Air india case study

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BUSINESS CASE
ON
“SCENARIO OF AIR INDIA”
FOR
THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE OF
―MASTER OF BUSINESS ADMINSTRATION‖
Session: 2016-2018
DEPARTMENT OF BUSINESS ADMINISTRATION
UNIVERSITY OF LUCKNOW
Under The Guidance of Submitted By
Dr. Mohd. Anees Deepak Kumar
MBA IVth Semester
17001000060

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STUDENT DECLARATION
This is to certify that I have completed the Business Case Titled ―Scenario of Air India” in
University of Lucknow under the guidance of Dr. Mohd Anees in Partial fulfilment of the
requirement for the award of degree of Master of Business Administration at University of
Lucknow Department of Business Administration, Lucknow. This is original piece of work &
I have not submitted it earlier elsewhere.
DEEPAK KUMAR

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INDEX
Executive Summary………………………………………………………..5
1.0.Introduction to the company
1.1.Founders………………………………………………………………..6-7
1.2.History…………………………………………………………………7-8
1.3.Products………………………………………………………………..9
1.4.Company‘s growth…………………………………………………….10
2.0.Environmental analysis (micro and macro) including SWOT………………....11 - 12
2.1.Industry background including competitors…………………………...12 - 13
2.2.Market analysis…………………………………………………………13 - 14
2.3.Relevant laws…………………………………………………………..14 - 15
2.4.Cultural context………………………………………………………...16
2.5.Socio-economic trends…………………………………………………16 - 17
3.0.Company‘s past and current plans and strategies to exploit opportunities/strengths and
combat threats/weakness/challenges…………………………………………. 18
3.1.Financial strategy………………………………………………………18
3.2.Marketing strategy……………………………………………………...18-19
3.3.HR policy/strategy………………………………………………………19
4.0.CSR practices/sustainable practices…………………………………………….20
5.0.Major success story in detail……………………………………………………21
5.1.Issues/problems………………………………………………………….21
5.2.Company decisions and actions to resolve the issue/problem/leadership 22 - 23
6.0.Emerging challenges/threats…………………………………………………….23
7.0.Analysis of Case………………………………………………………………..23–24
8.0.Problems & Challenges…………………………………………………………29
9.0. Findings………………………………………………………………………..29
10.0. Possible Alternatives……………………………………………………….30
11.0. Future prospects…………………………………………………………….30
12.0. References…………………………………………………………………..31

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ACKNOWLEDGEMENT
I sincerely appreciate all people who continuously helped me in making this journey of case
study possible. I am grateful and truly appreciate their kindness in giving thoughtful
guidance; suggestions and encouragement to assist me complete my case study. Specifically,
I wish to acknowledge the support I received in the cause of writing this case to my
supervisor Dr. Mohd Anees for his guidance.

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EXECUTIVE SUMMARY
Air India is a public limited company, under the civil aviation ministry, Gov. of India. It is
operating more than 90 destinations in domestic and International Market. The Airlines has
its corporate office in New Delhi, IGI Airport and the regional offices in the different cities
across nation. Air India is largest international airline of India with an 18.6 % Market Share.
The carrier is the third largest. With the arrival of other aviation companies, the market share
has been reducing, but with the strong fleet it is continually acted as a leader in this industry.
During the analysis of this case, the main objectives of the study have been:
 To understand the ways of Competing with the Private Companies
 Also the ways of Revenue Generation through opening new routes.
 Make image of Air India as compared to its counterparts.
 Ways of getting best results in opposite condition.
To find out the required information primary data was collected through Personal Interview
of Mr. Vinay (Air India) & Mr. Shakeel Ahmad Khan (Assistant General Manager) Lucknow
and secondary data from Air India Travel Magazine, Annual Reports & Other Online
available sources.
The private airlines were better in certain service factors. It may be possible, but now they
can feel that Air India is not behind them in any manner.

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1.0. INTRODUCTION TO THE COMPANY
1.1. FOUNDERS
Air India is the flag carrier airline of India. It is owned by Air India Limited, a
government-owned enterprise, and operates a fleet of Airbus and Boeing aircraft
serving 90 domestic and international destinations. The airline has its hub at Indira
Gandhi International Airport, New Delhi, alongside several focus cities across India.
Air India is the largest international carrier out of India with an 18.6% market
share. Over 60 international destinations are served by Air India across four
continents. Additionally, the carrier is the third largest domestic airline in India in
terms of passengers carried (after Indigo and Jet Airways) with a market share of
13.5% as of July 2017. The airline became the 27th member of Star Alliance on 11
July 2014.
The airline was founded by J. R. D. Tata as Tata Airlines in 1932; Tata himself flew
its first single-engine de Havilland Puss Moth, carrying air mail from Karachi to
Bombay's Juhu aerodrome and later continuing to Madras (currently Chennai). After
World War II, it became a public limited company and was renamed as Air India. On
21 February 1960, it took delivery of its first Boeing 707 named Gauri Shankar and
became the first Asian airline to induct a jet aircraft in its fleet. In 2000–01, attempts
were made to privatise Air India and from 2006 onwards, it suffered losses after its
merger with Indian Airlines.
Air India also operates flights to domestic and Asian destinations through its
subsidiaries Alliance Air and Air India Express. Air India's mascot
is the Maharajah (Emperor) and the logo consists of a flying swan with the wheel of
Konark inside it.

