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This presentation talks about Human Resource crisis happened in Air India. How HR couldn't help to find way between all situations & adverse circumstances. The consequences faced are tremendous in monitory loss.
It gives thinking in multiple direction while looking out towards a specific problem.
HR CRISIS IN
Presented by :
1) Viral Nandu (26)
2) Tripti Sawant (38)
3) Narendra Shere (40)
4) Kumod Shirkande (47)
5) Amit Thakkar (55)
Human Resource Management
We shall address the difficulties faced by the employees amidst Adverse
Human Resource conditions and financial trouble in the Air India Ltd. (here
after referred as AI).
Employee survey (Qualitative research; personal interviews) conducted by
‘Dharmadhikari Committee’ to understand their situation & its findings.
To analyze perspective of Human Resource Issues in this case.
Indian Airlines and Air India Merger Issues brought forward by
Main Recommendations put by ‘Dharmadhikari Committee’
Survey Details along with Recommendations & Conclusions
Source: Dharmadhikari Committee Report
BACKGROUND OF ORGANIZATION
Air India was founded by J. R. D. Tata in July 1932 as Tata Airlines, a division of Tata
Tata Airlines became a public limited company on 29 July 1946 under the name Air
In 2007, Air India merged with Indian Airlines to form National Aviation Company
of India Limited (NACIL).
October 26, 2010 Air India and Indian Airlines merged along with their subsidiaries
to form Air India Limited (w.e.f 27 February 2011).
Ranked 28th among the top 50 service brands, ahead of leading banks, insurance
companies, food-chains and airlines.
Air India operates across 113 destinations including 15 international ones across the
USA, Europe, Canada, the Far-East and south-east Asia and the Gulf.
According to Economic Times Brand Equity Survey’10
National air-carrier, Air India, has been ranked as the 'Most Trusted Brand' in
the aviation sector in the country by the Economic Times Brand Equity Survey
Reader’s Digest Trusted Brand Gold Award in September 2010.
This is the fifth consecutive time that the country's flag-carrier has bagged the
Unfortunately the complacent management has turned the goodwill of trust
into a rusty feeling, in addition to this existence of rampant corruption and
Truly forgetting years for the beleaguered Air India with net losses of Rs.2226cr
in fiscal 2007-08; and Rs 7189cr and Rs.5551cr for fiscal 2008-09 and 2009-10
Source: ET Brand Equity Survey’10 & Reader’s Digest
PUNCHLINE FROM PREFACE
“We hope that the report will serve as a reference point and a
convenient tool in resolving long pending issues relating to human
resources arising out of integration of manpower of the erstwhile two
(FORMER JUDGE, SUPREME COURT OF INDIA)
CHAIRMAN OF THE COMMITTEE.
January 31, 2012.
to ply on
al with 49%
Act, 1953, by
g Air India
ADVERSE FINANCIAL SITUATIONS
Air India Limited (AI), is running into huge losses, according to report. It has
accumulated losses over Rs. 7000 cr; working capital loan of Rs 16000 cr,
Annual infusion of Rs 5000 cr to keep paying the oil and airport charges and
Currently the employees are not being paid for almost 4 consecutive months
and are facing uninformed transfers as well as change of reporting structure.
The financial ill-health of Air India is attributed by a civil aviation expert to a
“systematic failure of the political and bureaucratic masters who have run the
airline like their own principalities for years now. And the merger of Air India
and erstwhile Indian Airlines in March 2007 under Praful Patel’s directives has
led to an unmitigated disaster”
Foreign Direct Investment : Up To 49% Of Foreign Equity & 100% Of NRI
investment is allowed Pertaining to the Domestic Air Transport Services
While the passenger traffic growth has been steady (averaging 14% in 2010-12),
intense competition has impacted yields and forced AI back into losses in an
inflated cost base scenario.
Presently it contributes 0.5 % of GDP and it is expected that by 2030 it will
contribute 5 % of GDP.
Source: The Financial Express & The Economic Times
DEFINING THE EMPLOYEE PROBLEMS
Employees not paid salaries. Salary is as per productivity and 6th Pay
commission is not applicable.
Issues related to structure mapping and level mapping w.r.t to rank and basic
Hierarchy issues. Reporting issues due to no non level mapping.
Consolidation of work force through out-sourcing of activities mainly at lower
level (Cleaning, Maintenance etc)
Since 1990- Young cabin crew employees are hired on contractual basis
Different HR policies for AIR INDIA and INDIAN AIRLINES post merger also
which further exaggerate the current situation.
