AIR INDIA

HISTORY OF AIR INDIA AIRLINES

• J. R. D. Tata founded Tata Airlines in 1932.

• It was the first to provide commercial Airline services.

• After World War II in 1946, Tata Airlines became a public limited company

under the name of Air India.

• Under the Air Corporations Act of 1953, the Government nationalized the

Air transportation industry and Air India International Limited was born.

• In 1960, Air India flew its first international flight to New York via London.

INTRODUCTION TO AIR INDIA

• First it serves as domestic air lines, which serves between the Indian cities of Mumbai, Delhi, Chennai, Ahmadabad etc, later it starts the services to pakistan.

• In the year 1946, at the end of the world II, it became a public limited company and named as Air-India limited. With in no time, the government won 49% of its shares and started international services with regular flights to London, Geneva, Cairo etc, and then it was entitled as Air-India international limited .

• By the year of 1960 the Air-India got the international routes for Singapore, Malaysia, New York, Moscow and Sydney

• In the year of 1962, the company was entitled as Air-India International and it became the world’s first All Jet air line.

• Air-India was ranked as 19th biggest air line in the world.

• Air bus A-310 - 8

• Air bus A-319 - 15

• Air bus A-320 - 43

• Air bus A-321 - 12

• Air bus A-330 - 2

• Boeing 737-800 – 22

• Boeing 747 – 6

• Boeing 737 - 5

• Boeing 777 - 14

• Airbus A-330 Freighters - 4

• Boeing 737 freighters - 6

• ATR* - 7

• CRJ 700 - 3

The fleet of Air-India consists of 147 aircrafts and the details are given below -

Logo

• The logo of the new airline is a red coloured flying swan with the `Konark Chakra' in orange, placed inside it.

• The new logo would feature notably on the tail of the aircraft. While the aircraft will be ivory in colour, the base will retain the red streak of Air India.

• The painted on red palace style carvings on the outside of the windows refer to their slogan "your palace in the sky" which is written on the back of the aircraft.

The Maharajah

• This now familiar lovable figure first made his appearance in Air India way back in 1946, when Bobby Kooka as Air India's Commercial Director and Umesh Rao, an artist with J.Walter Thompson Ltd., Mumbai, together created the Maharajah.

• This was began as an attempt  to take Air India's sales and promotional messages to millions of travellers across the world.

• He has completed 56 years and become the most recognizable mascot all over the world.

• In fact he has won numerous national and international awards for Air India for humour and originality in publicity.

• The Maharajah began merely as a rich Indian emperor, symbolizing politeness and high living.

• He has a distinctive personality by having outsized moustache, the striped turban and the curved nose.

VARIOUS SCHEMES FOR TICKETS

Special Schemes:

1. Stopovers

The Air-India stopovers, specially designed for the convenience of tourists and business travellers who would normally overfly India, provide them an excellent opportunity to enjoy a complete holiday at budget rates.

In India stopover packages are offered at the four metro cities of Delhi, Mumbai, Calcutta and Chennai.

2. India Super Summer Saver Scheme

To make India a year-round destination by increasing traffic, in the lean summer month’s period of April through September, Air-India introduced Super Summer Savers in 1992.

This special scheme is on with the collaboration of the Department of Tourism, Indian Airlines, and leading hotel chains, and helps use the summer months underutilized hotel capacity.

• Other Schemes:

1. Air India American Express Gold Card

Pay 10% less on full fare Business Class tickets and 15% less on full fare Economy Class tickets - every time, on any domestic or International sector on Air India.

2. Complimentary upgrades to Business Class

Get a complimentary upgrade voucher to Business Class the moment you become an Air India American Express Gold Card member. These vouchers can be used on any of Air India destinations.

PROMOTION & OFFERS

Frequent flyer programme

• Flying Returns is Air India's frequent flyer programme. It is India’s first frequent flyer programme and is claimed to be one of the most rewarding programmes in the region.

• A member can earn mileage points and redeem them for award travel. On higher fares, such as full fare economy, and on Business/First Class, passengers will also earn bonus miles, and clock mileage points. The points can also be used for awards travel on Lufthansa and Singapore Airlines.

• Air India has partnered with UNICONNECT as its telecom partner, to all members of "FLYING RETURNS".

• It reduce their mobile expenditure by more than 70% on roaming charges.

