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  • AIR INDIA-INDIAN AIRLINE MERGER: REASONS FOR FAILURE

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    The merger was intended to create synergies between the two airlines but ultimately proved disastrous. It failed to meet strategic goals, market share declined, and the merged airline dropped in market position. Reasons for failure included lack of leadership, lack of synergy planning, issues integrating fleets and HR, and lack of IT integration. The document recommends Air India should have focused on the growing low-cost carrier market segment instead of the merger.

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    The merger was intended to create synergies between the two airlines but ultimately proved disastrous. It failed to meet strategic goals, market share declined, and the merged airline dropped in market position. Reasons for failure included lack of leadership, lack of synergy planning, issues integrating fleets and HR, and lack of IT integration. The document recommends Air India should have focused on the growing low-cost carrier market segment instead of the merger.

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    6 views14 pages

    AIR INDIA-INDIAN AIRLINE MERGER: REASONS FOR FAILURE

    Uploaded by

    p11
    The merger was intended to create synergies between the two airlines but ultimately proved disastrous. It failed to meet strategic goals, market share declined, and the merged airline dropped in market position. Reasons for failure included lack of leadership, lack of synergy planning, issues integrating fleets and HR, and lack of IT integration. The document recommends Air India should have focused on the growing low-cost carrier market segment instead of the merger.

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    of 14

    AIR INDIA LIMITED AND INDIAN

    AIRLINE LIMITED MERGER

    Presenter:
    Sajjad Hussain
    Road-Map
    Company profile
    Merger proved as a recipe of disaster
    Answer to questions
    Evidences
    Reasons of merger failure
    Recommendations
    Company Profile (Pre-merger)
    Started in 1946
    Went Internationally 1948
    According to the Indian Parliament act 1953 two
    separate autonomous corporations were evolved
    from air India (as Air India Limited & Indian
    Airline Limited)
    Company Profile (Pre-merger)
    Until 1986 both monopolized (As AIL was
    conducting International Business)
    Changes in civil aviation policies ( deregulation )
    Hit by open skies policies 1990
    Act of 1994, liberalized the civil aviation industry
    Since then companys share was declining but
    remained profitable until 2005
    Company Profile (Post-merger)
    In 2007 Govt: Announced merger with Indian
    Airline Limited which officially took place in
    2011 as NACIL
    Later on the name was retained as Air India
    Merger proved as a recipe of disaster

    Failed to meet up invitation of Star Alliances


    Market share declined ( 19.2% 14% )
    Dropped down its market position from 1st to 4th
    Over staffing
    Merger proved as a recipe of disaster

    Short of working capital ( purchased unplanned


    aircraft i.e. 28 68)
    Disregarded Indian Pilots Guild ( IPG )
    Gave away two prime routes
    Kochi - Doha Bahrain and
    Calicut- Doha-Bahrain
    Answers to questions
    No! it was not a good decision under that
    circumstances.
    Privatization was relatively better option.
    Yes! As the management was not taking the
    appropriate decisions and proved as inefficient
    in responding to market developments.
    Evidences (Exhibit 4)
    Reasons of merger failure
    Lack of effective leadership
    Lack of synergy
    Fleet Expansion
    HR integration
    Lack of IT integration
    LCC v/s FSC( Exhibit # 4, 2008-9)
    ITEMS PER AIR INDA Kingfisher Spice jet Indigo
    DAY
    Passenger per 83 70 111 122
    flight
    Avg Passenger 60% 63% 66.1% 69.6%
    load factor
    Avg weight 58% 59.8% 62.8% 67.2%
    load factor
    Flights per 345 337 101 110
    day
    No of pilots 1401 1025 140 255
    Pilots per 4.0 3.0 1.38 2.32
    flight
    Recommendations

    We strongly recommend that AIL must


    introduce subsidiary for LCC ( Segmentation )

    Rather than merger, we recommend that AIL


    must have been privatized
    Recommendations
    Management should consider employee aspect
    regarding there salaries, promotions and health
    insurance rather than focusing on political issues.
    We recommend that rather than focusing on Hi-
    Class services which lead to marketing myopia, it
    must have focused on market demand which was
    low cost.
    Thanks for your patience

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