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.

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Air India Air India Express Air India Cargo Air India Air Transport Services b.000 Organisation Structure: Previous National Aviation Company of India Limited a.Size. Services and Employees: Products: Airline Ground Handling Services Hotels Services Fleet size: 31 Destinations: 29 Employees: 32. 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 .

IT etc Large single entity instead of two competing carriers Limited purchase of fleet required o Response: ‡ ‡ ‡ Parliamentary Standing Committee on Transport.o Expected Result: ‡ ‡ ‡ ‡ Synergy of operations Rationalized cost of hiring. Tourism and Culture slammed the merger in report Criticism of haste and inadequate planning Increase in losses post merger .

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

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 .

AI took up internal communication challenge where the MD-Arvind Jadhav delivered emphatic and practical statements. describing the problems and the state of affairs of the company to all the stakeholders.Specific Steps and Policies Around 2000 employees have been directly downsized and around 10. 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. full of promises. The remuneration structure as well as compensation payment has been reduced and transfers take place on regular basis. AI started recruiting employees on a contract basis at cheaper rates. .000 employees have been indirectly downsized from Air India AI offered the employees with the option of going on ³Leave without Pay´ for a period from 2-5 years.

Change in Leadership .

globally advertised in order to get a truly professional and qualified person (Capt. Arvind Jadhav --. 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 .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.

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

Independent Directors²5 on a Board of 14 Shri Anand Mahindra Vice Chairman & MD.A. Emke Group . Mahindra & Mahindra Ltd. H. Ambuja Realty Development Ltd.) Dr. Shri F. Major Air Chief Marshal (Retd. Mr M. Amit Mitra Secretary General. Yusuffali Managing Director. FICC Shri Harsh Vardhan Neotia Chairman.

who has managed to get reprieve from a panel formed by the Directors. which the Board has clearly disapproved of) An obvious truth : Air India is sorely missing a true visionary leadership. hired by the Air India COO. ( Irony: A panel to investigate an appointment. like that of Y. despite reservations expressed by the independent directors Under scrutiny : Stefan Sukumar. Deveshwar . Air India's chief of training. Pawan Arora.C.Controversy Faultlines within the new management : The dismissal of the COO of subsidiary Air India Express.

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 .

‡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. the latter in joint ventures with Boeing and Airbus. maintenance repair and overhaul (MRO) will get hived off. 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. ‡Contractual staff : Air India has also started recruiting employees only on contract basis .Overcoming the Hurdles in Organizational change Organisational culture ‡Restructuring: The process of restructuring has been started at a slow pace. Hierarchy ‡Downsizing ‡Outsourcing : It was decided that ground handling.

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 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.

Internal communicators as Change Managers from all Communicator can role in key change agents strata of the organization to be µmodels¶ 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. .

people excel and learn not because they are told to but because they want to Increased clarity. 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.Peter Senge¶s Five Disciplines in AI Team Learning instead of a complex hierarchical structure. enthusiasm and commitment .

e. 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. localized AI Personal Mastery Continuous learning and implementation .Peter Senge¶s Five Disciplines in AI Mental Models Assumptions/generalizations about the senior management.

changes in consumer behavior.Peter Senge¶s Five Disciplines in AI Systems Thinking Dynamic organization:Competition. external environment factors Focus on whole rather than on parts:Too much of departmentalization .

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