Table of contents

SR.NO TOPIC PAGE

NOS
1.1 SUMMARY 2-3
1.2 ACKNOWLEDGEMENT 4
1.2 WHY THIS TOPIC?? 9
1.3 OBJECTIVE OF THE STUDY 10
2. COMPANY PROFILE 11

2.1. HISTORY 12

2.2. BOARD OF DIRECTORS 13

2.3. MISSION 14

2.4. OBJECTIVE 15

2.5. AMALGAMATION OF AIR INDIA AND INDIAN AIRLINES 16-17

WITH NACIL

2.6. ORGANISATION STRUCTURE OF THE COMPANY 18

2.7. 19
MAHARAJA
3. REVIEW OF PERFORMANCE-HIGHLIGHTS 20
4. CSR 21
5. AVIATION SCENERIO 21-22

5.1. 23
CIVIL AVIATION SCENARIO IN INDIA
5.2. 24
DEVELOPMENTS IN THE YEAR 2008-09

6. ANALYSIS OF FINANCIAL/PHYSICAL PERFORMANCE 25

6.1A 26
REVENUE
6.1B 27
EXPENDITURE

6.3.

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6.4. EXPENDITURE 23

6.4A 24
PROFIT AND LOSS ACCOUNT
6.4B 25
BALANCE SHEET

FINANCIAL INITIATIVES
26

SALE AND LEASE BACK OF AIRCRAFT

7. HIREARCHY 27

8. DEPARTMENTS 28-29

8.1.
VARIOUS DEPARTMENTS IN AIR INDIA

8.2.
SECTIONS IN FINANCE DEPARTMENT
9. PROJECT PROFILE 30-31

RAMP ASSISTANT ON AIRPORTS

RA FORMS
9.1. 32

9.2 33-34
10. MISCELLANEOUS BILLING 35

10.1 SPECIMEN OF RECHARGE 36

10.2. SPECIMEN OF JV 37

SPECIMEN OF MISCELLANEOUS BILLING 38

VOUCHER
10.3. 39
11. RECHARGES 40
12. ERP ORACLE AT AIR INDIA 41-44

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12.1. AR AT AIR INDIA DOES… 45

12.2. IMPLEMENTATION OF ERP 46

12.3. MODULES OF ERP 47-48

12.4. WHY ERP? 49

13. FINDINGS 50-51
14. CONCLUSION 52

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 EXECUTIVE SUMMARY

Air India is India’s national Airline. Air India’s history can be traced to October 15, 1932. On
this day J.R.D. Tata, the father of Civil Aviation in India found Air India.

Air India was earlier known as Tata Airlines. Tata Airlines was converted into a Public Company
under the name of Air India in August 1946.

On March 8, 1948, Air India International Limited was formed to start Air India’s international
operations. On June 8, 1948, Air India started its international services with a weekly flight from
Mumbai to London via Cairo and Geneva with a Lockheed Constellation aircraft.

In early 1950s due to deteriorating financial condition of various airlines, the Government decided to
nationalize air transport. On August 1, 1953 two autonomous corporations were created. Indian
Airlines was formed with the merger of eight domestic airlines to operate domestic services, while
Air India International was established to operate the overseas services. The word 'International' was
dropped in 1962. With effect from March 1, 1994, the airline has been functioning as Air India
Limited and now it is known as NACIL (National Aviation Company of India Limited).

Air India is still known by the name to retain the prestigious brand name it posses. As the whole
aviation industry is running in losses Air India being the national carrier is not left out from the
problem. It is facing a very bad financial crunch and is recording crores of losses every day, but all
efforts are being made to overcome the crunch.

In this project the ERP usage in Air India in the Revenue accounts section is explained. The whole
project is a chain of operations beginning with the RA Forms and Security Services calculations
which is then used in Miscellaneous billing and finally used to form the ERP and generating reports
of the transactions.

The RA Forms form the basis of all the further operations. The Security personnel present at the
TARMAC fills in the details of the services provided by the airlines to the domestic and IATA
airlines. These forms are filled during the period from the point the flight lands till the departure. It
also includes the PHS charges.

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Air India provides services according to the agreement being entered into with other airlines. Certain
airlines are exempted from some charges due to the agreement. An RA Form and a Security Form is
given in the annexure which clearly mentions the details.

Next comes the Miscellaneous Billing where the charges are made according to the RA Forms.
Recharges form a part of MSBILLING. It enables in calculation on the basis of the rate on the day of
providing the service. Invoice numbers are given to each bill being passed. The numbers are used in
making modifications and finding out the respective invoices. It is a more simple form of passing the
bills.

MSBILLING also enables passing JVs (Journal Voucher) consisting the calculation of
Comprehensive charges, tax, education cess etc. the rates applied for the services are already decided
in advance and a rate chart is provided.

Finally comes the ERP. ERP was started in Air India before 2 years. All the staff was given training
for it and hence was implemented widely in all the sections. It is a more consolidated form of the
transactions. ERP numbers are given to every transaction and each number consists of a large
number of MS BILLS.

ERP is an internet and intranet based solution, helping the users to access and work on the system
wherever they are. The user configurable reports help the users to take appropriate decisions on time.
An employee from the Cochin station can access the ERP on any of the station worldwide. This
saves a lot of time and helps proper decision making. It consolidates all the processes into one
database.

