Air India

Organizational Change

Aastha Chawla, Aniket Samat, Ashutosh, Deepali Sharma, Jagriti Gupta, Rahul Kishore Singh, Sawedana V. Shirsat, Tarun Saini, Ashish Kumar, Nidhi Kothari

About the Organisation: State-owned flag carrier; Currently the oldest and largest airline of the Republic of India. Operates a fleet of Airbus and Boeing aircraft serving Asia, Europe and North America. Corporate office : Air India Building at Nariman Point in South Mumbai.

Brief History: Founded by J. R. D. Tata in July 1932 as Tata Airlines, a division of Tata Sons Ltd. 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. 2001: Air India put up for sale by the then NDA government. One of the bids was by a consortium of Tata Group-Singapore Airlines. However the re-privatization plans were shelved after Singapore Airlines pulled out and the global economy slum 2007: the Government of India announced that Air India would be merged with Indian. As part of the merger process, a new company called the National Aviation Company of India Limited (NACIL) was established.

Size, Services and Employees: Products: Airline Ground Handling Services Hotels Services Fleet size: 31

Destinations: 29 Employees: 32,000

Organisation Structure: Previous National Aviation Company of India Limited a. Air India Air India Express Air India Cargo Air India Air Transport Services b. Indian Air India Regional (formerly Alliance Air)

Merger with IA

Cause

Turbulent times for airlines

Expected Synergies

Demand for new hardware by both national carriers

Competition faced by the previously monopolistic carriers

Huge Costs of operation

o Expected Result:

Synergy of operations Rationalized cost of hiring, IT etc Large single entity instead of two competing carriers Limited purchase of fleet required

o Response:

Parliamentary Standing Committee on Transport, Tourism and Culture slammed the merger in report Criticism of haste and inadequate planning Increase in losses post merger

Specific Steps
The Cabinet meeting on 1st March, 2007 : approved the proposal to merge Indian Airlines and Air India. A new company viz. National Aviation Company of India Limited (NACIL) was incorporated on 30th March, 2007 headquartered at Mumbai. The brand name of the new airline is Air India and its logo is Maharaja and would operate in both the domestic and international sectors. A 3-tier Grievances Redressal Machinery to address the employees grievances has been set up in Air India. May 2007, India's Ministry of Civil Aviation announced that Air India Limited (AI), India's national flag carrier and Indian Airlines Limited (IA), the government owned domestic airline, would merge with effect from July 15, 2007.

Downsizing

o Cause:

Huge financial loss Excessive staff 500 crew members per aircraft Industry norm: 120 per aircraft

o Response:

Parliamentary Standing Committee on Transport, Tourism and Culture slammed the merger in report Criticism of haste and inadequate planning Increase in losses post merger

Specific Steps and Policies

Around 2000 employees have been directly downsized and around 10,000 employees have been indirectly downsized from Air India AI offered the employees with the option of going on Leave without Pay for a period from 2-5 years. A joint venture company has been entered into Singapore Air Terminal Services (SATS) to induct new employees into the joint venture company on lesser emoluments and lesser service conditions. AI started recruiting employees on a contract basis at cheaper rates. The remuneration structure as well as compensation payment has been reduced and transfers take place on regular basis. AI took up internal communication challenge where the MD-Arvind Jadhav delivered emphatic and practical statements, full of promises, describing the problems and the state of affairs of the company to all the stakeholders.

Change in Leadership

Restructuring Of Management
Overhaul of the Air India management in 2009 Creation of a new post of Chief Operating Officer to assist the current MD Mr. Arvind Jadhav --- globally advertised in order to get a truly professional and qualified person (Capt. Gustav Baldauf was ultimately appointed as the COO) Five independent directors appointed on the Board of Directors----Brought in from the private sector in order to place due emphasis on efficiency and transparency

Specific Steps and policies

With approval, the Board of Directors of erstwhile Air India and Indian Airlines was dissolved. Shri V. Thulasidas and Shri Vishwapati Trivedi took over charge of CMD and Joint MD respectively of NACIL. The Aviation Minister, Praful Patel, had allayed fears and assured the employees unions of the two airlines that employment conditions, wages, seniority and career progression, would largely remain unchanged. The merger was closely followed by the recession in which airlines all over the world were showing losses. The company decided to followed a step by step approach to a change in leadership i.e. a partial sale of equity through an initial public offer to begin with to help induce professionalism in the leadership. However this has not taken place primarily due to opposition from the staff.

Independent Directors5 on a Board of 14

Shri Anand Mahindra Vice Chairman & MD, Mahindra & Mahindra Ltd. Shri F. H. Major Air Chief Marshal (Retd.) Dr. Amit Mitra Secretary General, FICC Shri Harsh Vardhan Neotia Chairman, Ambuja Realty Development Ltd. Mr M.A. Yusuffali Managing Director, Emke Group

Controversy
Faultlines within the new management :
The dismissal of the COO of subsidiary Air India Express, Pawan Arora, hired by the Air India COO, despite reservations expressed by the independent directors

Under scrutiny :
Stefan Sukumar, Air India's chief of training, who has managed to get reprieve from a panel formed by the Directors, ( Irony: A panel to investigate an appointment, which the Board has clearly disapproved of)

An obvious truth :
Air India is sorely missing a true visionary leadership, like that of Y.C. Deveshwar

Hurdles in Organizational change in Air India

Organizational culture:
Government organization rigidity Lower level work force synchronization

Brand Name
Name identity problem Business differences

Hierarchy
Downsizing Order of positions

Overcoming the Hurdles in Organizational change

Organisational culture Restructuring: The process of restructuring has been started at a slow pace. Remuneration structure : The remuneration structure as well as the compensation payment had been reduced Transfers:Airlines managers are now recruited and the managers form air India are transferred to Delhi and Pune. Brand name Combined Identity Logo: a red colored flying swan became the logo base with the Konark Chakra in orange color partially put inside it. Hierarchy Downsizing Outsourcing : It was decided that ground handling, maintenance repair and overhaul (MRO) will get hived off, the latter in joint ventures with Boeing and Airbus. Contractual staff : Air India has also started recruiting employees only on contract basis

Internal communicators as Change Managers and rally Instil a sense of belonging to the current crisis
them to overcome it together Single leader empowered to communicate and take decisive actions
Buy-in from employees as to the turnaround plan and how each one can play a role Sharing the new short term goal, the overall vision and a detailed action plan to get there

By keeping all channels of communication open Drawing employees and the leadership in conversations
Jet Airways: downsizing 2000 employees overnight

Internal communicators as Change Managers from all Communicator can role in key change agents
strata of the organization to be models of change and lionize their effort. Managing rumours
Identify respectable & believable key employees to tap this informal channel to route key messages on change.

Leaders with not just acumen but tenacity to stick through the ride.

Peter Senges Five Disciplines in AI

Team Learning instead of a complex hierarchical structure.
Senior management engaging in true dialogue Dialogue+Systems thinking=Creates a language to deal with complexity

Building shared vision

When there is a genuine vision, people excel and learn not because they are told to but because they want to Increased clarity, enthusiasm and commitment

Peter Senges Five Disciplines in AI

Mental Models
Assumptions/generalizations about the senior management, decisions taken Turn the mirror inward and unearth internal pictures of them transcend internal politics and game playing distribute business responsibly widely while retaining coordination and control i.e. localized AI

Personal Mastery
Continuous learning and implementation

Peter Senges Five Disciplines in AI

Systems Thinking
Dynamic organization:Competition, changes in consumer behavior, external environment factors Focus on whole rather than on parts:Too much of departmentalization

Thank You