• UNICONNECT specializes in providing the most cost effective global roaming solutions across the globe through its wide portfolio of country specific SIMS & Global SIMS with coverage across 200 countries.

Premium lounges: The Maharaja Lounge is offered to First and Business class passengers. Air India shares lounges with other international airlines at international airports that do not have a Maharaja Lounge available. There are six Maharaja Lounges, one at each of the six major destinations of Air India:International

•John F. Kennedy International Airport (New York)

•London Heathrow Airport

India

•Bengaluru International Airport (Bangalore)

•Chhatrapati Shivaji International Airport (Mumbai)

•Indira Gandhi International Airport (Delhi)

•Rajiv Gandhi International Airport (Hyderabad)

• Mobile check-in : The mobile check-in facility is available to all domestic passengers from the six major metro cities viz. Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore and will be subsequently extended to other stations and international flights.

Other promotional offers

• TV promotion : Air-India, In association with the Department of Tourism and the Taj Bengal, Calcutta, sponsored a promotional programme through the popular MW channel network. The programme focused on Calcutta. Calcutta being the gateway to Eastern India, this promotion generated good publicity for this key metropolis and enhanced its position on India's tourism map.

• Health camp

Northern Region Medical Department had organized a Diabetes Awareness Week from May 9 to May 13, 2011. The camp was held for two hours daily to screen, educate and guide AI employees on the health problems triggered by increase in blood glucose (sugar).

• International Women’s Day : Celebrations started a day earlier in Western Region in Mumbai.A “greenery drive” was organised at the New Engineering Complex Sahar, Mumbai, on March 7, 2011. Saplings were planted by women employees near the security department..

Indian Crafts Exhibition in Austria

The exhibition featured a display of contemporary Indian handicrafts. The event was organized jointly by Air-India. ICCR, the Crafts Museum, and the Department

of Tourism.

 

Food & Culture Festivals

  Following the popularity of the Goan Food and Cultural Festivals organised in Singapore and Kuala Lumpur in 1992, Air-India is planning to organise more such events. These festivals will feature other Indian states like Rajasthan, and will be organised in collaboration with the respective tourism bodies involved.

 

The Corporate Environment Policy

• This policy talks about the green measures taken by AI as a part of their social responsibility.

• It also talks about the AI’s goal to be an organization whose practices make it one of the most environmentally sensitive company in the aviation industry.

INTERNAL CONTROL SYSTEMS

• The Company continues to ensure proper and adequate internal control systems and procedures commensurate with its size and nature of business. These control systems ensure that all assets are safeguarded and protected against loss from unauthorized use and that transactions are authorized, recorded and reported correctly.

• The Company has an extensive system of internal controls which ensures optimal utilization and protection of resources, IT security, accurate reporting of financial transactions and compliance with applicable laws and regulations as also internal policies and procedures.

• The Company has a well defined manual on delegation of authority and administrative powers, based on which, the authorities exercise their powers.

• The Company has independent internal audit systems to monitor the entire operations and services spanning over all locations, business and functions on a regular basis. The Company has also employed outside consultants in its various areas of functioning in order to reduce/monitor its cost platform.

The Dark Ages

• From the beginning of 1970s, Air-India faces many difficulties . The economic recession, all over the world, shows a huge impact on the company during this time.

• In additional to this effect, as the company was owned by the government, it kept the routes which are yielding losses as open, as for the prestigious purposes. Whereas other commercial air-lines close all these routes.

• Competition from other air lines in carrying foreign passengers. Air-India mostly depends on local passengers for the business. Due to this the air fares have to be kept low, this leads to losses, some times.

• The darkest spot on Air-India history was, the crash of one of its Boeing 747 with 329 foreign passengers, in to the sea, in June 1985.

• During the years 1991-1995, Air-India losses $171 million. And it got bad reputation for poor services and facilities.

To cover up the losses:

• The company planned to increase its reserve cash by selling its Hotel Corporation in Indian sub continent, worth of $220 million and some old Boeing 747s, worth of $60million.

• The company was planning for a private collaboration from other air lines, but which was not accepted by many of the employees and the government of India.

• And the company plans to reduce the pay roll by $40 million by closing some unprofitable routes and reducing the employment, which leads to a strike by the employees and the pilots.