ERP in the revenue accounts section mainly deals with the calculation of Sundry Debtors and
deciding on the revenue to be generated.

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 Introduction

Air India consists of various departments and sections dealing in finance like the Cash
management, Capital Budgeting, Store accounts, Pay accounts, Insurance, Local billing ,Revenue
accounts comprising of MSBILLING and ERP, etc. but this topic was choosen as a topic of study.

ERP is a new concept in Finance though it is uncommon in Operations Management. This bought in
the curiosity to know how it is used in Finance and hence the selection of this topic. Air India
implemented ERP lately and hence helped the airlines in a better recording of their transactions in a
consolidated manner.

Though it was difficult to learn everything associated with ERP we still tried learning whatever we
could and have also been exposed to the corporate work culture of Air India.

1.3 OBJECTIVE OF THE STUDY

To know the finer nuances of Revenue accounts

To know the procedures carried out in the Finance department

To study the work culture of a corporate entity

To learn what are the functions carried out in an airlines apart from the airport functions

Need for implementing ERP

What is the difference between MSBILLING and ERP

To find if ERP has helped in adding on the revenue and simplifying the procedures in the
section

The next step after ERP

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 COMPANY PROFILE
HISTORY

Air India is India's national flag carrier. October 15, 1932 was the day that J.R.D. Tata,the
father of Civil Aviation in India found Air India.Air India is the national flag carrier airline of India,
flying a worldwide network of passenger and cargo services. Air India is state-owned, and
administered as part of the National Aviation Company of India Limited - which was created in 2007
to facilitate Air India's merger with Indian Airlines . The main bases of operation of the airline are
Mumbai's Chhatrapati Shivaji International Airport and Delhi's Indira Gandhi International Airport.

Air India is the 16th largest airline in Asia, serving 28 destinations worldwide, and, with its
affiliated carriers, serves over 100 cities. Air India has code share agreements with twelve other
international airlines. In 2010, Air India is expected to join Star Alliance, the world's largest airline
alliance.

2.2 BOARD OF DIRECTORS

Shri Praful Patel

Minster of Civil Aviation

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 Shri Arvind Jadhav
Chairman and Managing Director, NACIL.

Shri Prashant Narain Sukul

Joint Secretary, Ministry of Civil Aviation

Shri E.K.Bharat Bhushan

Joint Secretary & Financial Advisor, Ministry of Civil Aviation

Shri Amod Sharma

SBU Head-Related Business

Smt. Anita Khurana

SBU Head-Cargo

Shri Vipin K. Sharma

SBU Head-MRO (Engg & Comp)

MANAGEMENT

DIRECTORS
NAME DESIGNATION

Mr. Amod Sharma Director – Related Business

Ms. Anita Khurana SBU Head – Cargo
Mr. V. K. Sharma SBU Head – MRO (Engg. & Comp.)
Mrs. Urmila Subbarao Chief Vigilance Officer

2.3 MISSION

To inspire people to make India win and take pride in India and NACIL.

To generate a net inflow of foreign exchange and seek its progressive enlargement through a
larger share of the international market.

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 To create and maintain consumers and customers of international transportation by providing
competitive superior package of services and generate a sustainable surplus by keeping the
assets in a new and contemporary state and deploy the net surplus for growth and for
justifiable reward to the stakeholder

To generate a net inflow of foreign exchange and seek its progressive enlargement through a
larger share of the international market.

To contribute through competitive success of Air-India to the national preparedness for the
inevitable progressive globalization of the economy by generating confidence in the Indian
business genius.

To enhance its competitive market standing and image as an international carrier.

To achieve the highest level of safety of operations.

2.4 OBJECTIVE
To provide safe, efficient, adequate, economical and properly co-ordinate international air-
services, and to develop such services to the best advantage.

To provide high standards of services to passengers and customers on ground and in the air.

To achieve, maintain and improve its rightful place in the international air transport industry.

To make an increasing contribution to the national economy and maximize revenues with
efficient fleet utilization and route network.

To promote international tourism to India and to improve the nation’s foreign exchange
resources.

To assist in the promotion of nation’s export trade.

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 To improve the national economy by encouraging local skills and technology to get
equipment and materials other than aircraft, indigenously manufactured with the intention to
curtail imports steadily.

To promote healthy relations with the various employee’s unions for ensuring employee’s co-
operation in the performance of the company’s activities.

To provide wider participation amongst its employees in management functions.

AMALGAMATION OF AIR INDIA AND INDIAN AIRLINES

WITH NACIL

The need for amalgamation of Air India limited (AI) and Indian Airlines Limited (IA) was
necessitated due to the fact that both AI and IA, which were operating in a largely protected
environment, were faced with fierce competition from domestic private and global airline
companies. Market share had declined substantially for both airlines. Significant increase in
competitive activity had eroded historical advantage of both carriers as leading international
carriers had increased coverage and frequency to major cities in India and domestic carriers also
significantly ramped up operations.

The declining market, operating and financial performance posed a serious threat to future
survival of the two airlines on a stand-alone basis. It was felt that in an increasingly consolidating
global aviation environment, where ' critical mass/ size' is a key success factor, combining the
two state owned airlines into a single merged entity would better equip them to survive and
prosper amidst fierce global and domestic competition as it would provide an opportunity to
leverage combined assets and capital better and build a stronger sustainable business. It was also
felt that the amalgamation would:

10
 Enable optimal utilization of existing resources through improvement in load factors and
yields on commonly serviced routes as well as deploy 'freed up' aircraft capacity on alternate
routes.

