Successive managements have also been insensitive to issues raised by the unions. This is
    because of a weak HR setup, lack of structured policies and their inconsistent application.
    The management has taken decisions under duress, appeasing one section of employees at
    the expense of others.

       Should an airline tolerate overpaid pilots taking medical leave en masse on false
        pretexts and leave passengers — who pay through their nose — in the lurch?


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Some of the pilots’ demands, such as they should decide who should be allowed
        to train on the new generation aircraft, sound absurd.

While pilots should follow the industrial laws applicable for strikes, they earn salaries that
appear huge to a common man but are largely in tune with global standards. If there is a case
of overpaying the pilots, the management personnel who have signed such obnoxious
agreements should be held guilty and accountable. As regards training of erstwhile Indian
Airlines pilots on B787s, a decision ought to have been taken guided solely by the interests of
the airline.

       Should fat-salaried pilots be deemed to be workmen and allowed to go into trade
        union action?

Well-paid pilots certainly don’t deserve to be deemed “workmen”, but the description has
legal validity. AI had for years drawn the attention of the authorities to this anomaly, but to
no effect.

       The root cause of much of the strife in AI seems to be the 2007 merger (of Indian
        Airlines and Air India) that led to the formation of a unified carrier. Can the two
        sets of employees think of themselves as one unit?

Merger is undoubtedly at the root of the current problems. Although HR issues were cited as
problems before it was decided to merge, these were not addressed. The civil aviation
ministry, which was to guide the merged entity in resolving parity and other issues, appointed
the Justice Dharmadhikari Committee for the purpose only in May 2011, three years and
eight months after the merger. Who is accountable for this lapse? Or, did the ministry wish to
let the merged Air India embroil itself in problems?

       Will the implementation of the Dharmadhikari report cure the HR-related ills of
        AI? Will wage cuts work?

It is unlikely that implementing Dharmadhikari committee’s recommendations will help
address the HR concerns. AI may, in fact, witness the sinking of employees’ morale even
further. This was an important committee but its report does not raise any expectations.

It was said that implementing the report will result in a saving of Rs 250 crores in the wage
bill, but this seems unlikely as the cost neutrality principle has been violated in many of the



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recommendations. The report is neither just nor sound from the point of view of managing
the airline productively and efficiently

       In view of the massive bailout package for Air India from the taxpayers’ money,
        do you think that the Turnaround Plan (TAP) for the airline —monitored by the
        government — will succeed?

As long as the inherent weaknesses of the management structure (board of directors, chief
executive, senior management), and of the work culture, are not addressed, no TAP can
succeed. Mere infusion of funds is unlikely to help as the management structure responsible
for AI’s decline in recent years (through faulty policies) has been given the job of turning the
airline around. This is ironical.




The reason why the airline has been consistently losing market share and figuring way down
in terms of on-time performance and load factor amongst all airlines should have been
studied for remedial action if the TAP were to have any chance of success.

       Is it time to sell the national carrier? Will there be takers?

Air India can be salvaged if structural changes in management can be made and professionals
are allowed to run it on commercial terms. There is no hope as long as civil servants manage
it with constant interference from the ministry. With its current level of losses and debt, AI
cannot be a good business proposition for a potential buyer.




    (G) AIR INDIA SUFFERS LOSS OF RS 600 CRORES DUE TO 58-DAY PILOTS
        STRIKE: AJIT SINGH
        NEW DELHI: Air India has suffered a loss of around Rs 600 crores due to the recent
        58-day-long strike by its pilots, Civil Aviation Minister Ajit Singh said today.


        "The total loss of revenue already caused to Air India due to prolonged strike by the
        pilots is approximately Rs 600 crores," he told the Rajya Sabha in a written reply.
        He said a section of Air India pilots represented by Indian Pilots Guild started
        reporting sick from May 7, in protest against the management's decision to train pilots
        of erstwhile Indian Airlines to fly Boeing 787 Dreamliner aircraft.

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The minister said due to the strike the national carrier had to restructure its operations
        and operate 39 international flights against 46. He also informed that Air India
        management has derecognised the pilot's union and terminated the services of 98
        pilots.


        In reply to separate question, Singh said, "No recruitment action has been initiated by
        the Air India management."He also said Justice Dharmadhikari Committee had given
        its recommendations and the government has sent it to Air India management for
        implementation. "Air India has also prepared a Voluntary Retirement Scheme for its
        employees," Singh said.


    (H) AIR INDIA PILOTS END STRIKE AFTER 58 DAYS
        Legal proceedings involved in the end of the strike
        The 58-day protracted strike by Air India pilots was called off on 4th July after the
        Delhi high court asked them to join duty within 48 hours and the management to
        sympathetically consider their grievances.


        The decision to end the strike was announced by the Indian Pilots' Guild (IPG) after a
        meeting of its managing committee in Mumbai.
        In the late night statement, the IPG thanked the Indian judiciary, especially the Delhi
        high court, "for mediating in this issue, which is critical to the survival of Air India
        and is in the national interest".