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1.2. HISTORY
Tata Airlines started the first airmail service in India on October 15, 1932 with J.R.D.
Tata flying a D.H. Puss Moth carrying the postal mail, from Karachi to Juhu,
Mumbai, via Ahmedabad. In the airline‘s first full year of operations, it flew 145
passengers and 11.71 tonnes of mail over 170,000 of de Havilland Dh-83 Fox
Moths, Miles Merlins and WACO WQC-6 biplanes. Gradually, new routes were
added and more flights frequencies within India were increased.
To touch the new civilian status and its role as a public organisation, Tata Airlines
was converted into a Public Limited Company on 29 July 1946 and renamed Air
India. At the end of 1947, Air India submitted a plan to the Government for the
formation of Air India Fina International Limited with the government participation to
operate international services. The plan was approved and Air India International
launched its first service to London via Cairo and Geneva on 8 June 1948 with
Constellation aircraft. The airlines industry comprises passenger air transportation,
both scheduled and chartered, but exclude air freight transport. Industry volume are
defined as the total number of passengers enplaned at all airport within the country or
region. Industry value is defined as the total revenue obtained by airlines from
transporting these passengers.
The Indian airlines industry generated total revenue of $6 billion in 2006 this
representing a compound annual growth rate (CAGR) of 27.6% for the period
spanning 2002-2006.
The domestic segment was the industry‘s most successful in 2006, generating total
Passenger volume.
The performance of the industry is forecast to accelerate, within an anticipated CAGR
of 39.3% for the five-year period 2006-2011 expected to drive the industry to a value
of $31.5% billion by the end of 2011.

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Airlines passenger volumes increased with a CAGR of 25.6% between 2002 – 2006,
to reach a total of 40.1 million people in 2006. The industry‘s volume is expected to
rise to 205.2 million people by the end of 2011, this representing a CAGR of 38.6%
for the 2006 – 2011 period.
The international segment contributed the remaining passenger volume of 3.7 million
in 2006, equating to 9.1% of the industry‘s aggregate volumes.
Incorporation
Established in 1953 under Air Corporation Act
Became Public Limited Company in 1994
Registered Office : New Delhi
Head Office : Mumbai
Authorized Capital : Rs.500.00 Crores
Paid – up Capital : Rs.153.84 Crores
Subsidiary Company
Air India has the following Subsidiary Companies with an Authorized / Paid-up
Capital (in Rs. Crores) as under
Authorised Paid up
Hotel Corporation of India 41.00 40.00
Air India Charters Ltd 30.00 30.00
Air India Transport Services Ltd 100.00 0.05
Air India Engineering Servies Ltd 100.00 0.05

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1.3. PRODUCTS
Currently Air India has many single body aircraft for domestic destinations like A320,
A321 and A320 neo. Air India has also many 2 engine aircraft like Boeing 777-
200LR, Boeing 777-300ER, Boeing 747-400 and Boeing 787-8 which operates
mainly for international destinations.
Services We Offer
 Passenger Handling
 Ramp Handling
 Cargo Handling & Warehousing
 Technical Assistance
 Diverted Flight Handling
 VVIP & Charter Handling
 Airport Handling Training & Development
 ULD Repair Facility
 Aircraft Recovery Assistance
 Engineering /Allied Services

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1.4. COMPANY’S GROWTH
India‘s national airlines, provides domestic and international air transport services
to both passengers and cargo.
Air India pioneered the country‘s aviation sector and its history starts with the
history of civil aviation in India. Air India embodies the spirit of India by
extending warm hospitality through presenting Indian Culture and the urge to
satisfy its guests.
Since the first flight on October 15, 1932, Air India has grown to be like a biggest
international airline connecting to 36 destinations in the USA, Europe, Australia,
Far-East and South-East Asia and the Gulf. The airline‘s domestic network covers
56 destinations, including all state capitals and far-flung areas of India‘s North-
East, Ladakh, Andaman and Nicobar Islands. The airline also provides ground
handling and engineering & maintenance services, as well as low-cost travel
options, through its subsidiaries. Air India‘s young fleet of 106 aircraft comprises
a mix of the latest state-of-the-art B787 Dreamliners (21 aircraft), B777s, B747s,
Airbus A330s, A321s, A320s and A319s.
Constantly changing and transforming itself to stay ahead of competition, Air
India has been and will continue to be committed to providing good service,
through latest technology, to flyers worldwide.
JOURNEY MAP
 Air India Net Profit rises to Rs 333 (1992)
 AI is the oldest, most staffed international feet. The aircraft is 14 years old.
The total number of staff per aircraft is 750 (2000).
 AI ends Fiscal Year with a loss of Rs. 448 crore (2008)
 Accumulated loss Rs.7000 crores, Working capital loan Rs.16000 crore, Total
Debt Rs.79000 crore (2010).

