CASE STUDY of air india

CASE TUDY ON AIR INDIA

CASE STUDY ON AIR INDIA

OF BUSINESS PROCES & STRATEGIC MANAGEMENT

Submitted To: N.P.SINGH

Submitted By: Priyanka Bhardwaj(86) Anil Tiwari(98) Lovisha Sharma (76)

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI,NEW DELHI

1

CASE TUDY ON AIR INDIA Air India Limited (Hindi: एएए एएएएएए) is the national flag carrier airline of India, flying a worldwide network of passenger and cargo services. Air India is state-owned, and administered as part of the National Aviation Company of India Limited - which was created in 2007 to facilitate Air India's merger with Indian Airlines.[3] The main bases of operation of the airline are Mumbai's Chhatrapati Shivaji International Airport and Delhi's Indira Gandhi International Airport. Air India is the 16th largest airline in Asia,[4] serving 25 destinations worldwide, and, with its affiliated carriers, serves over 100 cities. Air India has codeshare agreements with twelve other international airlines.[5] In 2010, Air India is expected to join Star Alliance, the world's largest airline alliance.[6][7]

HISTORY OFAIR INDIA

Air India was founded by J. R. D. Tata in 1932 as Tata Airlines, a division of Tata Sons Ltd. (now Tata Group). On 15 October 1932, J. R. D. Tata flew a single-engined De Havilland Puss Moth carrying air mail (postal mail of Imperial Airways) from Karachi's Drigh Road Aerodrome to Bombay's Juhu Airstrip via Ahmedabad. The aircraft continued to Madras via Bellary piloted by former Royal Air Force pilot Nevill Vintcent. 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 and registered VT-CQP took off from Bombay bound for London 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 1 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. In 1954, the airline took delivery of its first L-1049 Super Constellations and inaugurated services to Bangkok, Hong Kong, Tokyo and Singapore. 2

CASE TUDY ON AIR INDIA Air India International entered the jet age in 1960 when its first Boeing 707-420, named Nandadevi and registered VT-DJJ, was delivered. Jet services to New York City via London were inaugurated that same year on 14th May 1960. On 8 June 1962, the airline's name was officially truncated to Air India. On 11 June 1962, Air India became the world's first all-jet airline.

EXPANSION PLAN OF AIR INDIA

Air India Headquarters at Nariman Point in Mumbai. In 1970, Air India moved its offices to downtown Bombay. The next year, the airline took delivery of its first Boeing 747-200B named Emperor Ashoka (registered VTEBD). This coincided with the introduction of the 'Palace In The Sky' livery and branding. A distinctive feature of this livery is the paintwork around each aircraft window, in the cusped arch style of windows in Indian palaces. In 1986 Air India took delivery of the Airbus A310-300; the airline is the largest operator of this type in passenger service. In 1988, Air India also took delivery of two Boeing 747-300Ms in mixed passenger-cargo configuration. In 1989, to supplement its "Flying Palace" livery, Air India introduced a new "sun" livery that was mostly white but had a golden sun on a red tail. Only applied to around a half of Air India's fleet, the new livery did not succeed, as the Indian flying public complained about the phasing out of the classic colours. The new livery was dropped after two years and the old scheme was returned. In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747400 named Konark and registered VT-ESM made history by operating the first nonstop 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 newly renamed Chhatrapati Shivaji International Airport in Mumbai. In 2000, Air India introduced services to Shanghai, as well as to Los Angeles and Newark. On 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. Air India expanded its international routes to

3

CASE TUDY ON AIR INDIA include non-stop flights from Ahmedabad and also expanded its international operations from Bangalore and Hyderabad. On 8 March 2004, International Women's Day, the airline operated an "All Women Flight" from Mumbai to Singapore.[8] Captain Rashmi Miranda, who became AirIndia's first female Commander in November 2003 and Captain Kshmata Bajpai piloted the flight, an Airbus A310-300 aircraft. The flight dispatch activities relating to this flight were also coordinated by a female Flight Dispatcher, Vasanti Kolnad. The Safety Audit on board was also conducted by another woman, Harpreet D Singh. The airline has seventeen female pilots, including five trainee pilots. In 2007, the Government 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 (or NACIL) was established, into which both Air India (along with Air India Express) and Indian Airlines (along with Alliance Air) have been merged.[9] Once the merger is complete, the airline - which will continue to be called Air India - will continue to be headquartered in Mumbai. It will be India's largest airline after the merger, with 100 aircraft,along with 59 orders and 89 destinations(including 50 domestic destinations and 39 international routes)excluding its and Indian Airlines' subsidiaries. Star Alliance announced on 13 December 2007 that it had invited Air India to join as a member.[10][11] Air India is set to become a full Star Alliance member in 2010. India has the world's fastest growing airline industry.[12] However, increasing fuel prices resulted in a 4% decline in air traffic in June 2008.[13] Increasing competition of other major Indian carriers like Jet Airways and Kingfisher Airlines has pushed Air India to third place in India in terms of market share. In July 2008, it was reported that Air India was seeking US$534 million in aid from the Indian government to cover its losses.[14] In the wake of rising fuel prices, the airline decided to hike its air fare in June 2008.[15] Air India plans to open up new/resume routes to Africa (Dar es Salaam, Mauritius, Johannesburg, Lagos), Asia (Beijing, Taipei), Europe (Birmingham, Geneva/Zürich, Moscow, Rome/Milan), North America (Boston, Dallas/Houston, San Francisco, Vancouver, Washington, D.C.) and Oceania (Melbourne, Sydney)[16][17][18][19]. On 1 March 2009 Air India made Frankfurt Airport its European Hub for its North American Operations.