        "We the pilots of Air India and members of the Indian Pilots Guild, on the
        intervention of Hon'ble Justice Ms. Reva Khetrapal of the Hon'ble Delhi high court
        have started the procedure to resume work," the IPG statement issued after the
        meeting said.


        It said that as directed by the high court, the IPG looked forward to negotiations with
        the AI management on all pending issues in the presence of the chief labour
        commissioner.




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"We sincerely hope that the AI management and the civil aviation ministry will be as
        sincere on their part. On this understanding, we are commencing the process of
        restoring normalcy of operations," said IPG general secretary E A Kapadia.


        The IPG statement came after its counsel, Geeta Luthra, told the high court that the
        striking pilots numbering 434 will join their duties in 48 hours.


        During the two-hour-long court proceedings, the judge said the pilots are not
        "goondas or criminal elements. You consider their grievances after talking to them."


        "The senior counsel (Luthra) appearing for the pilots has said that her clients will
        immediately call off the strike and join their duties in 48 hours, by giving joining
        reports or the report expressing their willingness to join the duty.


        "The AI management shall sympathetically consider the grievances of the pilots
        including the aspect of reinstatement of those pilots whose services were terminated
        as a consequence to their strike," Justice Khetrapal said while disposing of the pilots'
        plea for a direction to the AI management to take back the 101 sacked pilots,
        including 10 IPG office bearers.


        Earlier, the IPG welcomed the high court's order. "The court has made very positive
        observations. It has said that all pilots should be taken back and no distinction should
        be made between those sacked and others. We are happy with the court's
        observations," IPG joint secretary Tauseef Mukadamn said.


        The pilots went on strike on May 7 over demands for better career progression. The
        airlines management took a tough stand sacking 101 pilots including 10 office bearers
        of the IPG which was also derecognised.
        Justice Khetrapal, who also sought a report from the conciliator by July 9, was
        hearing an application of the IPG which had alleged that the management has created
        a "hostile environment" by sacking the striking pilots and also derecognising it.


        The court directed the pilots as well as the management to appear before the
        conciliator, chief labour commissioner N K Prasad, on July 6 at 4.30pm.Appearing for

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the management, Bhasin said the court should not entertain the pilots' plea as they are
        in contempt.


        He submitted the management is ready to talk to the pilots once they call off their
        strike.


        "They are in complete disobedience of the court's orders for the last two months and
        they need to call off the strike first before talking to the management regarding their
        demands.


        "Let the counsel for the pilots make a statement before this court that they are ready to
        call off the strike today. They should not make any pre-condition to call off the strike.
        First they should obey the court's order and then talk to the management," Bhasin
        said.


        To this submission, the court asked the pilots to call off their strike.

CONCLUSION: MY UNDERSTANDING ON THE STRIKE

       Air India crisis has shocked the whole nation .Pilots refusing to fly while
        Management refusing to talks has disturbed the air traffic of India so much that people
        are now relying on Trains for any Business Class Travel needs.
       Air India is at war, with itself. There are two systems working side by side in the flag
        carrier and the current pilots’ agitation, if anything, exposes that.
       In 2007, the government had merged Air India (AI) and Indian Airlines (IA) to make
        one of the largest airlines in the world by fleet-size and manpower. Five years down
        the road, it has come not to be.
       Insiders today say that though they sit in the same offices and share a common brand
        name, the split is wide open, as two systems compete to run one airline.
       Not just pilots and the cabin crew, even managers and junior staff from both sides
        fight over allowances, pay scales and even holidays.
       On the surface, it looked like an issue with the pilots. But when contacted by IANS,
        even the cabin crew-in-charges, cargo managers and other functionaries voiced the
        same resentment over the merger.


Ragavendra.B
09MBI050
   “The merger created problems that cannot be solved. Our grades, work, promotions
        and allowances are different. When you see your colleague from the other cadre doing
        the same work, but getting easy promotions, allowances, there is bound to be
        resentment,” a senior official with the operations arm told this correspondent on
        condition of anonymity.
       “The company below the rank of DGM (deputy general manger) is not at all
        integrated. There are two systems of promotions, allowances and even foreign
        postings.”
       Another official with the airline’s cargo division said the problems started when the
        two systems collided. AI was following a system under which the department head
        has the discretionary power to promote and the promotions are time- bound, while IA
        had a strict Human Resources (HR) code of interviews and written tests.
       “These are just initial problems. Once the Dharmadhikari report is implemented, I
        don’t know what criteria it has but if it comes with the rider that the pay scale would
        be criteria for seniority, promotions will be a major problem.”
       Not just that. In the pilots case, while a commander of AI gets Rs.8 lakh per month
        that of IC gets Rs.3 lakh per month. Even a bare minimum flying allowance of 80
        hours is granted to AI pilots while it is only 72 hours given to IA pilots.
       “In this case there is also an issue of promotion. We don’t get to fly as much as our IC
        counterparts do, thereby reducing our flying hours and a chance to get to the higher
        grade,” said an agitating pilot.
       Both sides also play the blame game by stating that overseas assignments as station
        officers are restricted for IA officials as traditionally they only had three foreign
        branches.
       No one knows what the report by Justice D.M. Dharmadhikari submitted in January
        actually has suggested. Details are not available, but it is understood to have talked
        about the mess in the airline and has made recommendations on such critical issues
        like career progression, integration across various cadres, rationalisation of pay scale,
        allowances and incentives and overall restructuring of the entire staff of the erstwhile
        Indian Airlines and Air India.