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2.0. ENVIRONMENTAL ANALYSIS (MICRO & MACRO)
INCLUDING SWOT
1. Strength
 Air India has been the largest carrier.
 Updated fleet and competent repairs and maintenance expertise
 Advance information systems
 It has a good reputation in both international and domestic
markets
 Old age goodwill
 Has financial backing of the Government.
2. Weakness
 Huge employee turnover of around 31000, aircraft employee
ratio of 210 is highest in the industry
 Air India is still pursuing to increase capacity this fiscal by
10%
 NACIL is not price competitive according to industry standards
 The lack of clarity on the strategic direction largely dilutes its
capabilities and confuses its brand within markets
 Low profitability and utilization of capacity
 Growing competitor base and entry of Low-Cost Carriers
 The airline‘s high-cost structure and the compulsions of being a
public sector unit are the reasons and it had been making a loss
and shall continue to make losses for some quarters.
3. Opportunity
 India airline industry is growing faster and will continue to
grow as the GDP increases
 Worldwide deregulations make the skies more accessible; the
route agreement is easier to be achieved
 The number of foreign visitors and investors to India is
increasing rapidly.
 Complementary industry like tourism will increase demand for
airline service

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 Customers are getting wealthier; tend to be less price-conscious
and prefer to choose quality service over cost
 Best time for introducing LCC‘s
4. Threats
 Air India faces imminent aggressive competition from world
leading airlines and price wars triggered by domestic players
 The Indian Railway Ministry has dramatically improved speed
and services in their medium/long distant routes, attracting
passengers away from air service, with prices almost at par
with the low cost carriers.
2.1. INDUSTRY BACKGROUND INCLUDING COMPETITORS
Air France and Delta Airlines: Air France was one of the biggest European airlines
with an excellence in Paris. The company was aggressively looking for greater
international reach. The SkyTeam alliance was one of the smallest, with a weak
presence in Asia. Delta Airlines, SkyTeam‘s American carrier, had a negligible
presence in Asia and would, therefore, also benefit greatly from a strong Asian
partner. As one of the financially stronger airline carriers in the world, Air France
would lead the investment with Delta providing additional support as a junior partner.
Northwest Airlines and KLM: Northwest was perhaps the strongest competitor for
Air India because of its existing business relationship with its subsidiary. Northwest
was already an extensive presence in Asia. However, it was widely known that, at the
time, Northwest was financially weaker than its rivals. KLM was a strong European
carrier that would offer tremendous financial support to bolster any bid.
One World Alliance: The One World alliance was the most unknown of the potential
bidders. Cathay Pacific would likely lead any investment, with potential support from
British Airways, CITIC Pacific, and Swire Pacific. Cathay Pacific was one of the
leading carriers in the Asia/Pacific region with strong operational reputation and

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obvious synergies. British Airways would likely serve as a junior investor, but could
lend substantial financial support and an extensive European network. Although not
likely to participate financially, American Airlines would also offer a substantial
North American network.
Star Alliance: The possibility that some of Duke Air‘s Star Alliance partners
participated in the Air India deal existed. The possible investors would be United
Airlines and Singapore Airlines, two financially strong airlines with superior
operations in Asia. Canadian Airlines, although a smaller carrier in global terms had
strong interests and relationships in Asia and would also likely to participate as a
junior partner. Duke Airlines would take the lead in any deal and would only consider
bringing new partners in with the additional shares purchased as part of the Initial
Public offering.
2.2. MARKET ANALYSIS
Market share: AI was one of the designated global airlines out of India. AI operates
to all the major destinations of world. AI also competed with domestic Airlines in
India on a number of routes like the Arabian Places and South East Asia. In last few
years, AI‘s capacity share had declined primarily due to its small fleet size, which
directly meant that it was not able to offer services on some small routes economically
and hence discontinued flights, Actually quality of service and frequency of flights
had been the advantage of AI. Secondly, the entry of competitive carriers like Oman
Air, Qatar Airways, Korean, Malaysian and Thai Airways had drastically impacted
Air India‘s market share.
Route Network and Market Profile: Air India operated flights to several
destinations in USA, UK, Europe, and the Gulf, South East and Far East Asia. This