Provide an opportunity to leverage skilled and experienced manpower available with both the
companies to the optimal potential.

Provide an integrated international/domestic footprint which would significantly enhance

customer proposition and allow easy entry into one of the three global airlines alliances.

Provide an opportunity to fully leverage strong assets, capabilities and infrastructure.

Potential to launch high growth and profitability businesses (Ground Handling Services,
Maintenance Repair and Overhaul etc.)

Post merger, brand name "Air India" has been retained with “Maharaja" as its mascot. It has
also been decided to continue with the two alpha numeric codes viz. 098/AI and 058/IC in the
merged company viz. NACIL till the integration of IT platforms of erstwhile Air India and Indian
Airlines completed and to its effect two separate Tripartite Agreements were signed with IATA
to establish the transfer of the existing airlines codes viz. 098/058 to NACIL.

The merged entity along with its subsidiary companies, with a fleet size of more than 140
aircraft would enter the list of top 30 airlines globally in terms of fleet size and would rank
amongst the top 10 in Asia.Alongwith the size, the merger is expected to create considerable
synergy, since the domestic and international operations could feed traffic into each other.
Besides, it could result in redeployment of aircraft since Air India and Indian Airlines were flying
on some common routes in the Gulf and South East Asia.

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 ORGANISATION STRUCTURE OF THE COMPANY

The Organization Structure of the Company consisted of the Corporate set up and 6 Strategic
Business units in the following areas:-

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 THE MAHARAJAH
The Maharajah began merely as a rich Indian potentate, symbolizing graciousness and high
living. And somewhere along the line his creators gave him a distinctive personality. His outsized
moustache, the striped turban and his aquiline nose.

It was a design for an inflight memo pad grew to take Air India's sales and promotional
messages to millions of travelers across the world. Today, this naughty diminutive Maharajah of Air
India has become a world figure. He can be a lover boy in Paris, a sumo wrestler in Tokyo, a
pavement artist, a Red Indian, a monk... he can effortlessly flirt with the beauties of the world.

He has completed 56 years and become the most recognizable mascot the world over. His antics,
his expressions, his puns have allowed Air India to promote its services with a unique panache and
an unmatched sense of subtle humour. In fact he has won numerous national and international awards
for Air India for humour and originality in publicity. 

And as with all great men, he too has had his critics. But the millions of travellers whose lives
he has touched far outnumber them. In fact, to them, the Maharajah with his inimitable style, charm
and wit is a very real person. He's almost like a friend to every Air India traveler. A friend who
reaches out with warmth and hospitality, even to the farthest corners of the world.

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 REVIEW OF PERFORMANCE-HIGHLIGHTS

The Company suffered a net loss of Rs. 22,262 million vis-a-vis a projected loss of Rs.
21,440 million in 2007-08. Total revenue achieved by the company was rs. 152,575 million and
Total Expenditure Rs. 185,555 million. After adjusting for Deferred Tax Asset of Rs. 10, 845
million the net loss registered was Rs. 22,262 million. This being the first year of accounts, there
were no previous years’ figures represented. However, comparison was based on projected
figures of 2007-08. The Loss was mainly due to the following factors:

Decline in passenger load factor

Decline in projected yield
Increase in financing cost due to aircraft acquisition and working capital
Increase in Depreciation expenditure and aircraft maintenance costs
Increase in Wage bill and other Staff Cost
Increase in Aviation Turbine Fuel Cost

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 CORPORATE SOCIAL RESPONSIBILITY
Environment protection

Environment is a global concern and the aviation industry blamed for guzzling up fossil
fuels, is trying to do its bit for Mother Nature. The company is already in this league with its various
efforts. Last year, it not only received the “Montreal Protocol Public Awareness Award” presented
by UNEP (United Nations Environmental Programme) in recognition of its efforts in protecting the
ozone layer, but also bagged the “Golden Peacock Award” for corporate innovation for protection of
the environment.
At its corporate office in Mumbai, various steps are being taken to save energy and conserve water.
The building is being converted into a Green Building with the help of Ministry of Environment and
Forests and The Energy and Resources Institute (TERI).
Air India also placed orders for GEnx engines for its fleet of B787 aircraft which are expected to be
20 to 25% more fuel efficient than existing engines.

On the occasion of World AIDS Day on 1st December 2007,Air India lend a helping hand in
generating awareness regarding AIDS by painting one of its Airbus A320 Aircraft in red-the colour
of HIV-AIDS campaign-with Act 07 and the pneumonic ribbon of AIDS symbol on the fuselage. The
aircraft was used as a backdrop in the aids awareness programme organized by M/s Heroes project, a
Non-Government Organization (NGO).

Encouragement/Assistance to small scale industrial units

In Accordance with the Government guidelines issued from time to time, the company
continued to support the SSI units/Social Welfare/Charitable Organizations and procurement from
SSI units during the year amounted to approximately Rs.360 million and the selective sourcing
/procurement from other social / charitable organizations amounted to Rs.6.3million.