―Therefore it can be understood the root of the problem is with the untimely and
misjudged merger of the two airlines that has been the primary reason for the never
ending ordeal of Air India. Measures have to be taken up so as to conclude the

Ragavendra.B
09MBI050
misunderstandings between the management and the unions, if this is not feasible then
it is time that the Airlines split from their troublesome merger as suggested by industry
experts so as to the root problem will be hence solved. This will prove to be rather
beneficial to the airlines, the government and the public as well‖




References:

       www.timesofindia.com
       www.economictimes.com
       www.ndtv.com
       www.airindia.com
       www.businessworld.in
       www.ibn.in
       www.Aviation-safety.net
       www.cbn.in
       www.outlook.in
       www.Financialexpress.com
       The Wall Street Journal




Ragavendra.B
09MBI050

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Analysis on Air India strike on May 2012

  • 1. A Case on Air India’s Pilot Strike of May 2012 CONTENTS 1) Company background of Air India 2) History 3) The merger into Air India 4) Financial Crisis of Air India 5) The chronology of the Air India strike may 2012 6) Highlights of the strike: Management’s view and the Union’s view 7) Causes for the strike 8) Effects of the strike 9) Interview of former executive director of Air India: Jitender Bhargava 10) Conclusion: My understandings from the case 11) References Submitted By: Ragavendra.B 09MBI050 Ragavendra.B 09MBI050
  • 2. Batch (2) Company Background Air India is the flag carrier airline of India. It is part of the government of India owned Air India Limited (AIL). The airline operates a fleet of Airbus and Boeing aircraft serving Asia, Europe and North America. Its corporate office is located at the Air India Building at Nariman Point in South Mumbai. 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. Air India has the fourth largest share in India's domestic air travel market, behind Jet Airways, IndiGo and SpiceJet, as of May 2012.Following its merger with Indian Airlines, Air India has faced multiple problems, including escalating financial losses, discontent amongst employees, and poor customer service. Between September 2007 and May 2011, Air India's domestic market share declined from 19.2% to 14%, primarily due to stiff competition from private Indian carriers. In August 2011, Air India's invitation to join Star Alliance was suspended due to its failure to meet the minimum standards for the membership. In October 2011, talks between the airline and Star Alliance have resumed. In April 2012, the Indian government granted another bailout package to Air India, including Rs300 billion ($5.8 billion) of subsidies. Early years Tata Sons, a division of Tata Sons Ltd. (now Tata Group) was founded by J. R. D. Tata in 1932. Tata Airlines initially consisted of one Puss Moth aircraft, one Leopard Moth, one palm-thatched shed, one whole time pilot assisted by Tata and Vintcent, one part-time engineer and two apprentice-mechanics. Initial service included weekly airmail service with a Puss Moth aircraft between Karachi and Madras via Ahmedabad and Bombay, covering over 1,300 miles. In its very first year of operation, Tata Airlines flew 160,000 miles, carrying 155 passengers and 10.71 ton of mail. In the next few years, Tata Airlines continued to rely for its revenue on the mail contract with the Government of India for carriage of surcharged mail, including a considerable quantity of overseas mail brought to Karachi by Imperial Airways. The same year, Tata Airlines launched its longest domestic flight - Bombay to Trivandrum with a six-seater Miles Merlin. Ragavendra.B 09MBI050
  • 3. In 1938 it was re-christened as Tata Air Services and later same year was renamed as Tata Airlines. By this time Delhi and Colombo were also serviced. Post-war expansion 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 Heathrow via Cairo and Geneva. This marked the airline's first long-haul 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. At the same time all domestic services were transferred to Indian Airlines (now renamed as Indian). In 1954, the airline took delivery of its first L-1049 Super Constellations and inaugurated services to Bangkok, Hong Kong, Tokyo and Singapore. Early 1990s In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-400 named Konark (registered VT-ESM) made history by operating the first non-stop flight between New York City and Delhi. In 1994 the airline was registered as Air India Ltd. In 1996, the airline inaugurated service to its second US gateway at O'Hare International Airport in Chicago. In 1999, the airline opened its dedicated Terminal 2-C at the renamed Chhatrapati Shivaji International Airport in Mumbai. 2000 – present In 2000, Air India introduced services to Shanghai and to its third US gateway at Newark Liberty International Airport in Newark. In May 2004, Air India launched a wholly owned low cost airline called Air-India Express. Air India Express connecting cities in India with the Middle East, Southeast Asia and the Subcontinent. In 2004 Air India launched flights to its Ragavendra.B 09MBI050