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was possible due to AI‘s code sharing agreements. Air India had a permission to carry
domestic traffic on all domestic destinations of Air India services.
Markets and Competition: AI faced competition from large international and
national aviation companies of the countries to which it flew. Air India was not in a
position to offer daily flights to all the markets because of its small size of the fleet.
Therefore, it was unable to capture the large part of market. Air India was expected to
offer daily flights to major locations like the US, the UK and Paris once it changed its
fleet with the advanced aeroplanes.
Fleet Modernisation and Augmentation: AI fleet had five types of aircrafts. In the
short term, AI planned to rationalise the fleet by dry leasing A310s. The medium term
plan was to rationalise the fleet composition to four aircraft types by 2003–04 and the
long-term plan was to have three aircraft types by 2007–08. The youngest aircraft in
the fleet, the B747-400s would allow AI to optimise capacity deployment in profitable
markets by operating at high capacity. The other two types of aircraft that AI planned
to have in its fleet in the long term were the Small Capacity Long Range (SCLR) and
Small Capacity Short Range (SCSR) aircraft types, which were yet to be selected. As
most of the long-haul routes barring the UK/USA routes were low-density routes, AI
preferred to operate smaller capacity aircrafts with greater frequency in these routes.
2.3. RELEVANT LAWS
1. Regulatory Authority: The Director General of Civil Aviation is a statutory
authority responsible for laying down, implementing and monitoring standards
regarding airworthiness of aircrafts, safety and operations, flight crew standards,
training, etc.
2. Operating Permit (for scheduled international air services): The airline wishing
to operate scheduled international air services has to be designated through diplomatic
channels or by the aeronautical authorities of the country whose Government have
concluded the Agreement with the Government of India.

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3. Maintenance approvals: Rule 60 of the Aircraft Rules, 1937, stipulates that all
Indian registered aircrafts are required to possess a current Certificate of
Airworthiness before undertaking any flight. It is, therefore, obligatory that the
aircrafts are maintained as per approved maintenance schedules. Maintenance work
carried out on the aircraft has to be certified in the relevant log books by appropriately
licensed AMEs, approved or authorised persons who have actually performed the
work. Airline operators who do not have their own facility for maintenance and
certification of aircraft, aircraft components or items of equipment can get
maintenance and certification performed by organisations or individuals, who are
approved for the purpose. However, scheduled airlines are required to have their own
maintenance facility.
4. Schedules and Fare Approvals: The airline has to, in accordance with the
provisions of the bilateral air services agreement, obtain the approval of the
competent authorities (which is the DGCA in India) of the tariffs to be charged in the
agreed services operated in the specified route(s). The proposed tariffs have to be
submitted to the aeronautical authorities of both the contracting parties to the bilateral
agreement at least 90 days before the proposed date of their introduction. This period
can be reduced subject to the agreement of the said authorities. The airlines also have
to file their proposed flight schedule with the office of the DGCA for approval, at
least 30 days prior to the commencement of the agreed services. The flight schedule
should contain information relating to the type of service and its frequency, the type
of aircraft to be used and the flight timings. The flights can be operated only after the
schedule has been approved by the DGCA.
5. Route Rights and Air Service Agreements: The operations of international air
services to/ from India are governed by inter-governmental air services agreements
(ASA), under which frequency/capacity entitlements and route rights have been
exchanged.

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2.4. CULTURAL CONTEXT
With the complete overhauling of Air India in the offing, Air India chairman Ashwani
Lohani asked the staff to be ready for a complete change in work culture. Lohani said
that the move would get a better deal and also stated the government's decision to sell
off AI, mentioning that privatization would make it a better airline.
In a letter to the AI employees, Ashwani Lohani stated that huge debt has
accumulated due to continuous losses over the years and disinvestment remains the
only option to make Air India a much stronger world class airline. He further added
that the PSU environment would get replaced by a corporate culture, which the AI
employees will have to imbibe over time.
According to sources, Air India drew up a proposal to offer voluntary retirement to
over one-third of its 40,000 employees. Many of the contractors, including office staff
and ground handlers would be given buyout offers to prevent protests.
Reportedly, Air India had also put its fleet expansion on hold, scrapping a proposal to
lease eight Boeing 787 wide-body aircraft. With the disinvestment going on in the
state airline, Air India's net loss after tax has been narrowed to Rs. 3,643 crore while
its operating profit rose to Rs. 300 crore in the last financial year. As reported by the
government, the airline saw its total revenue, including exceptional and extraordinary
items, increase to Rs. 22,146 crore in 2016-17 period.
2.5. SOCIO-ECONOMIC TRENDS