REVENUE BREAKDOWN 2011-12

REVENUE :

• Total Revenue increased from Rs.140,620.1 million in 2010-11 to Rs.147,138.1 million (an increase of Rs.6,518.0 million) during 2011-12.

• Operating Revenue was Rs.146,753.0 million as against previous year’s revenue of Rs.139,760.3 million (increase of Rs.6,992.7 million).

• Passenger Revenue increased from Rs.104,438.2 million last year to Rs.114,236.9 million (an increase of Rs.9,798.7 million) which was mainly due to increase in yield per PKM from 3.46 to 3.74 and increase in Passenger Load Factor from 66.1 to 67.9

EXPENDITURE

• The total expenditure incurred during the year was Rs.234,594.8 million as compared to the previous year’s figure of Rs.213,215.9 million (an increase of Rs.21,378.9 million).

• Operating Expenses increased from Rs.180,808.0 million to Rs.198,139.9 million (an increase of Rs.17,331.9 million) mainly due to the following :

• Increase in fuel price by Rs.23,996.1 million i.e. 39.3%;

• Increase in interest on working capital loans by Rs.4,533.1 million

Measures Taken By Air India

• The national carrier has also decided to discontinue loss-making routes, among others steps, to rein in the spending and return to break-even.

• The use of expensive hotels or five-star hotels for stay during the travel or holding events has been restricted unless it is unavoidable and the budget for such activities has been reduced by 10 percent as part of the measures by AI.

• After a long spell of losses, Air India had recorded a net profit of Rs 14.6 crore in December last on account of a healthy growth in both passengers and cargo revenues.

• Air India's total revenue rose by 6.5 percent to Rs 2070 crore during December 2014 as compared to Rs 1,944 crore in the same period in 2013.

• The state-run airline has reduced both its operational and net loss over the last two fiscals. Its net loss came down to Rs 5,389 crore in the last fiscal compared with a net loss of Rs 5,490 crore in financial year 2013 and Rs 7,559.74 crore in FY12.

• AI has a cost base of nearly Rs 24,000 crore out of which nearly Rs 14,000 crore is variable and this includes fuel cost of Rs 9,500 crore."With the decline in fuel prices, the company plans to achieve at least a 20-25 percent reduction in its fuel bills in the next fiscal, which will be a substantial saving for the carrier.

• The management has also directed that all routes should be critically reviewed and routes which are not covering fuel cost or variable costs, removed from the network after studying the historical trends.

• The management has also emphasised to all its employees that the targets set under the turnaround plan and the budgets should be achieved for this fiscal on a "war footing" and there can be no compromise on these.

• On the operational front, the measures are aimed at improving aircraft utilisation by cutting down the turnaround time at transit stations, reducing duty travel of crew to the minimum to increase their productivity, close monitoring of occupancy ratios on various flights, bringing down expenditure on entertainment at foreign stations,

BUDGET ALLOCATION TO AIRLINE INDUSTRY

Government of India has taken several steps to tide over the crisis," the statement said mentioning that the government in the federal budget 2011-12 had allocated Rs 2,000 crore for the airline and that another Rs 1,200 crore was expected to be infused this year".

Currently the airline, which is laden with a cumulative debt of Rs 40,000 crore it incurred over aircraft acquisition and as short-term loans to maintain its operations, expects a fresh equity infusion of Rs 1,200 crore in July. The cash-strapped carrier is also seeking a total infusion of Rs 17,000 crore, which includes Rs 5,000 crore for this fiscal year alone, the report pointed out.

Case Points

• 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.

• 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).

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

Employee Strike

Demand:

• Better salary, promotion and increment.

• Equality between Air India and India Airline Staff.

• Reappoint the pilots, who force to resign.

• career progression

• integration across various cadres

• rationalization of pay scale

THE CHRONOLOGY OF THE AIR INDIA STRIKE MAY 2012

On May 8, 2012 about 100 pilots went on medical leave as a mark of protest.

• 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.

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

• 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.

• on 4 July 2012 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.

• Due to pilots' strike Air India suffered a loss of 500 crores (US$90.5 million)

MANAGEMENT’S VIEW

• Efforts are being made to resolve the situation.

• Appeal to the pilots that they should think about the passengers.

• As per Rule 42 (2) of the Aircraft Rules, 1937: 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

• An interview with the former executive director of Air India: Jitender Bhargava

Why so many pilot strikes taken place in Air India lately?

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.

How it End?• 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 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.