  • 4. fourth US gateway at Los Angeles International Airport in Los Angeles (which has since been terminated) and expanded its international routes to include flights from Ahmedabad, Amritsar, Bangalore and Hyderabad. On 1 December 2009, Air India introduced services to its fifth US gateway at Washington Dulles International Airport in Washington, D.C., accessed via a stopover at JFK Airport in New York City. This service has been terminated. Re-privatisation plans In 2001, the Government of India put forward plans on privatizing Air India. One of the bids was by a consortium of Tata Group-Singapore Airlines. However the re-privatisation plans were shelved after Singapore Airlines pulled out and the global economy slumped. Merger with Indian Airlines In 2007, the Government of India announced that Air India would be merged with Indian Airlines. As part of the merger process, a new company called the National Aviation Company of India Limited (NACIL) was established, into which both Air India (along with Air India Express) and Indian Airlines (along with Alliance Air) will be merged. On 27 February 2011, Air India and Indian Airlines merged along with their subsidiaries to form Air India Limited. Financial crisis Around 2006-2007, the airlines began showing signs of financial distress. The combined losses for Air India and Indian Airlines in 2006-07 were 770 crores (7.7 billion). After the merger of the airlines, this went up to 7,200 crores (72 billion) by March 2009.This was followed by restructuring plans which are still in progress. In July 2009, SBI Capital Markets was appointed to prepare a road map for the recovery of the airline. The carrier sold three Airbus A300 and one Boeing 747-300M in March 2009 for $18.75 million to survive the financial crunch. As of March 2011, Air India has accumulated a debt of Rs. 42,570 crores (approximately $10 billion) and an operating loss of Rs. 22,000 crores, and is seeking Rs. 42,920 crores from the government. For the past three months (June, July, August 2011), the carrier has been missing salary payments and interest payments and Moody’s Investor Service has warned Ragavendra.B 09MBI050
  • 5. that missing payments by Air India to creditors, such as the State Bank of India, will negatively affect the credit ratings of those banks. A report by the Comptroller and Auditor General (CAG) blamed the decision to buy 111 new planes as one of the major causes of the debt troubles in Air India; in addition it blamed on the ill timed merger with Indian Airlines as well. Due to high fuel and loan costs, Indian government has already pumped 32 billion rupees into Air India since April 2009 and in March 2012 government bailed out Air India Ltd. With 67.5 billion rupees ($1.4 billion) which the amount almost double of the federal government has spent on new hospitals over the past three years. Air India's corporate headquarters is located at the Air India Building at Nariman Point in South Mumbai. The airline moved there in 1970. The Air India Building also serves as a regional office for Indian. As of 8 May 2012 the carrier invited offers from banks to raise up $ 800 million via external commercial borrowing and bridge financing. This was stated in the documents put up on the carrier's website. Ragavendra.B 09MBI050
  • 6. THE CHRONOLOGY OF THE AIR INDIA STRIKE MAY 2012 1) On May 8, 2012 about 100 pilots went on medical leave as a mark of protest while their talks with the management were still on. 2) The reason the pilot members of IPG went on mass sick leave, protesting the move to provide Boeing-787 Dreamliner training to pilots from the erstwhile Indian Airlines 3) Later, the same day it sacked ten agitating pilots and de-recognized their union after 160 pilots failed to join duty by the given deadline 4) After putting forth an original list of 14 demands, the aviators are now asking for reinstatement of their 101 sacked colleagues 5) On the 15th of May, the Union Civil Aviation Minister Ajit Singh stated that the Government was giving Air India one last chance and that it must perform in order to qualify for a bailout. 6) On May 26, 2012 Aviation minister Ajit Singh announced that he would go ahead and hire new pilots if the strike did not end soon. 7) While, AI management gave an assurance to Delhi High Court that it would look into the hardships of the pilots sympathetically, the striking pilots have decided to end the 58 day old strike immediately. Ragavendra.B 09MBI050
  • 7. 8) Due to pilots' strike Air India suffered a loss of 500 crores (US$90.5 million) in 45 days. Eventually, following the intervention of the Delhi High Court, the pilots called off their 58 day strike on 4 July 2012. HIGHLIGHTS OF THE STRIKE These are the critical events and features that happened during the course of the strike. It includes the actual dialogues and excerpts as quoted to the press media including personal interview, online interview and other sources 1) Air India pilots' strike the longest pilot stir in 40 years. 2) Strike of Air India pilots illegal: Ajit Singh 3) Air India crisis: Government in no mood to reinstate all sacked pilots 4) Pilots' strike: Air India loses Rs 500cr, extends contingency plan till July 5) Air India management could have prevented the strike 6) Air India has been harmed by its owner, the government 7) Air India suffers loss of Rs 600 crores due to 58-day pilots strike: Ajit Singh 8) Air India pilots end strike after 58 days 9) The Reason behind Air India Despair (A) AIR INDIA PILOTS' STRIKE THE LONGEST PILOT STIR IN 40 YEARS. The hunger protest by the pilots of Air India (AI) entered its sixth day on Friday (29TH June 2012). The pilots have been on strike for more than 50 days now, making it the longest running pilots' strike in the last 40 years. They went on strike on May 8 to protest against the airline's decision to train the erstwhile Indian Airlines (IC) pilots for the soon-to-be inducted Dreamliner aircraft. The union of the AI pilots, Indian Pilots' Guild (IPG) was derecognised by the airline when they went on strike. UNIONS VIEW: The derecognised unions released a press note saying that the strike is the longest strike in the last 40 years. In 1993, pilots of IC had gone on strike and the airline had adopted the same indifferent approach. To replace the pilots, the airline recruited more pilots from Uzbekistan airways. Ragavendra.B 09MBI050