4

CASE TUDY ON AIR INDIA

Financial Crisis Around 2006-07, the airlines began showing signs of financial distress. The combined losses for Air India and Indian Airlines in 2006-07 was Rs 771 crores. After the merger of the airlines, this went up to Rs 7200 crores by March 2009.[20] This was followed by restructuring plans which are still in progress.[21]. In July 2009, SBI Capital Markets Ltd was appointed to prepare a road map for the recovery of the airline.

LIVERY OF AIR INDIA

Air India Mascot "The Maharaja" Air India's current livery was unveiled in May 2007.[31] It is a cross between Air India's old predominately red and white livery and Indian Airlines's livery. The new livery was first seen in July 2007 on a new Boeing 777-200LR when Air India and Indian Airlines formally became one airline. The fleets of both airlines will be painted in the new livery. The logo of the combined airline is a Flying Swan with the Konark Chakra placed inside it. The Flying Swan has been adapted from Air India’s characteristic logo, ‘The Centaur’ whereas the Konark Chakra is reminiscent of the Indian Airlines logo. The logo is featured on the tail of the aircraft and the Konark Chakra is on the engines. Colours are red for “Flying Swan” and orange for “Konark Chakra". While the base colour for the new livery is ivory, Air India's characteristic red has been retained. Running parallel to each other are orange and red speed lines from the front door to the rear door. The brand name ‘Air India’ runs across the tail of the aircraft.

5

CASE TUDY ON AIR INDIA

AWARDS AND RECOGNITIONS • • • • • •

• • •

• •

•

• • • •

Preferred International Airline award for travel and hospitality from Awaz Consumer Awards 2006 [36] Best International West Bound Airline out of India for three successive years by Galileo Express TravelWorld Award Best Corporate Social Responsibility Initiative. by Galileo Express TravelWorld Award [37] Best Short-Haul International Airline by Galileo Express TravelWorld Award 2008[37] The Mercury Award for the years 1994 and 2003, from the International Flight Catering Association, for finest in-flight catering services. Amity Corporate Excellence Award instituted by the Amity International Business School, Noida, Uttar Pradesh to honour Corporates with distinct vision, innovation, competitiveness and sustenance.[37] Reader’s Digest Trusted Brand Award[37] Dun and Bradstreet Award(D&B)- first in terms of revenue out of the top airline companies out of India[37] Best South Asian Airline award by readers of TTG Asia, TTG China, TTG Mice and TTG-BT Mice China, all renowned Mice and business travel publications.[37] Cargo Airline of the Year at the 26th Cargo Airline of the Year Awards[38] The airline entered the Guinness Book of World Records for the largest evacuation by a civil airliner. Over 111,000 people were evacuated from Amman to Mumbai – a distance of 4,117 km, by operating 488 flights in association with Indian Airlines, from 13 August to 11 October, 1990 – lasting 59 days. The operation was carried out during Persian Gulf War in 1990 to evacuate Indian expatriates from Kuwait and Iraq. The Montreal Protocol Public Awareness Award was awarded to Air India by the United Nations for environmental protection, especially in the ozone layer.[39] World's First All-Jet Airline- June 1962 World's Largest Operator of Airbus A310-300 Air India's security department became the first aviation security organisation in the world to acquire ISO 9002 certification (31 January 31 2001). Air India's Department of Engineering has obtained the ISO 9002 for its Engineering facilities for meeting international standards

6

CASE TUDY ON AIR INDIA

TOP AIR INDIA COMPETITORS Company

Location

Cathay Pacific

Lantau, Hong Kong

Jet Airways

Mumbai, India

Singapore Airlines

, Singapore

Kingfisher

USA

Jetair way

Mumbai

Airline Business Analysis

Each month the Flight Insight team provides statistics and analysis for Airline Business to supplement a range of features, special reports and surveys. See below for some examples of the data the Flight Insight team can provide.If you would like this type of information tailored to your specific business needs, request a proposal.