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Bilateral to Multilateral: The existing bilateral system envisages one-to-one
agreements between the governments regarding the relative rights of the airlines
flying between the two countries. However, there has been a need to move away from
this bilateral framework. The first step in this direction is ‗Open Skies‘ agreements to
reduce the regulation of airlines operations. The existing bilateral system is likely to
be inadequate to meet the challenges the industry would face in the future. This would
be due to continuing restrictions in the areas of ownership and investment, as well as
limitations on wet leasing and government-financed transportation. Multilateral
approaches might address these issues more effectively. The next step envisaged is
the movement towards multilateral or ―plurilateral‘ agreements. A multilateral
approach is one in which more than two countries decide on the regulation of air
transport while a plurilateral approach is one in which blocks of countries negotiate
and decide on the regulation of air transport. There have been some initiatives in this
direction in Europe through the European Civil Aviation Conference (ECAC),
Eurocontrol (the European air traffic control entity), and the Joint Aviation
Authorities (JAA) in which almost all the Central European states participate.
Globalisation and Deregulation: There has been considerable deregulation in the
airlines industry. This process has been led by the United States, which has preferred
deregulation of all international aviation markets. It has started signing open skies
agreements. For American carriers, this would enable greater access to other markets
at reduced economic regulation allowing code-sharing, alliances and partial
ownership deals between international carriers. Other countries have also seen
benefits from open skies and the consequent competition as a way of boosting tourism
and commerce by lowering the cost of air travel.
Alliances, JV’s and Subsidiaries: A related development has been the development
of global alliances. These alliances give the members an effective hub and spoke
network. With smoother connections stimulating traffic, an alliance can lower a
carrier‘s costs dramatically while allowing the carrier to cut fares and increase flight
frequency. An airline participating in an alliance can do this without substantial
investment in additional aircraft, airport facilities or route authority. There are
currently four major global airline alliances—Star Alliance anchored by United
Airlines and Lufthansa, One World with America Airlines and British Airways,
Skyteam with Delta Airlines and Air France, Wings with KLM and Northwest

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Airlines. However, allegiance to these alliances is weak. During the past two years,
many large and small airlines have shifted partnerships.
3.0. COMPANY’S PAST AND CURRENT PLANS AND STRATEGIES
TO EXPLOIT OPPORTUNITIES/STRENGTHS AND COMBAT
THREATS/WEAKNESSES/CHALLENGES
3.1. FINANCIAL STRATEGY
A different end-state vision for Air India is to meet all financial goals. The end state
goal is for marketing to be able to implement the required changes to the frequent-
flyer program without exceeding their program budget. A metric that can be used is
for the actual marketing expenses to be less than 100% of projected expenses. A
major strength of this vision is that the company will spend less and will have more
resources for other projects.
3.2. MARKETING STRATEGY
Air India must forecast market potential and future demand, analyze competitive
landscape and customer purchase behaviors, and identify current and future
customer needs. The company must be able to forecast the future demand by using
marketing research as a medium for analysis.
Marketing research is the process of defining a marketing problem and opportunity,
systematically collecting and analyzing information, and recommending actions. The
broad goal of marketing research is to identify and define both marketing problems
and opportunities and to generate and improve marketing actions. Although marketing
research isn't perfect, it seeks to reduce risk and uncertainty to improve decisions
made by marketing managers. (Kerin et al., 2006)
A technique for marketing research is to utilize the 5-step marketing research
approach which encompasses the following steps:
•
Define the problem

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•
Develop the research plan
•
Collect relevant information by specifying
•
Develop findings
•
Take marketing actions
3.3. HR POLICY/STRATEGY
Air India must apply a top down approach and use strategies to engage their internal
stakeholders in their decision making process. The executive management team must
be unified in their approach and tactics in order for middle management to be
effective when managing subordinates. All employees must be confident in order for
the company to become profitable and successful.
In order for the plan to succeed, it must be implemented correctly. The
implementation part of a plan is difficult because of negotiations, internal resistance
to change, and meeting difficult timelines. Communication between management
and employees must become the norm during the implementation process. ―In
successful projects, preparation for implementation is done in advance. It is
addressed in the initial plan and throughout the project. There is a strong liaison
between the project team and the user about implementation details‖ (Nicholas,
2001, p. 547).
One end-state vision after implementing the strategic marketing process is for
employees to unite and work collectively on all projects. Cross-functional teams
should become the norm of the company. Air India must implement internal
marketing strategies to assist the employees. The end-state goal is for job satisfaction
to be high. A metric that can be used would be a bi-annually job appraisal and a
convenient suggestion box. The target would be for 100% of the employees to be
satisfied with job duties and requirements. This would help retain employees and
would attract new employees to the company. By using a suggestion box or other
anonymous option, the company may be able to get more honest or direct feedback.
―Employees may be encouraged to suggest new-product ideas through suggestion
boxes or contests‖ (Kerin et al., 2006). Management could also attempt to contact