  • 8. The airline, then, started dialogue with the pilots on strike and they were back to work in a week. ""This means that if the airline wants, it can open dialogue with the pilots. The idea is to resolve differences, improve working conditions and service more passengers,"" an airline official said. (B) STRIKE OF AIR INDIA PILOTS ILLEGAL: AJIT SINGH LUCKNOW: Terming the strike of Air India pilots as illegal, Union civil aviation minister Ajit Singh appealed the pilots to resume work. Speaking to reporters on the sidelines of the inauguration of new terminal at Amausi airport, Ajit Singh said that the ministry will solve the problems within a period of three months. The government has already given a package of Rs 30,000 crores for the revival of Air India. But, money alone cannot solve the problem. The airline has to be competitive and pay attention to the cost, he said, and added that no solution is possible by creating loss or causing inconvenience to the passengers. The government will not adopt a victimisation policy, and whatever problems they have will be sorted out in three months, he said. MANAGEMENT’S VIEW: "Efforts are being made to resolve the situation. It is my appeal to the pilots that they should think about the passengers," the civil aviation minister said, and added, "If passengers are unhappy, it would create more problems in days to come. If the airline does not survive, then there is no meaning of other things like salary, promotion or increment." The on-going protest by the Air India pilots had forced the carrier to curtail its international flight operations, particularly those to North America and Europe. It was following the protest that the ailing national airline lost around Rs 200 crores. Saturday was the 12th day of strike called by pilots. Ajit Singh also expressed his concern over the high taxes on aviation turbine fuel. The fuel invites a tax of 40% to 50% in India, whereas in foreign countries it is around 35%. It is the cost of fuel that needs to be looked into considering the passenger traffic and rising trade, he said. Ragavendra.B 09MBI050
  • 9. (C) AIR INDIA CRISIS: GOVERNMENT IN NO MOOD TO REINSTATE ALL SACKED PILOTS Even as the Delhi High Court on Monday pulled up the Air India management for delaying reinstatement of the 101 sacked commanders out of the 450 striking pilots, the government remains firm that restoration of jobs of the terminated pilots would be on a case-to-case basis. The court has asked Air India to seek direction from the Centre and respond by Wednesday (July 18) on whether the committee set up to look into the reinstatement of sacked pilots can resolve the issue within four weeks. One of the members of the Indian Pilots Guild, the union that went on strike on May 7, said the court accused Air India of "sitting on conciliatory proceedings," adding that it was a very good day for them. However, the government remains stiff on its earlier stance that the cases of pilots will be looked into individually. "Air India has been asked to respond on considering reinstatement of sacked pilots. Consideration doesn't mean taking everyone back," a senior official from the civil aviation ministry. Such a response comes in the wake of government's plan to rationalise Air India's international operations further, leading to a reduction in the total number of pilots for overseas routes by 40%. "There were a total of 750 pilots for flying on international routes before the strike and we never needed so many. Now the requirement is for only 400-450 pilots as per our new plan," another official from the aviation ministry said. During the nearly two- month-long strike, the AI management had sacked 101 of the 450 pilots and currently the agitators and the company are negotiating over how to reinstate them. Sector players say the airline is not only using this opportunity to cut excess flab but also send out a message that the government will be tough on those who jeopardise operations, especially at a time when the airline is struggling to stay afloat and has just received Rs 30,000-crores bailout funds. Ragavendra.B 09MBI050
  • 10. According to Air India officials, it's not just the fact that the airline would now require fewer pilots, but many of them also stand to lose their licences if they are unable to clear the medical tests the company plans to put them through. "Pilots who have claimed sickness for two months have been asked to submit medical reports. But verification of the two-month long sickness and related tests and reports may catch pilots on the wrong foot," a company official said on anonymity. As per Rule 42 (2) of the Aircraft Rules, 1937, the holder of a licence shall not exercise the privileges of his licence without being declared fit after a fresh medical examination in the event of his having "a sickness or injury involving incapacity for a period of fifteen days or more for which he is licensed..." According to a letter by the Director-General of Medical Services (Air), prescribing the procedure on sickness examination, the medical department of Air India will apply for a no-objection certificate (NOC) to Director of Medical Services at DGCA for each pilot. (D) PILOTS' STRIKE: AIR INDIA LOSES RS 500CR, EXTENDS CONTINGENCY PLAN TILL JULY Cash-strapped Air India has suffered a loss of around Rs 500 crores due to the 45- day-old pilots' strike, forcing the airline management to extend its curtailed international flight plan till July 31. Air India has lost around Rs 500 crores in terms of revenue in the on-going strike, as the airline has been incurring losses to the tune of about Rs 10 crores per day, sources told PTI today, a day after Air India CMD Rohit Nandan said the national carrier was also "making some substantial savings". "It was not possible to calculate the savings now, as we have to fulfil our commitments to our vendors on quarterly or half-yearly basis. At least we are making savings on some of the flights like Delhi-Toronto, on which we were losing Rs 300 crores annually," he had said. The on-going stir has forced the airline management to extend its contingency plan for the fourth time, since the strike began on May 7, till July 31. "We have decided to extend our interim schedule for international flights, as part of our contingency plan, till July 31 or unless the strike is called off before that day," an Ragavendra.B 09MBI050