15
 AVIATION SCENERIO
CIVIL AVIATION SCENARIO IN INDIA

Based on the carriage data available from the Airport Authority of India, scheduled
international passenger carriage during year 2007-08 recorded a growth of 15.7% versus the carriage
of 2006-07. Similarly, domestic passenger carriage recorded a growth of 23.3% versus the
corresponding period of previous year.

India’s airports handle close to 120 million domestic and international passengers for the
period ending March 2008, representing a 21% increase over the previous year.
Centre for Asia Pacific Aviation (CAPA) has stated that India’s civil aviation passenger growth at
20% is among the highest in the world. The sector is slated to cruise far ahead of Asian giants like
China or even strong economies like France and Australia. The no of passengers who will be
airborne by 2020 in a whopping 400 million.
Moreover, India has a share of 12% of the worldwide business jets market as the demand for private
or business jets in India is expected to grow at 50% on the annual basis over the next few years.

IATA, in its estimates reckons India to be a driving force behind the world’s civil aviation
business that is globally expected to grow from US$5.1 billion to US$ 5.6 billion this year.

Domestic air traffic is likely to increase by more than double and touch 86.1 million
passengers by 2010, up from 32.2 million passengers in 2007.
India liberalization of the aviation sector has opened up 28 airports for foreign direct investment in
areas of operation and maintenance of airports. International no-frills budget carriers, especially
Asian low cost carriers are also make a beeline for India. The two new Green field state-of-art
airports of Hyderabad and Bangalore were opened for traffic on 22 nd March 2008 and 23rd May 2008,
respectively.

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 Currently, India has 80 fully functional airports handling schedule, commercial, charter,
defense services and 368 landing strips. The government has envisioned an investment of close to
US$ 9 billion with a private sector contributing about US$ 5.92 billion and AAI to pitch in with US$
2.96 billion in a bid to develop about 100 green field airports during the period of 2007-2012.

Strategic alliances have been one of the most visible responses of airlines to the intense
competition of recent years. The main objective of the alliances is to create competitive advantage
for the partners by enabling them to complement each other’s services and achieve substantial
economies of scale, particularly in marketing and maintenance costs and largely retailing and
corporate independence. Such alliances enabled airlines to break regional barriers and explore vast
and hitherto untapped business opportunities.

Jet Airways and Air Sahara has set prelude for alliance and mergers with Jet Airways buying
out Air Sahara for Rs.14500 million in April 2007 and Kingfisher by acquiring 26% stake in Deccan
Aviation and additional 20% stake via open offer. Recently, Jet Airways and Kingfisher also entered
into a commercial operation agreement in various fields to prevent duplication of infrastructure and
reduce cost platform.

Also, the Government of India approved the amalgamation of Air India Ltd. And Indian
Airlines Ltd. with National Aviation Company of India Ltd. in August 2007 with an appointed date
of 1st April 2007. The potential synergies are expected to enhance the new combined airlines
profitability.

17
 CURRENT AVIATION SENARIO

MARKET
SHARE IN
JUNE,'09

ON TIME PERFORMANCE IN JUNE’09

18
DOMESTIC FLYERS

Jan-June,’09 211 lakh

Jan-June,’08 228 lakh

Fall 8%

LOAD FACTORS IN JUNE,’09

19
 DEVELOPMENTS IN THE YEAR 2018-2019

The global crisis resulting from high oil prices and declining traffic in hitting India hard.
Growth has slowed from 33% in 2007 to 7.5% for the first six months of the year. And the last few
months have been negative. Indian carriers could post US$1.5 billion in losses in 2008, the largest
outside the US.” Urgent action is needed to help Indian carriers whether the perfect storm of high
cost and falling demand,” said IATA in a Press Release. Three priority areas have been identified
viz., reducing costs, improving infrastructure and adopting global standards.

India was characterized by IATA as among the most expensive places on the planet to buy
Aviation Turbine Fuel (ATF).In August 2018, it was 58% more expensive to buy fuel in Mumbai
(for domestic flights) than in Singapore (for International).Excise duties, throughput fees charged by
airport operators and state taxes of up to 30% for domestic flights result in a cost structure that
cannot support a competitive industry. Removing excise tax, implementing a standard 4 % state sales
tax for domestic fuel and greater transparency in overall pricing were urgently needed to restore
profitability to the Indian Carriers.IATA also deplored India’s Service Tax on premium class
tickets , over flying, landing and airport charges.

INFRASTRUCTURE

Infrastructure investments are urgently needed. While Delhi was moving towards the
capability of handling 100 million passengers, the situation at Mumbai remained critical. With the
privatization of airports at Mumbai and Delhi the infrastructure at both these airports are expected to
improve in the coming years with the expansion plans of the Mumbai International Airport Ltd.
(MIAL) and Delhi International Airport Ltd. (DIAL) taking shape.

IATA has observed that India has been asked to take a leadership role in shaping Aviation
policies, including environmental and commercial freedoms. It is said that in a few years, Asia
Pacific will be the largest single aviation market. India will be key driver of that growth. India’s

20
enormous size makes it an important market. It also gives it a responsibility to take a leadership role
on policy issues. India would become a strong voice for a global solution on the environment, as
envisioned by Kyoto.

The Airport Economic Regulatory Authority (AERA) bill has been passed in the Parliament
which would ensure that India’s aviation infrastructure meets cost efficiency and service level targets
with charging polices in line with ICAO principles. Among other things IATA has called for a
review on service tax on premium class tickets, air navigational charges and landing and parking
charges.