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their employees for feedback, which would allow management to ask follow up
questions to better understand the challenges.
4.0. CSR PRACTICES/SUSTAINABLE PRACTICES
The Department of Quality Management System has been entrusted with the task of
handling the CSR activities carried out by the Company. The Company is in the
process of signing MoU with Tata Institute of Social Sciences (TISS) for working on
the project of CSR in Andaman & Nicobar Islands.
The set of activities that are being undertaken towards the achievement of objectives
of AISATS CSR policy include:
a) Eradicating hunger, poverty and malnutrition, promoting preventive health care and
sanitation and making available safe drinking water;
b) Promoting education, including special education and employment enhancing
vocation skills especially among children, women, elderly, and the differently abled
and livelihood enhancement projects;
c) Promoting gender equality, empowering women, setting up homes and hostels for
women and orphans; setting up old age homes, day care centres and such other
facilities for senior citizens and measures for reducing inequalities faced by socially
and economically backward groups;
d) Ensuring environmental sustainability, ecological balance, protection of flora and
fauna, animal welfare, agroforestry, conservation of natural resources and maintaining
quality of soil, air and water ;
e) Protection of national heritage, art and culture including restoration of building and
sites of historical importance and works of art; setting up public libraries; promotion
and development of traditional art and handicrafts;
f) Measures for the benefit of armed forces veterans, war widows and their
dependants; g) Training to promote rural sports, national recognised sports,
Paralympics sports and Olympic sports;
h) Contribution to the Prime Minister‘s National Relief Fund or any other fund set up
by the Central Government for socio- economic development and relief and welfare
of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and
women;

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i) Contributions and funds provided to technology incubators located within academic
institutions which are approved by the Central Government.
j) Rural Development Projects.
5.0. MAJOR SUCCESS STORY IN DETAIL
5.1. ISSUES/PROBLEMS
Air India is a 85 year old company that commands a fleet of more than 575 jets that
serve 240 cities with more than 2500 daily flights. The company is facing numerous
challenges because of rising costs and lack of innovation. Customers are not satisfied
with the service they are receiving and management cannot agree on how to correct
the issues. A manager at Air India expresses, ―Your challenge is going to be rising
above our competition without discounting airfare‖ (Case Study, 2008). The company
will have to figure out strategies to overcome the challenges.
Air India is skating on thin ice because customers are unhappy, employees are not
unified, and competition is on the rise (Case Study, 2008). Strategic decisions must
be made to help the organization get back on track. Special attention must be given
to innovation, efficacy, customer service, and efficiency. The company is expecting
to enhance the quality of the services they provide without discounting airfare,
which means that marketing will play a big role in their success.
When deciding the optimum solution, Air India must understand what their goals are,
what their end-state vision is, and also what challenges they have faced with product
development. These factors will help the company decide how to move forward and
become the leading airline provider. Air India is currently unengaged with its
customers. Some of the senior leaders do not believe that the best use of their
resources is by reconnecting with clients, which has hurt the company significantly.
Air India leadership is divided on the strategic vision for the airline‘s future.
Furthermore, the investment that Air India has made into a customer relationship
management (CRM) system was not sufficient, which has affected the customer
service department ability to work with the clients.

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5.2. COMPANY DECISIONS AND ACTIONS TO RESOLVE
THE ISSUE/PROBLEM/ LEADERSHIP ROLES
A company‘s strategic marketing process is the approach used ―whereby an
organization allocates its marketing mix resources to reach its target markets‖. The
result of the strategic marketing process is the development of the company‘s
overall marketing plan ―which is the roadmap for the marketing activities of an
organization for a specified future period of time‖. The marketing plan of a
company serves to direct primary functions within an organization including supply
chain management, demand forecasting, sales initiatives, and finance strategy as
well as customer service programs. A primary challenge for the company is the need
to coordinate all programs, processes, and functions to meet the goal of making the
customer the primary focus of all company efforts.
Air India needs to create a unified company-wide effort, to develop marketing
programs that link customer relationship initiatives to its overall organizational
goals. The beginning of this process will need to include the company-wide
commitment to make the needs of the customer the number one priority. The
company will then need to create business and marketing strategies that increase
synergies. The company will be able to prosper by having organizational synergy
and a united team working towards the same vision. The company must be able to
make strategic decisions and capitalize on their competitive advantages.
Trends in society easily influence many factors which make it difficult for companies
to predict which product will be successful. ―The process of continually acquiring
information on events occurring outside the organization to identify and interpret
potential trends is called environmental scanning‖. Timing is also important when
introducing a new product or service to the market. A product can be introduced too
soon or too late which will have an impact on the success of the product. ―IBM, for
example, killed several laptop computer prototypes because competitors introduced