  • 11. Air India official said. Under the interim schedule, Air India would operate 38 international flights per day instead of 45 that it operates under normal conditions. Domestic operations of Air India are also being run normally and there have been no disruptions due to the present agitation, he said. (E) AIR INDIA MANAGEMENT COULD HAVE PREVENTED THE STRIKE: The causes that triggered the strike Cause 1 :The latest decision taken by the Air India management on the Boeing 787 Dreamliner issue is yet another example of mismanagement and political interference involved in running of this government-backed carrier. It questions a critical decision taken by the airline management which trigged off the 58-day pilots’ strike that wrecked the airline's flight schedule during the peak travel season. The management were unable to answer the following questios in light of the strike: i. Why was the airline management in such a tearing hurry to send pilots from the erstwhile Indian Airlines (IC) to train on the B787 aircraft? The first batch of IC pilots were sent by the airline management to Singpaore for B787 training on May 6. In response, the pilots from erstwhile Air India (AI) went on a strike from May 7 onwards. Now the 32 IC pilots are back after completing their B787 training. But the airline management has asked them to do a refresher course and go back to flying A320 aircraft, which is the one they flew before they were sent for the Dreamliner training. ii. So what was the point in rushing the IC pilots for B787 training? Had the management not rushed with its decision to send IC pilots for B787 training, the AI strike would not have happened. The B787 training had turned into a contentious issue as it was the first aircraft-type for which the management decided that pilots from both the sides of the merged airline those from the erstwhile Air India and Indian Airlines respectively, that is would be sent to train on it and fly it. Since all the aircraft orders were placed before the merger the norm followed in Ragavendra.B 09MBI050
  • 12. the merged airline till then was that Indian Airlines pilots would train and fly the aircraft ordered by Indian Airlines and vice versa. Now, the B787s were ordered by the erstwhile Air India and so the airline management was in talks with pilots from the erstwhile Air India to solve their career progression worries as they would have to share their B787 pie with Indian Airlines pilots. But even before the talks could reach a conclusion the management, without a warning, decided to rush IC pilots for B787 training on May 6. Cause 2: "That was the only reason the strike broke out. Had they reached an agreement with the AI pilots on their career progression issue before sending the IC pilots for training the strike would not have happened,'' said an airline top official. Had Air India been a private airline then the officials who took the decision to send the IC batch of pilots to train on May 6 would have had some tough questions to answer. But it is a government-carrier and it has taxpayer's money to bail it out. AI insiders contend that it's a give and take. After all, they dish out a lot of freebies to the politicians and the government. (F) AIR INDIA HAS BEEN HARMED BY ITS OWNER, THE GOVERNMENT: An interview with the former executive director of Air India: Jitender Bhargava  Why so many pilot strikes taken place in Air India lately? Has the management been insensitive to pilots’ concerns, forcing them into unreasonable behaviour? In the present case, what should the management do to appear reasonable in dealing with the pilots whose strike was declared illegal by the judiciary? Though AI has been reeling under heavy losses, there have been three strikes by pilots in the last three years. No demand, no matter how genuine, can justify a strike in today’s situation. Successive managements have also been insensitive to issues raised by the unions. This is because of a weak HR setup, lack of structured policies and their inconsistent application. The management has taken decisions under duress, appeasing one section of employees at the expense of others.  Should an airline tolerate overpaid pilots taking medical leave en masse on false pretexts and leave passengers — who pay through their nose — in the lurch? Ragavendra.B 09MBI050
  • 13. Some of the pilots’ demands, such as they should decide who should be allowed to train on the new generation aircraft, sound absurd. While pilots should follow the industrial laws applicable for strikes, they earn salaries that appear huge to a common man but are largely in tune with global standards. If there is a case of overpaying the pilots, the management personnel who have signed such obnoxious agreements should be held guilty and accountable. As regards training of erstwhile Indian Airlines pilots on B787s, a decision ought to have been taken guided solely by the interests of the airline.  Should fat-salaried pilots be deemed to be workmen and allowed to go into trade union action? Well-paid pilots certainly don’t deserve to be deemed “workmen”, but the description has legal validity. AI had for years drawn the attention of the authorities to this anomaly, but to no effect.  