Indian Airlines & Its Human Resource Problems

And Its HR Problems

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.

 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.

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

In 1994-98 losses reached 5.9bn and in 1998-99 it reached 7.5bn

in billion 1998 - 99 1994 - 98 0

1

2

3

4

5

6

7

8

Market Share of IA v/s Pvt. Players

Shares Shares

IA 47% Pvt. Players

53%

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.

 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

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.

 Probir Sen:-

He brought pilot emoluments on par with other airlines. Creation of Alliance Air, a subsidiary airline company for reemployment Substantial wage hike for employees by 10%.

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 &

Impact of Staff Cost Hike in Fare 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.

Increase in Staff Cost Year

Staff costing Rs. Bn)

No. of employ ee

Per Employ ee costing mn)

Total Expend iture in Rs. Bn)

Effectiv e Fleet Size.

20.75

Staff cost as percen tage of total operati onal exp) 15%

22182

0.13

1994-95 3.74(31. 22683 18 %)

0.16

22.59

19%

58

1995-96 5.71(52. 22582 59%)

0.25

26

25%

55

1996-97 7.10(24. 22153 35%)

0.32

29.29

26%

40

1997-98 8.17(15. 21990 03%)

0.37

32.21

27%

40

1998-99 8.75(7.1 21922 2%)

0.39

34.31

28%

41

1993-94 2.85

54

Increase in losses due to PLI

7.1 7 6.9 6.8 Rs. In billion

6.7 6.6 6.5 6.4 1995 - 99

1999

Comparison of Various Airlines Name Of No. 0f Airlines aircraft in fleet

No. of AT Km( Employe in es Million)

Employe es per aircraft

Singapor e Airlines

84

13549

AT Km per Employe 14418.32 e 1064161 4

161

Thai 76 Airways Internatio nal

24186

6546.627 270678

318

Indian Airlines

51

21990

2113.671 398204

431

Gulf Air

30

5308

1416.235 245831

177

Kuwait Airways

22

5761

345.599

92853

261

Jet Airways

19

3722

1094.132 49756

196

 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.

Suggestions  No qualification bar for Senior

Executive's  Lack of Continuity in planning.  There was no fixed pricing strategy.  Lack of performance evaluation.  Underutilization of Manpower.

Our Team…  Nima  Nisha  Rachel  Jackline  Alifiya  Vidhi  Rajni  Asmita  Priya  Reha

Thank You