23 | P a g e
better, more advanced machines to the marketplace before IBM could get there‖. Lack
of marketing research can also hinder the success of a product because marketing
research seeks to reduce risk and uncertainty. Without sufficient resources, Classic
Airlines may not be able to invest in marketing research.
For Air India, being able to adapt to different trends and markets is crucial for
success. Insufficient market attractiveness is also a challenge with new products.
The idea of market attractiveness is ―a large target market with high growth and real
buyer need‖. The company needs a large target market with high growth in order to
succeed.
6.0. EMERGING CHALLENGES/THREATS
Air India must address the challenges the company is facing. The company is
experiencing a decrease in stock prices. Employee morale is low because of finger
pointing and lack of unity. The case study states that ―loyal customers were jumping
ship and the ones still aboard seemed to be flying less frequently‖. The senior vice
president of customer service explains that ―customers have no voice‖ which is a
major challenge for the company. Air India and many of its rivals expanded too
quickly. The case study mentions that the CEO and CFO focus on numbers and less
on marketing. Membership in classic rewards is down nearly 20% and the average
number of flights per member is down more than 20%. The company recently
mandated a 15% across the board cost reduction over the next 18 months which is
also a major challenge for all departments. ―Changes in the marketing environment
are a source of opportunities and threats to be managed. The process of continually
acquiring information on events occurring outside the organization to identify and
interpret potential trends is called environmental scanning‖. Environmental
scanning will help the company progress.
7.0. ANALYSIS OF CASE
The Whole Case is about the Air India. Having gone through the case one can see that
the Company is facing the problem of Rising cost and Lack of Innovation. This is not
the end of the story. The airline recently had to take loans to pay the salaries of its

24 | P a g e
employees. One would say things could hardly get any worse than that. Air India
could not declare even a minuscule net profit at the time fuel prices had hit rock
bottom. All they could claim was a operating Profit of Rs. 105 Crore. Then, the
comptroller and Auditor General Dropped a bombshell.
Importantly, Air India‘s biggest liability may be its public – sector corporate culture.
In Competition with private airlines that have immensely more nimble management
and well – selected, well trained and highly motivated staff,
The Customers are unhappy, employees are not satisfied and competition is on the
rise. Company should take strategic decisions to help the organization get back on
track. The airfares are not reduced and company
Is expecting to improve the quality of services they provide without discounting
airfare, which means that marketing will play a big role in their success. Air India
should understand that it‘s a company where thousands of employees are working for
their welfare it should change the work culture. Picture should be clear where they
have to move with vision and accept the challenges to deliver the better service for
there customer. It is not like Air India cannot change its work culture once the
company changed its goal it can fulfil any required Achievement.
Ministry said that the local air traffic from January to August rose by 17% to 754.11
Lakhs from 644.68 lakh during the corresponding period of previous year.
As per the data, among the private airlines. Indigo maintained its highest market share
at 39.8% by carrying 300.12 lakh passengers till now in 2017. In the month of
August, Indigo‘s market share was 38% a marginally down from July when it was
38.7%.
Following Indigo was Jet Airways, Where its market share was at 15.9% in August as
against 15.8% in July. Then came SpiceJet, Where its market share stood at 14% in
August as against 14.2% in July.
Fourth in the list among the private players, was GoAir with market Share of
8% in August as against 7.8% in July. Government – owned Air India‘s market share
stood at 13.2% in August as Compared to 13.5% in July.

25 | P a g e
Air India’s Financials
(In Crore)
Air India seems to have become efficient all of a sudden. At least, that‘s what its
provisional numbers for 2016 -17.
The air lines‘s net loss for FY17 declined by Rs 194 crore compared to FY16, to Rs.
3,643 crore.
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
90,000.00
FY11 FY12 FY13 FY14 FY15 FY16 FY17
Air India Jet Airways Spice Jet Indigo

26 | P a g e
Market Leader in Terms of Fleet
Air India has 118 aircraft in its fleet size, Air India‘s fleet is second only to market
leader Indigo‘s offering any investor a chance to expand in the world‘s fastest
growing major aviation market.

27 | P a g e
Most Preferable Choice
When we go through the no of passenger in India Air India comes the First in the line
as this chart shows that the Most of the passengers prefer the Air India for there
oversees flights and also helps sidesteps local requirements for a carrier to fly
domestically before starting overseas operations.
Air India Route

28 | P a g e
Air
Air India offers the most of its flights to the Busy Routes of this country like. Delhi,
Mumbai, Bengaluru Chennai Kolkata. The Chart shows that the Company has the
largest fleet which is used to cater the passenger rush in the busiest Airports of the
country.
Air India‘s operating profit more than doubled year –on – year to Rs 300 Crore,
according to the aviation ministry. In Comparison, Jet Airways operating profit was
down 50%. It makes more sense to compare Jet Airways and Air India given the
similar revenue size and higher share of international revenue in there portfolio. For
perspective, Indigo‘s operating profit fell 31% in FY17. Whereas Spice Jet‘s rose by
mere 1%. The last fiscal year was a challenging one for the industry given the fuel
costs had increased as percentage of revenue for the listed airlines and demonetization
had also hit them adversely.
Passenger Traffic of Air India
(In Millions)
If we go through the Data we would find that in terms of Passenger Traffic, Air India
is Doing Well.
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
0
0.5
1
1.5
2
2.5
3
Traffic
Traffic