The root cause of much of the strife in AI seems to be the 2007 merger (of Indian Airlines and Air India) that led to the formation of a unified carrier. Can the two sets of employees think of themselves as one unit? Merger is undoubtedly at the root of the current problems. Although HR issues were cited as problems before it was decided to merge, these were not addressed. The civil aviation ministry, which was to guide the merged entity in resolving parity and other issues, appointed the Justice Dharmadhikari Committee for the purpose only in May 2011, three years and eight months after the merger. Who is accountable for this lapse? Or, did the ministry wish to let the merged Air India embroil itself in problems?  Will the implementation of the Dharmadhikari report cure the HR-related ills of AI? Will wage cuts work? It is unlikely that implementing Dharmadhikari committee’s recommendations will help address the HR concerns. AI may, in fact, witness the sinking of employees’ morale even further. This was an important committee but its report does not raise any expectations. It was said that implementing the report will result in a saving of Rs 250 crores in the wage bill, but this seems unlikely as the cost neutrality principle has been violated in many of the Ragavendra.B 09MBI050
  • 14. recommendations. The report is neither just nor sound from the point of view of managing the airline productively and efficiently  In view of the massive bailout package for Air India from the taxpayers’ money, do you think that the Turnaround Plan (TAP) for the airline —monitored by the government — will succeed? As long as the inherent weaknesses of the management structure (board of directors, chief executive, senior management), and of the work culture, are not addressed, no TAP can succeed. Mere infusion of funds is unlikely to help as the management structure responsible for AI’s decline in recent years (through faulty policies) has been given the job of turning the airline around. This is ironical. The reason why the airline has been consistently losing market share and figuring way down in terms of on-time performance and load factor amongst all airlines should have been studied for remedial action if the TAP were to have any chance of success.  Is it time to sell the national carrier? Will there be takers? Air India can be salvaged if structural changes in management can be made and professionals are allowed to run it on commercial terms. There is no hope as long as civil servants manage it with constant interference from the ministry. With its current level of losses and debt, AI cannot be a good business proposition for a potential buyer. (G) AIR INDIA SUFFERS LOSS OF RS 600 CRORES DUE TO 58-DAY PILOTS STRIKE: AJIT SINGH NEW DELHI: Air India has suffered a loss of around Rs 600 crores due to the recent 58-day-long strike by its pilots, Civil Aviation Minister Ajit Singh said today. "The total loss of revenue already caused to Air India due to prolonged strike by the pilots is approximately Rs 600 crores," he told the Rajya Sabha in a written reply. He said a section of Air India pilots represented by Indian Pilots Guild started reporting sick from May 7, in protest against the management's decision to train pilots of erstwhile Indian Airlines to fly Boeing 787 Dreamliner aircraft. Ragavendra.B 09MBI050
  • 15. The minister said due to the strike the national carrier had to restructure its operations and operate 39 international flights against 46. He also informed that Air India management has derecognised the pilot's union and terminated the services of 98 pilots. In reply to separate question, Singh said, "No recruitment action has been initiated by the Air India management."He also said Justice Dharmadhikari Committee had given its recommendations and the government has sent it to Air India management for implementation. "Air India has also prepared a Voluntary Retirement Scheme for its employees," Singh said. (H) AIR INDIA PILOTS END STRIKE AFTER 58 DAYS Legal proceedings involved in the end of the strike The 58-day protracted strike by Air India pilots was called off on 4th July after the Delhi high court asked them to join duty within 48 hours and the management to sympathetically consider their grievances. The decision to end the strike was announced by the Indian Pilots' Guild (IPG) after a meeting of its managing committee in Mumbai. In the late night statement, the IPG thanked the Indian judiciary, especially the Delhi high court, "for mediating in this issue, which is critical to the survival of Air India and is in the national interest". "We the pilots of Air India and members of the Indian Pilots Guild, on the intervention of Hon'ble Justice Ms. Reva Khetrapal of the Hon'ble Delhi high court have started the procedure to resume work," the IPG statement issued after the meeting said. It said that as directed by the high court, the IPG looked forward to negotiations with the AI management on all pending issues in the presence of the chief labour commissioner. Ragavendra.B 09MBI050
  • 16. "We sincerely hope that the AI management and the civil aviation ministry will be as sincere on their part. On this understanding, we are commencing the process of restoring normalcy of operations," said IPG general secretary E A Kapadia. The IPG statement came after its counsel, Geeta Luthra, told the high court that the striking pilots numbering 434 will join their duties in 48 hours. During the two-hour-long court proceedings, the judge said the pilots are not "goondas or criminal elements. You consider their grievances after talking to them." "The senior counsel (Luthra) appearing for the pilots has said that her clients will immediately call off the strike and join their duties in 48 hours, by giving joining reports or the report expressing their willingness to join the duty. "The AI management shall sympathetically consider the grievances of the pilots including the aspect of reinstatement of those pilots whose services were terminated as a consequence to their strike," Justice Khetrapal said while disposing of the pilots' plea for a direction to the AI management