Indian airliness

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Air India Strikes

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Indian airliness

  1. 1. Timeline1. Founded by JRD TATA in 19322. 1953 Indian Govt. acquired major stake3. 1960 purchased first Boeing 707 and entered jet age4. Renamed to Air India Ltd. In 19965. Was set for disinvestment in 2001 but it failed due to global slowdown.6. In 2006 the airlines began showing signs of financial distress. Estimated loss Rs. 770 crores ( 7.7 billion).7. In 2007 Air India and Indian Airlines merged along with their subsidiaries to form Air India Limited.8. Senseless merger of the two wings of the airline took loss figures to Rs7,200 crores ( 72 billion) by March 20099. This was followed by various restructuring plans which were not at all effective.10. May 2011 : Already reeling under financial crunch because of the ten day pilot strike Air India finds itself in a tight spot as State-run oil companies – the Indian Oil Corporation, the Bharat Petroleum Corporation Ltd. and the Hindustan Petroleum Corporation refuse to supply the fuel to the bleeding carrier.11. For the financial year 2010-2011 a loss of Rs 7000 crore is expected.
  2. 2. INTRODUCTION IA-Formation May-1953 (ACA) Two Entities-Indian Airlines & Air India Merging Vayudoot in-1990 IA’s Network,75 Destinations-59 in India &16 Abroad. IA & Alliance Air carried 75 million passengers annually.
  3. 3.  IA’s fleet strength – 55 Aircrafts, 11 Airbus A300s, 30 Airbus A320s, 11 Boeing B737s & 3 Dorniers D0228. In 1994 entry of private players Increased competition, launching of new aircraft ,advertisement campaigns. 17% increase in passenger revenues.
  4. 4. Market Scenario In 1994 – Sahara & Jet Airways Pvt. Players East West, NEPC & Damania Losses due to inefficiency and excess expenditure Increase in staff cost during 1994-98 Co. facing frequent losses Losses touching 7.5 billion in 1999 Govt. interference
  5. 5. In 1994-98 losses reached 5.9bn and in1998-99 it reached 7.5bn in billion1998 - 991994 - 98 0 1 2 3 4 5 6 7 8
  6. 6. Market Share of IA v/s Pvt.Players Shares IA 47% Shares Pvt. Players 53%
  7. 7. PROBLEMS Civil Aviation Ministry:- Interference in decision making. Increased in subsidized fares. Union:- 8 unions strikes, go-slow agitation, wage negotiations. 13 agitations – 1989 – 92.
  8. 8.  Pilots:- 1993 - 46 days strike. 1994 – Nov., in 1995 – Apr. faced an evident agitation. 1996 – demands for high wages. 1997 – strike for foreign allowances, fixed flying hours, free meals & wage parity. Engineers:- Apr. 2000 - go –slow agitation demands for pay revision & change in career b progression
  9. 9. Actions Taken Russy Mody:- 1994 – chairman of IA. Committee under chairmanship under Vijay Kelkar. Recommendations for financial aid by the Govt. Equalization of salary with Air India. Proposal for increase in age of retirement. Evaluation by P.S. Brar: IA would “go down the drain” & massive cost cutting & HR management. Received severe criticism.
  10. 10.  Probir Sen:- He brought pilot emoluments on par with other airlines. Creation of Alliance Air, a subsidiary airline company for re-employment Substantial wage hike for employees by 10%.
  11. 11. Productivity Linked Scheme(PLI) Persuade pilots to fly more & to increase aircraft utilization. Grossly misused by Engg. Dept. – Airbus. Pilots – misuse of flying hours. Increase in annual wage bill by 1.8 bn. OTA increased by 109% in 1993 – 99. 91 – 92 & 95 – 96 increase pay & allowances by 842% & 134%.
  12. 12. Impact of Staff Cost Hike inFare Increase(%) Date of fare increase Impact(%) 25/07/1994 16.22 1/10/1995 25 22/09/1996 36 15/10/1997 13.44 1/10/1998 8.8 Improvement shown. 1997 – 98 – 140 mn profit. 1999 – suffered losses.
  13. 13. Increase inPerYear Staff No. of Staff Cost Total Staff cost Effective costing employee Employee Expendit as Fleet Rs. Bn) costing ure in Rs. percenta Size. mn) Bn) ge of total operation al exp)1993-94 2.85 22182 0.13 20.75 15% 541994-95 3.74(31.18 22683 0.16 22.59 19% 58 %)1995-96 5.71(52.59 22582 0.25 26 25% 55 %)1996-97 7.10(24.35 22153 0.32 29.29 26% 40 %)1997-98 8.17(15.03 21990 0.37 32.21 27% 40 %)1998-99 8.75(7.12 21922 0.39 34.31 28% 41 %)
  14. 14. Increase in losses due to PLI7.1 76.96.8 Rs. In billion6.76.66.56.4 1995 - 99 1999
  15. 15. Comparison of Various AirlinesName Of No. 0f No. of AT Km( in AT Km per EmployeesAirlines aircraft in Employees Million) Employee per fleet aircraftSingapore 84 13549 14418.324 1064161 161AirlinesThai 76 24186 6546.627 270678 318AirwaysInternationalIndian 51 21990 2113.671 398204 431AirlinesGulf Air 30 5308 1416.235 245831 177Kuwait 22 5761 345.599 92853 261AirwaysJet Airways 19 3722 1094.132 49756 196
  16. 16.  680 mn. Of wage bill doubled in next 3 years. 150 employees earning about 0.3 mn. Per annum. Compared 1994 – 95, employees increased by 2109 in 1997 – 98. P.S. Brar committee attribution.
  17. 17. Suggestions No qualification bar for Senior Executives Lack of Continuity in planning. There was no fixed pricing strategy. Lack of performance evaluation. Underutilization of Manpower.
  18. 18. Thank You

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