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 ANALYSIS OF FINANCIAL/PHYSICAL PERFORMANCE
Since this was the first year of the company’s performance, comparison has been made to the
revised estimates for 2007-08 & not the previous year’s figures.
A REVENUE
Total revenue declined from the projected Rs.154840 million to Rs.152570 million
(reduction of Rs.2270 million.)
Operating revenue for the year was Rs.136380 million against projected revenue of
Rs.141080 million (Reduction of Rs 4700 million)
The reduction in the revenue was on account of-
o Decline in passenger seat factor from 66.8% to 63.8%.
o Decline in cargo & freight revenue by RS.1480 million due to fall in freighter
revenue.
Other revenue for the year increased by Rs.2430 million due to various factors like exchange
gain, write back of certain liabilities etc.

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 B EXPENDITURE
The total expenditure incurred was Rs.185550 million as compared to a projected figure of
Rs.182660 million (An increase of Rs.2890 million)
Operating expenses went up by Rs.2870 million mainly due to the following
o Aircraft maintenance expenditure increased by Rs.1990 million
o Bad debts written of Rs.1120 million (Including write off Rs.1070 million
towards due from Airline Allied Services Ltd.
Absorption of pilot training Expenses of Rs.750 million

The Deferred tax Asset of Rs.10845 million has been created in 2007-08 as compared to the p
projected figure of Rs. 6380 million. An amount of Rs.78942.9 million representing the excess of the
fair value of the assets transferred by the transferor companies (erstwhile air India & Indian Airlines)
has been transferred to capital reserves in accordance with Accounting Standard 14 issued by ICAI.

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 FINANCIAL INITITATIVES

AIRCRAFT FINANCING

The company’s USD 7.2 billion loans for one of the largest fleet acquisition of 68 aircrafts
was cleared by Export-Import bank (Ex-Im bank) of USA on 9 th October 2006. The US Ex-Im issued
a final commitment of 17 aircrafts and a preliminary commitment for 751 aircraft schedule to be
delivered between November 2006 and December 2011. The bank would guarantee loan upto 85% of
the fleet acquisition costing USD 7.2 billion and the balance 15% was to be funded from commercial
borrowings. The financing is the largest transaction done out of India supported by US Ex-Im bank.

An agreement was signed with US Ex-Im on 19 th September 2008 for the guaranteed
financing of the 3 B777 aircraft and 5 B737 -300 aircraft for an approximate value of US$ 550
billion. The Ex-Im portion of 85% of the bank loan will be funded by M/s Standard Chartered bank
and the remaining 15% by M/s IDBI bank. Meanwhile to support the deliveries which have been
already taken place, M/s Standard Chartered bank has given a bridge loan equivalent to this facility
which is operational upto 31st January 2009. The bridge loan will be financed out of the delivery
financing shortly. Meanwhile, US Ex-Im has also renewed its Preliminary commitment for the
remaining 43 aircraft including 27 B787 dream liner aircraft which are expected to join the fleet from
early 2010 onwards. Due to the liquidity crisis and the virtual collapse of the US banking system in
September 2008, M/s Standard Chartered bank revised the original terms of offer from sub LIBOR
with a review clause after one year to revert to the original pricing subject to market stabilization. A
similar agreement for financing 22 airbus fleet was entered into with M/s Kfw bank. For the 3 rd
tranche of aircraft deliveries numbering 21 to commence from April 2009, the company is already in
the process of typing of financing with a consortium of Indian banks led by IDBI to the extent of
USD 1.1 million equivalents to Rs. 5500 crores.

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. SALE AND LEASE BACK OF AIRCRAFT

The company has entered into aircraft sale agreement with Investec Bank (UK) Ltd. for sale
5320-200 and 3 B747-400 aircraft on 31 st March 2008 under a Sale and Lease back arrangement as
that date, the beneficial ownership in the sale property was transferred to Investec bank(UK) Ltd.
after receipt of an initial amount of USD 100 million.

The transfer of the legal title in the sale property was conditional upon Investec bank
remitting the balance portion of the sale proceeds and the execution of an operating lease agreement
by both parties in respect of each aircraft whereby NACIL would lease back the aircraft from the
buyer.

In the view of the severe liquidity crunch in the market and the global financial crisis,
Investec bank was in the position to complete the transaction only in the case of 3 B747-400 aircraft
and 1 A320-200 aircraft.

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HIREARCHY CHART

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 DEPARTMENTS

VARIOUS DEPARTMENTS IN AIR INDIA

AIR SAFETY

COMMERCIAL

DEPARTMENT OF INFORMATION TECHNOLOGY

ENGINEERING

FINANCE

GROUND SERVICES

HEADQUARTERS

HUMAN RESOURCES DEVELOPMENT

INFLIGHT SERVICES

INTERNAL AUDIT

MATERIALS MANAGEMENT

MEDICAL SERVICES

OPERATIONS

PUBLIC RELATIONS

PLANNING AND INTERNATIONAL RELATIONS

PROPERTIES AND FACILITIES

SECURITY

VIGILANCE

27
 SECTIONS IN FINANCE DEPARTMENT

SER SECTION
MIS AND STATISTICS
FINANCIAL ACCOUNTS
BILLING SECTION
STORES AND ACCOUNTS
INSURANCE
ADMINISTRATION
CAPITAL BUDGET AND (PROJECTS) MANAGEMENT
PAX (PASSENGERS) SCREENING SECTION
AIR INDIA EXPRESS
BANKING
INCOME TAX
CARGO AND MAIL
IATA (INTERNATIONAL AIR TRANSPORT ASSOCIATION) CLEARING
SECTION
STAFF CLAIM SECTION
LOANS AND PROVIDENT FUND SECTION
MISCELLANEOUS BILLS PASSING SECTION

