Case study on

Air India
And
It’s HR problems

By
Puspendra kumar Rana
27 January 2022 Air
India has been
welcomed back to
the Tata company
What are competencies?

A competency is a cluster of highly interrelated attributes, including knowledge, skills, and abilities (KSAs)

that give rise to the behaviors needed to perform a given job effectively.

Competencies can be either technical or behavioral. Technical competencies reflect the knowledge required to
perform a specific role. Behavioral Competencies describe the KSAs that facilitate the application of
technical knowledge to job-related behavior.

In other words, technical competencies reflect what knowledge HR professionals apply to their jobs, and
Behavioral Competencies reflect how they apply this knowledge.
OBJECTIVE OF THE CASE
FOCUSSES ON:

How poor management, especially in the human resources area, could spell doom even
for a Rs 40 bn monopoly

Why and how Indian Airlines was constantly plagued by HR problems

how IA's lackadaisical handling of its HR problems contributed to the overall mess

Examines the causes of the HR problems faced by Indian Airlines.

Poor management and stubborn work force can drive a monopoly into losses

Other lapses such as poor canteen management and payment of excessive allowances.
Frequent
HR
problems

INCREASED
Gross PUBLIC
Mismana - RESENTMENT
gement TOWARDS
THE AIRLINE

Frequent
Strikes by
IA pilots
BACKGROUND NOTE
 Formed in May 1953 with the nationalization of the airlines industry through the
Air Corporations Act

 Merger with VAYUDOOT in 1990

 Network ranged from Kuwait in the west to Singapore in the east, covering 75
destinations

 PRIVATISATION in 1994
 a mass exodus of its pilots to private airlines

 Competitive strategies

 a new image building advertisement campaign

 Strict adherence to flight schedules
 better in-flight and ground services
 Could not sustain competition :

• By 1999 the losses touched Rs 7.5 bn

• Market share reduced to 47%

 Interference by the Ministry of Civil Aviation

 Human resource problems : Lack of MANPOWER PLANNING

 periodic and realistic assessment of the manpower needs

 need-based recruitment
 optimum utilization of the recruited personnel
 abolition of surplus and redundant posts

 No proper mechanism to handle the labour relations particularly the

strikes and also the compensation claims WRT to overtime allowances
etc.
CASE FACTS -- FIGHTER PILOTS

 IA's eight unions

 Use of unscrupulous methods to force the management
 Pressurizing IA for more money
 From November 1989 to June 1992, there were 13
agitations by different unions

 The agitation in April 1995 by PILOTS

 demanding higher allowances for flying in international sectors
 refused to fly with people re-employed Raised questions
 1997 On IA's
 strike for foreign allowances, fixed flying hour, free vulnerability
meals & wage parity.

 False medical claims

 April 2000 GO SLOW AGITATION by engineers

 pay revision
 change in the career progression pattern
 CASE FACTS --IA’s STRATEGIES

 Analysts noted that the people heading the airline were more interested in making
peace with the unions than looking at the company's long-term benefits.

 Russy Mody (Mody), joined IA as chairman in November 1994, made efforts to

appease the unions by

 proposing to bring their salaries on par with those of Air India employees

 increase the age of retirement from 58 to 60 to control the exodus of pilots

 Probir Sen (Sen) took over as chairman and managing director

 the pilot emoluments on par with emoluments other airlines

 created Alliance Air, a subsidiary airline company where the re-employed people were utilized
 INCREASE IN LOSSES DUE TO PLI

7.1

6.9

6.8

6.7 Rs. In billion

6.6

6.5

6.4
1995 - 99 1999

 In 1998, IA tried to persuade employees to cut down on PLI and overtime to help the airline
weather a difficult period -- efforts failed

 A net loss of Rs 641.8 mn was registered during the period 1995-99.

 IA had the maximum number of employees per aircraft.

 A COMPARISON OF VARIOUS AIRLINES

Name of Airlines Number of aircraft in fleet No. of employees Employees per aircraft

Singapore Airlines 84 13,549 161

Thai Airways International 76 24,186 318

Indian Airlines 51 21,990 431

Gulf Air 30 5,308 177

Kuwait Airways 22 5,761 261

Jet Airways 19 3,722 196

CRITICS…
The Brar committee attributed abnormal increase in staff costs to :

 inefficient manpower planning,

 unproductive deployment of manpower and
 unwarranted increase in salaries and wages of the employees.

Analysts criticized the way posts were created in IA

 In 1999, Six new posts of directors were created of which three were created by dividing
functions of existing directors

 no basic educational qualifications prescribed for senior executive posts: a matriculate

could become a manager, by acquiring the necessary job-related qualifications &
experience

 40 posts were introduced in the Southern Region on an ad-hoc basis, pending the
assessment of their requirement by the Staff Assessment Committee
PROBLEM AREAS
 PROBLEM 1: The management of IA aims at problem solving for short period of time. Also the trade unions seem to be
much in power and the organizations doesn’t seem to be management driven

 PROBLEM 2 : No check on employees with regard to their performance and output during the stipulated time period

 PROBLEM 3 : there were no limits as to which these emoluments and pli schemes were being withdrawn and the costs
were raising

 PROBLEM 4: The problem of social obligation and less management freedom

RECOMMENDATIONS
 the management should get into long term alignments/contracts with the trade unions and make them bind with the terms and conditions
of the contract so signed.

 employees need to be given targets which have to be achieved within a specific time period and also the implementation
of employee or performance management systems would help keep a check on every one’s output .

 the management should decide a budget with regard to such pli schemes or incentive schemes that are fixed during a
time period for a particular grade and job. For each job the targets as well as the range of earning incentives should be
clearly defined.

 The management should have more powers with itself to take the major decisions regarding technical assistance and
cabin crew so that trained professionals join and perform the tasks.

 A strict check on the various allowances being paid to the employees and their authenticity to be checked.

 The staffing of professionally qualified people suitable for each job such as that of pilots or cabin crew etc should be
hired and if possible they should be hired after signing bonds with the organization.