to take back the 101 sacked pilots, including 10 IPG office bearers. Earlier, the IPG welcomed the high court's order. "The court has made very positive observations. It has said that all pilots should be taken back and no distinction should be made between those sacked and others. We are happy with the court's observations," IPG joint secretary Tauseef Mukadamn said. The pilots went on strike on May 7 over demands for better career progression. The airlines management took a tough stand sacking 101 pilots including 10 office bearers of the IPG which was also derecognised. Justice Khetrapal, who also sought a report from the conciliator by July 9, was hearing an application of the IPG which had alleged that the management has created a "hostile environment" by sacking the striking pilots and also derecognising it. The court directed the pilots as well as the management to appear before the conciliator, chief labour commissioner N K Prasad, on July 6 at 4.30pm.Appearing for Ragavendra.B 09MBI050
  • 17. the management, Bhasin said the court should not entertain the pilots' plea as they are in contempt. He submitted the management is ready to talk to the pilots once they call off their strike. "They are in complete disobedience of the court's orders for the last two months and they need to call off the strike first before talking to the management regarding their demands. "Let the counsel for the pilots make a statement before this court that they are ready to call off the strike today. They should not make any pre-condition to call off the strike. First they should obey the court's order and then talk to the management," Bhasin said. To this submission, the court asked the pilots to call off their strike. CONCLUSION: MY UNDERSTANDING ON THE STRIKE  Air India crisis has shocked the whole nation .Pilots refusing to fly while Management refusing to talks has disturbed the air traffic of India so much that people are now relying on Trains for any Business Class Travel needs.  Air India is at war, with itself. There are two systems working side by side in the flag carrier and the current pilots’ agitation, if anything, exposes that.  In 2007, the government had merged Air India (AI) and Indian Airlines (IA) to make one of the largest airlines in the world by fleet-size and manpower. Five years down the road, it has come not to be.  Insiders today say that though they sit in the same offices and share a common brand name, the split is wide open, as two systems compete to run one airline.  Not just pilots and the cabin crew, even managers and junior staff from both sides fight over allowances, pay scales and even holidays.  On the surface, it looked like an issue with the pilots. But when contacted by IANS, even the cabin crew-in-charges, cargo managers and other functionaries voiced the same resentment over the merger. Ragavendra.B 09MBI050
  • 18. “The merger created problems that cannot be solved. Our grades, work, promotions and allowances are different. When you see your colleague from the other cadre doing the same work, but getting easy promotions, allowances, there is bound to be resentment,” a senior official with the operations arm told this correspondent on condition of anonymity.  “The company below the rank of DGM (deputy general manger) is not at all integrated. There are two systems of promotions, allowances and even foreign postings.”  Another official with the airline’s cargo division said the problems started when the two systems collided. AI was following a system under which the department head has the discretionary power to promote and the promotions are time- bound, while IA had a strict Human Resources (HR) code of interviews and written tests.  “These are just initial problems. Once the Dharmadhikari report is implemented, I don’t know what criteria it has but if it comes with the rider that the pay scale would be criteria for seniority, promotions will be a major problem.”  Not just that. In the pilots case, while a commander of AI gets Rs.8 lakh per month that of IC gets Rs.3 lakh per month. Even a bare minimum flying allowance of 80 hours is granted to AI pilots while it is only 72 hours given to IA pilots.  “In this case there is also an issue of promotion. We don’t get to fly as much as our IC counterparts do, thereby reducing our flying hours and a chance to get to the higher grade,” said an agitating pilot.  Both sides also play the blame game by stating that overseas assignments as station officers are restricted for IA officials as traditionally they only had three foreign branches.  No one knows what the report by Justice D.M. Dharmadhikari submitted in January actually has suggested. Details are not available, but it is understood to have talked about the mess in the airline and has made recommendations on such critical issues like career progression, integration across various cadres, rationalisation of pay scale, allowances and incentives and overall restructuring of the entire staff of the erstwhile Indian Airlines and Air India. ―Therefore it can be understood the root of the problem is with the untimely and misjudged merger of the two airlines that has been the primary reason for the never ending ordeal of Air India. Measures have to be taken up so as to conclude the Ragavendra.B 09MBI050
  • 19. misunderstandings between the management and the unions, if this is not feasible then it is time that the Airlines split from their troublesome merger as suggested by industry experts so as to the root problem will be hence solved. This will prove to be rather beneficial to the airlines, the government and the public as well‖ References:  www.timesofindia.com  www.economictimes.com  www.ndtv.com  www.airindia.com  www.businessworld.in  www.ibn.in  www.Aviation-safety.net  www.cbn.in  www.outlook.in  www.Financialexpress.com  The Wall Street Journal Ragavendra.B 09MBI050