28
 FINANCIAL ACCOUNTS
Financial Accounts section consolidates all entries to prepare trial balance; the necessary
details are used to prepare the balance sheet. The balance sheet is then submitted to the
parliament by 31st October of each year. And then the government displays it to the general
public.

INSURANCE
Insurance Section handles the overall insurance of various office equipments, computers,
employees, etc.It is a time bound activity.
There are two types of insurance, first being unit insurance i.e. the insurance which expires
within one year & the second which continues after one year.

PAX (PASSENGERS) SCREENING SECTION

Pax (passengers) screening section sells tickets through agents and Ground Service Agents
Sales. They get all the report of sales i.e. the revenue which Air India gets by selling the
passenger tickets.

AIR INDIA EXPRESS

Air-India Express is a low-cost airline subsidiary of Air India based in Mumbai, India. It
operates services mainly to the Middle East. Its main base is Cochin International Airport,
with a hub at Trivandrum International Airport. The airline is now part of the National
Aviation Company of India Limited, which was formed in order to facilitate the seamless
merger of Air India and Indian Airlines

CARGO AND MAIL

 Warehousing
 Acceptance, build-up and storage of goods
 Inventory control
 Handling of transit freight
 HUB concept (for full freighter airlines)
 Security services
 Express services

29
 Acceptance and processing of import, export, transit and transfer documentation
 Handling of dangerous goods, live animals, perishables and other special freight.
 Courier services
 Transport to and from aircraft.

IATA (INTERNATIONAL AIR TRANSPORT ASSOCIATION) CLEARING

SECTION

 The IATA Clearing Section of Air India enables the airlines to settle their interline billings
securely, efficiently and On-time.
 By offsetting their mutual transactions through the IATA Clearing House, participating companies
can reduce hundreds of bi-lateral, multi-currency transactions for passenger, cargo, baggage,
catering, ground-handling and other services to one single payable or receivable amount. 
 IATA transactions are closed weekly.

PAY ACCOUNTS AND STAFF CLAIM SECTION

Pay Accounts and staff claim section handles the employee’s salary, allowances (lunch,
medical, etc.) and claims like mediclaim, leave encashment, etc.

30
 PROJECT PROFILE

RAMP ASSISTANT ON AIRPORTS

Cargo flights crew ramp service

Provide fast and safe CIQ clearance by special assigned person with full
knowledge of regulations avoiding any disturbance.

Professional ramp transportation between terminal and the aircraft.

Provide transportation between hotel and airport as requested.

Passenger flights ramp assistant

Ramp supervision and coordination (liaise with all parties involved, supervise
loading, dispatch service, arrange fueling, arrange catering, etc...)

Filing of station copies of post-flight documents

Arrange services in case of diversion

Filing of station copies of flight documents

Effect payment, on behalf of the Carrier

Monthly OTP report

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 RA FORMS (RAMP ASSISTANCE FORMS)

RA forms are the forms which are to be filled according to the services provided by Air India to
the local and IATA Airlines. The services are provided on the basis of the agreements made between
the airlines. The agreement has a standard format. There are two versions of the SGHA (Standard
Ground Handling Agreement).i.e.

1. 2004

2. 2007

The services provided are clearly mentioned on the RA forms the format of which is provided in
annexure 1.

Some of them include providing:

Buses

Packstanders

X-raying

Baggage strapping etc. It also comes under the security services provided by the airlines the
format of which is given in annexure 2.

Services provided by the airlines is divided into 3 types:

Comprehensive Service Charges

Peak Hour Charges

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 DCS with PBPT

It also gives information regarding the type of flight i.e. whether it is a Transit flight or a Turnaround
flight. RA forms also gives details of the timings of the aircraft being halted at the TARMAC i.e. the
place of landing an aircraft. On the basis of which the PHS (Peak Hour Service Charges) is charged.
Any aircraft landing after 12:00 at midnight till morning 4:00 (00:01 to 00:04) is charged with PHS.

The PHS charges for security, extra equipment and handling are 15% extra over the normal
charges. Suppose a flight stays on the TARMAC for more than 4 hrs then the calculation is TR+4
and if the flight departs before 4 hrs then the calculation is made as TR-4.

The charges are calculated on the RA forms in $ (dollars) for IATA airlines and in Rs.
(Rupees) for local airlines. The calculation is as follows:

OLD RATES NEW RATES CRITERIA

12% 10% Service tax on whole amount
2% 2% On service tax
1% 1% Calculated on service
tax(Higher Education Cess)

RATE CHART

The RA forms are the basis of the calculation in the Miscellaneous Billing which is then
consolidated to form the ERP.