29 | P a g e
8.0. PROBLEMS & CHALLENGES
 The Maintenance Cost of Air Craft & Airport is leading the Company to Loss.
 The Interest paid to the Pending Bills of Oils.
 Company‘s Poor management is not able to handle the situation.
 Ground Staff & Pilots‘ are not Paid well therefore often they go for the strike
to fulfil their demand.
 Increasing Competition from the Foreign Air Lines in India therefore the
Market Share of the Company is slipped.
 Air India performs in-house works which other Airlines Outsourced.
 The failed merger with the Indian Airlines explained Rs.5000 Crore in 2008 –
09. This led the Company to Continue with the Loss.
 The Company is going in the Loss of approx. Rs.5,400.00 Crore.
 Foreign companies are increasing there operations in the Small Cities of India.
9.0. FINDINGS
 The profit maximization was not the prime Moto of Air India as it was a public
limited company.
 The serving passengers and finding new air routes to increase connectivity from the
distance places of the country is there aim.
 Air India has a fleet of advanced air carrier like Dreamliner in India, no other
company has a being this much large and advanced fleet.
 As earning profit is not there Moto then they are operating at the places where the
passengers are less. Like.. North East India.
 The cases of misbehaving with the passengers are zero in air India in comparison to
private companies.
 The work culture is good in comparison to other private airlines in India.
 The quality of food in Air India is good.
 ―Air India Express‖ is providing a cheaper ticket to the passengers.

30 | P a g e
 They are operating at the maximum air routes.
POSSIBLE ALTERNATIVES
In order for Air India to succeed, the company must invest significantly in marketing
to be able to predict human behaviours. ―Marketing is becoming more of a science
every day as we find more accurate ways to predict human behaviour and advances in
technology allow us to gauge and evaluate results automatically and instantaneously‖
(Levinson et al., 2008, p.11). The company must consider the risks and challenges
associated with the alternatives. When seeking the optimal solution, management
must consider the challenges that are hindering the company from becoming the
leading airline provider. The company can join an alliance, upgrade their current
CRM system, focus on their strategic marketing process, train managers to be more
effective leaders who focus on internal marketing, and utilize guerrilla marketing
strategies.
10.0. FUTURE PROSPECTS
Research has proven that customer relationship management has a direct impact on
the overall performance of the organizations. Therefore, companies must focus on
identifying efficiently and delivering effectively what the customer wants (Kotler,
1998, p. 57). By changing their internal and external marketing plans, Air India has
an opportunity to improve their capabilities in identifying and delivering what the
customer wants. The marketing plans of the companies presented in the
aforementioned benchmarking analysis will enable Air India to transform their
CRM approach into an efficient process that integrates customer requirements with
organizational needs. With a focus on customer retention and acquisition, Air India
will be in a position to create an efficient marketing plan that will adapt to changing
needs of the industry, foster positive customer relations, and develop policies and
programs that will benefit the entire organization.

31 | P a g e
11.0. REFERENCES
Mr. Shakeel Ahmad Khan( Assistant General Manager) & Mr. Vinay from Air India
Lucknow Station
Roma Das, Yes, It will be corporate culture for Air India staff, Retrieved from
https://www.newsbytesapp.com/timeline/Business/9025/50935/ai-staff-to-have-
corporate-culture
Lalit Singh, NACIL..Product of Air India and India Airlines, Retrieved from
https://www.slideshare.net/singhlalit4/nacilproduct-of-air-india-and-india-airlines
Expertise & Services Offered, Retrieved from http://www.airindia.in/expertise-
services-offered.htm
Corporate Social Responsibility Policy of Air India SATS Airport Services Pvt. Ltd.,
Retrieved from http://www.aisats.in/index.php/fronted/csr_policy
Aditya Agarwal, Siddarth Bafna, Ozlem Tanik, John Maniatis, and Alok Gupta,
Privatisation of India.
https://www.scribd.com/doc/24299179/Final-Project-Report-on-Indian-Aviation-
Industry
http://www.zeebiz.com/companies/news-local-air-traffic-rises-by-17-in-august-
indigo-tops-market-share-chart-25110
http://indpaedia.com/ind/index.php/Air_India
https://www.livemint.com/Money/jAbr3giEFLrLkVUGq0AArL/Air-India-improves-
performance-in-201617.html
http://www.twenty22.in/2017/06/air-india-privitisation-gets-cabinet-nod.html

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