7

CASE TUDY ON AIR INDIA

MARKETING INITIATIVES: → Numerous initiatives have been taken place on the Flying Returns, Frequent Flyer Programmes, the Maharajah Club and Leading Edge Club recognition → programme. → Enhanced the effectiveness of the distribution network by increasing the number of agent connected to SITAR; → A system has been set up with Route Managers monitoring the performance and advance booking of various routes and suggesting tactical → initiatives; → Providing the reservation facility on fax. → Providing interactive access to the Air India Reservations System through Internet with an eventual upgrade to e-Commerce; → Providing efficient assisted inter-terminaTransfer → A flexible pricing policy has been established to meet the challenge of improving market share, the fares mix as also the yield in each classes. → Increasing market penetration through focussing on corporate houses, incentives travel groups, outbound package tours and students; → Air India has devised new promotional packages for First and Executive Class passengers who can look forward to all expenses paid holiday package

8

CASE TUDY ON AIR INDIA → for two to destination in India and Abroad. The scheme provides for air tickets, hotel

FUTURE PLANS OF AIRINDIA → Invite First and Executive Class passengers to participate in the forthcoming Food Presentation, prior to menu change; → Plan to observe Customer Care week in the beginning of 2001;\ → Introduction of grooming checks for Cabin Crew; → Greater efforts to reduce distribution costs and Augment revenue; → -Reviewing relevance of GSAs w.r.t. today's global alliances; → Market tie-ups inter-carrier agreements such as code share etc. → To cater to Haj traffic demand, AI is planning to re-route 33 flights in each Phase-Iand Phase-II to Jeddah. → Keeping check and control on repetitive complaints and radically improving passenger’s service. →

ABOUT CASE OF AIRINDIA Air India to get Rs 5,000 cr equity infusion in 3 years

9

CASE TUDY ON AIR INDIA NEW DELHI: Cash-strapped Air India may get a fresh lease of life with the government agreeing to infuse a performance-linked equity of Rs 5,000 crore over the next three years into the state-owned airline. A committee of secretaries (CoS) headed by Cabinet secretary KM Chandrasekhar considered Air India’s proposal on Saturday to inject capital and provide soft loan, a person close to the development said. “The government would support the airline in meeting its short- and medium-term capital requirements. The CoS has agreed to increase the equity base of the company and take it above Rs 5,000 crore over the next three years,” the official said. He also said the government would help the airline in getting loan from banks if required. The airline is comfortable with what the committee has proposed. The airline’s cost-cutting exercise so far undertaken was not satisfactory. They need to do a lot more,” another government official said on condition of anonymity. Hit by the worst financial crisis in its history, Air India had earlier sought over Rs 15,000 crore from the government to tide over the crisis. Air India had an accumulated loss of over Rs 7,200 crore as on March 2009. The high-level committee has, however, made it clear that the financial help would be linked with the money saved by the airline. Air India expects to cut its operational cost by about Rs 2,000 crore per annum besides enhancing its cash flow by 10-15%. The airline aims at saving about Rs 750 crore by rationalising productivity-linked incentives of its 31,000 staff. It has targeted to reduce its cost by Rs 500 crore by rationalising its network. On the revenue enhancement front, Air India has decided to unlock the value of its real estate properties. It will also expand its customer base. The airline is all set to launch its low-cost airline Air India Express on domestic routes. “Accenture has given a cost-cutting plan. It has said that the company would save over Rs 4,000 crore annually by cutting cost and enhancing revenue. The company chief has asked all concerned functional directors to act and produce desired results,” a senior Air India official said on the condition of anonymity. He said the cost-cutting measures suggested by Accenture have been presented to the CoS. Air India had submitted a turnaround plan, prepared by merchant banking firm SBI Caps, to the panel last month. Loan liabilities of Air India currently stands at nearly Rs 16,000 crore. The company owes about Rs 600 crore to Airports Authority of India (AAI) over and above the dues of private airport operators such as Delhi International Airport (DIAL) and Mumbai International Airport (MIAL). “The company has to make principal and interest repayment of about Rs 9,000 crore over the next three years, mainly on account of fleet acquisition,” an official said. Meanwhile, the CoS has directed the ministry of civil aviation to move a proposal to the Cabinet in consultation with finance ministry for the financial assistance to beleaguered carrier

10