33
 MISCELLANEOUS BILLING

The Miscellaneous Billing of Air India manages the detailed information associated with
recording, tracking, calculating, and printing miscellaneous bills.  It allows for great flexibility in
managing billing information.  Seamless integration with the Financial Management, Bank
Reconciliation, Collections, and Budget Preparation Modules ensures data consistency. User-defined
tables, expressions, and formulas process supplements, bills or charges

Features:

Powerful on-line editor updates billing data on-line

Print detail and summary reports on demand
User-defined codes and classifications simplify your data management
Automatically compute bill amounts, late payment penalties, and simple interest due
Access information via billing ID, customer name, customer location, or other user-defined
criteria
Track unlimited number of information years for review and analysis
Create and maintain detailed records for each transaction including:

Late Payment Notifications Creates one-time or recurring invoices that can be posted as
unpaid items to the Accounts Receivable system for item and payment processing. 
 
Provides miscellaneous invoices containing an invoice number, invoice date, billing
code, unlimited free form text, due date, customer purchase order, discount date, and line item detail.
An invoice register is printed for verification prior to invoice printing.

34
 
Maintains monthly, quarterly, or annual perpetual or fixed amount contracts for recurring
charges. These recurring charges are posted to the Accounts Receivable system for payment
processing.
 
Provides for one-time invoices to be posted to a customer account for charges such as
services billing and sales of parts or fixed assets.

  SPECIMEN OF RECHARGE

35
SPECIMEN OF RECHARGE INVOICE

36
SPECIMEN OF JV
37
SPECIMEN OF MISCELLANEOUS BILLING VOUCHER

38
RECHARGES

39
Recharges are the charges been made by one airline to the other for changes or doubt on the charges
made on them.
ILLUSTRATION
Suppose Air India has charged $100 for the services being provided to Emirates. If according
to Emirates calculation of charges the amount sums upto only $50 then they would accept the $50
charged by Air India and will recharge the remaining $50 which they reject. This process continues
till either of the airlines accept the charge. In case Air India made a mistake in calculation they accept
the recharge and if not they reject it.

NARRATION
FULL REJECTION
Fully rejection to your recharge Invoice No:_____ of January 2007 clearance of our invoice no:____
dated March 2006.
PART REJECTION
Part rejection to your recharge Invoice No:_____ of January 2007 clearance of our invoice no:____
dated March 2006.
ON THE BASIS OF AGREEMENT
Fully rejection to your recharge Invoice No:_____ of January 2007 clearance of our invoice no:____
dated March 2006.The calculations are done on the basis of agreement. Please refer to the attached
letter.
LEVY
Fully rejection to your recharge Invoice No:_____ of January 2007 clearance of our invoice no:____
dated March 2006.CIAL levy mandatory.
The Recharge document is given in Annexure 3

ERP ORACLE AT AIR INDIA

40
 Air India Limited began operations in 1933 with two planes, one pilot, and a handful of
engineering staff. Its ‘office’ was a palm-thatched shed. Today, Air India has a fleet of 45 aircraft,
including Air India Express, a low-cost airline, and flies to around 44 destinations worldwide.
Headquartered in Mumbai, the airline made a net profit of US$2 million (Rs.97 million) and
increased revenue by 15% in the 2005 financial year.
In January 2006, Air India implemented a range of Oracle E-Business Suite applications as
the basis of an integrated enterprise resource planning system. To ensure its business and technical
staff could maintain and use the system, the company sent 40 employees to Oracle University.
The interactive training helped staff understand how an electronic business management
system worked and gave them the knowledge and confidence to use the applications from the go-live
date. The positive experience of staff promoted a cultural shift inthe organization and encouraged
management to consider extending the technology to other areas of its business.

A NEW WAY OF WORKING

Although Air India had used IT packages in the past, this was the first time the organization
had implemented a commercial off-the-shelf enterprise resource planning solution. Although the
concept of multiple users interacting on the same platform was not new to Air India, usage of a true
ERP solution was new to the organization. In the past, the company had relied on manual, paper-
based processes to manage its inventory, purchasing, and budgetary control and monitoring.
The airline sent around 40 people to Oracle University for training on Oracle Inventory and
Oracle Purchasing, followed by training on Oracle Financials. Technical staff received Level 1 and
Level 2 system administration training and attended patch installation courses.
The courses took place at Oracle’s premises in Mumbai and occasionally at Air India’s
offices. The face-to-face classroom training included instruction on how to use the Oracle
applications and basic exercises. Oracle trainers were on hand to help users when they ran into
difficulties or had queries. Training notes were also provided. Courses ran from three to five days,
depending on the subject.
Staff was happy with the quality and level of the training and instructors. The airline did not
expect them to master the application after one week of training; the aim was to give them some
reassurance on the system so they had the basic navigational routes and make it possible for them to
explore other options.

41
 Training familiarized staff with the application and gave them the
skills and confidence to use the system by themselves. Without the Oracle University training, the
airline believed it would not have been able to implement and use the Oracle solution effectively.
Air India had engaged an external company to implement the solution and found that training
improved communications. After the training, staff could talk the same ‘language’ as the
implementation partner. Risk was minimized because both organizations understood what the other
was trying to achieve.

REDUCED TRAINING COSTS

Air India used the first group of trainees to tutor their colleagues on the Oracle system,
reducing overall training costs. The staff didn’t just train them on the actual use of the application but
also showed them how the integrated Oracle ERP solution works. They provided background
information on the system that may not be immediately visible to the end user, satisfying users’
curiosity as to why certain processes happened in a particular way.