Staff integration and training issues.
DHARMA ADHIKARI committee was made to resolve employees issues but
without having capacity to impose the recommendations
The actual merger and integration of services of the employees of two erstwhile
companies has not taken place till this date resulting in frustration and
demoralization of the employees of the merged entity.
Source: Dharmadhikari Committee Report
DOWNFALL: FINANCIAL CRISIS
AI was not prepared for competition it faced after the liberalization of India
economy in 1990. Hence AI domestic market share declined from 19.2% to
14%, primarily due to stiff competition from private Indian carriers.
Overstaffed: Highest Employee per Aircraft ratio in the world 200:1 where as
desirable is 130-170:1.
The carrier sold three Airbus A300 and one Boeing 747-300M in March 2009 for
$18.75 million to survive the financial crunch.
A culture of complete sloth in administration and faulty policies has brought Air
India to this crisis level.
Complete lack of Ownership and responsibility for results and failures & deeply
ingrained corruption in all levels.
Employee strikes further taking it out of business, and competitors taking
The airline has not posted a profit since merging with former duopoly partner
Indian Airlines in 2007 and relies on handouts from New Delhi to survive.
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.
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.
Sources: www.businessworld.in, The Wall Street Journal
DOWNFALL: HR ISSUES
Pilots and crew used unsurplus methods.(Demands)
Strikes, go slow (Wages, Salary Negotiation)
Creating unnecessary strikes & Pressurizing Management (Shell out Money)
13 Agitations by 8 Different unions.
Higher Allowances for pilots who fly overseas flights.
Pilots Refused to fly people re-employed on contract.
Reporting sick at same time.
Issues in Ground handling team of IA & AI.
Asking for fixed flying hours, free meals, free stay.
IA Pilots promoted unconditionally, AI pilots should get Turn if there is immediate
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.
FEEDBACK – SUMMARIZED SURVEY
When Pilot went for Strike in May 2011, instead of talking to them then CMD
Mr. Arvind Jadav decided to “teach the Pilots a lesson”.
AI has suffered a loss of around Rs 600 crores due to the recent 58-day-long
strike by its pilots.
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 Dream liner aircraft.
When Jet Airways pilots went on strike a few years ago, Mr. Naresh Goyal, the
airlines chairman, talked to pilots and pleaded them to work. But Jadhav has
decided that he will not even talk to the pilots. Even the Delhi High Court has
noted this fact. “It appears that the management wants to make the pilots
scapegoats for its successive failures”. It was looking for an alibi and feels that
the pilots have provided it one.
There is a severe shortage of trained commanders across Indian carriers and
this has been forcing airlines to hire expatriates - often those with less than the
best skills. If Air India sacks the striking pilots they can easily get jobs in other
airlines within three months. But the pilots want to work for Air India.
They, however, also want their dues. In Parliament, we were told that Air India
loses Rs 20 crore a day. It is surprising then the management is fighting over
what is essentially a matter of a few crores.
EXPECTED OUTCOME – OUR RECOMMENDATION
AI should increase the equity base from Rs 145 CrFocus on risk management
AI should be given a autonomy in decision making, Earlier introduction of VRS
scheme would have helped AI.
The Govt. should provide capital in the form of Convertible debts as an option
to convert equity.
The lending decision should be made by the syndicate comprising the Govt. as
the largest lender and consortium of commercial banks.
Corporate governance issue is needed to be taken into consideration.
Privatization – to make AI free from government interference. To clear $9
billion debt as well as outstanding dues both to airport developers and state oil
To tackle a bloated cost structure, a difficult task given a workforce that is
heavily unionized to do some downsizing.
To cut unprofitable routes and create a new plan that would focus on a hub-
and-spoke route model.
Require visionary leader, who could drive AI in better way.
The important aspects observed in this case are:
Leadership: AI lacks extremely.
Employee oriented HR policies emphasize interpersonal relations, takes
personal interest in the needs of employees, and accepts individual differences
Leader-Member relationship which is the degree of confidence, trust, and
respect, subordinates have in their leader.
Motivation – A very important factor.
Self-Concordance: The degree to which peoples’ reasons for pursuing goals are
consistent with their interests and core values.
Employee Involvement, Participative Management, Representative
In spite of these factors, employees are still rendering their services to AI in
anticipation for revival of the company, by way of Govt. assistance, change in
management policies, debt clearance, transformation of HR policies and
company’s perception building.