42
43
 Accounts Receivable Of Air India Does...

Calculates penalty and late charges and even prints delinquency notices, form letters and
mailing labels.

Facilitates collection of outstanding revenue with account aging inquiry, payment processing,
custom letter requests, and payment arrangement set-up. 

Allows you to quickly view account balances and detail history with detailed on-line inquiry. 

Prints account summaries, trial balance, and detail trial balance information on demand. 

Maintains customer information including customer name and address, mailing address,
multiple ships to codes, credit limit, and account balance and detail invoice history and
payment transactions.

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45
 IMPLEMENTATION OF ERP

Air India SATS has successfully implemented an integrated ERP (Enterprise Resource Planning)
system.
ERP covers all the processes related to the ground and cargo handling companies, ranging
from their recruitment to retirement, flight opening and closing to final billing, complete financial
accounting, equipment maintenance and asset accounting, procurement and inventory, bio-metric
attendance and duty planning and allocations.

Process covered by ERP:

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 MODULES COVERED BY ERP:
Procurement
Inventory
Human Resource

Payroll Duty Roster Bio-metric

Attendance
Quality Control
Financial Accounting

General Ledger Accounts Payable Accounts Receivable Asset Register

Maintenance and Repair

Preventive Break-down

Operations

Flight opening Flight closing Additional Services

Contracts
Automated Billing

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 ERP is a frame-work based solution, any-time-ready for the business rule changes in terms of
contractual obligations or service level agreement (SLA) based changes in the processes. These
changes can be configured in ERP and accurate invoicing is possible with its flexible design.

ERP is an internet and intranet based solution, helping the users to access and work on the system
wherever they are. The user configurable reports help the users to take appropriate decisions on time.

Overall, ERP integrates all the departments of Air India SATS into one database, collaborating
the required information; make the information available to all the stake holders including their
partners, customers and vendors.

As shown above in the Oracle e-business suite transactions, Receipt, Collection and Customers
are the 4 major dimensions on which ERP works.Accounts Receivable, Accounts Payable and GL
Journal Voucher are the 3 main things which are worked on in the Revenue section of Air India. It
enables the calculation of Sundry Debtors. The sum of all the Sundry Debtors is taken and
accordingly Invoices are raised. Invoices are raised for local parties’ i.e. domestic airlines.It also
enables the creation of new customers, recording time of pay, customer details, customer no. etc.

The transactions are done on the account no of finance department-703

The transactions are given codes as 703NCH001 0000 0000 0000 where the codes can be extended
according to additional specifications. The coding remains the same for Government and Private
Airlines.

The ERP accounts are also known as 7 segment accounts.

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 Why ERP?
The catch word of ERP implementation is speed.
The faster it is implemented the quicker and better are the advantages and delivery in terms
of results.
The returns are sought at a shorter period. This deviation from the conventional practice has
become the order of the day as far as many companies are concerned.
Updating the system from time to time will help in gaining the finer nuances of technology.

ISSUES TO BE CONSIDERD WHILE ERP IMPLEMENTAION

Popular information systems

Likelihood of fluctuations in the choice of technology

The ability of market players to stay in tune with it

The ways and means to implement a business applications like ERP

To benefit from the same so as to gain a competitive edge

Their usage and services

The necessity for innovating software applications

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 FINDINGS

ADVANTAGES OF ERP

Bringing down the costs and saving the valuable time which would have otherwise been
wasted in procedural maneuvers and unwanted delays.
Consolidates all the data in one database
Can access from any station in the world
Disposing queries immediately and facilitating the payments from customers with ease.
It is the perfect commercial and scientific epitome of the verse "Think Local. Act Global".
ERP helps to control and data and facilitates the necessary contacts to acquire the same.
Ensures in finding the oldest of the data and the very latest easily and in no time.
Consolidates 100s of transactions in one ERP code due to specific codes given to each.
Is a chain process where the information is proceeded only after checking by the Assistant
Manager and the Senior Manager.
Any changes to be made in the information fed is made by them thus reducing the possibility
of mistakes.
DISADVANTAGES
Being a software based programme a failure in the system brings a halt to all the processes.
When Air India finance department was attacked by viruses all the ERP proceeding came to a
halt and no transactions were recorded.
Being the year ending the airlines had to face tremendous loss of time and money.
Training the employees in ERP consumed a large amount of time bringing other functions to
a halt.
Requires huge investment of money and time.
Not all employees are well acquainted with it increasing burden on other employees.
Information may reach in hands of wrong persons and also does not have secrey of
information.
The data once entered cannot be modified as done in MSBILLING.

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ADVANTAGES OF MSBILLING

User friendly software and easy to use and understand.

Modifications can be made when needed.
It encompasses all the domestic jargons, currency conversions, diverse accounting standards
etc.
No need to learn the rates and find them in case of recharges.
Feeding the invoice number gives the detail of the invoice at that very moment.
Calculation of JV also given in consolidated form.

DISADVANTAGES OF MSBILLING

Any wrong information entered can be modified but this process deletes all the available
information fed about the invoice.
Thus is time consuming.
Outdated method.
Network failure brings the entire system to a standstill.

51