Air India: All round Mismanagement ?

Published by MBA Skool Team, Published on May 23, 2011

Once the mighty Maharaja of the Indian skies, Air India has been reduced to near bankruptcy by the gross mismanagement by its political masters. Air India has been over the years used by politicians and ministers as their personal fief and coupled with a non performing top management has become a case fit for BIFR. Everyone including its employees has milked the airline to the maximum extent possible and it is currently on life support system courtesy the hard earned tax payer’s money.


Air India-Stalled ?

The company, which once ruled the Indian airline industry, as of today is in a complete mess and the reason for which it is in such a state is not difficult to comprehend.

1. Acquiring new aircrafts for Air India has always been a cumbersome and lengthy process because of the bureaucracy involved. But despite all odds the airline placed an order for 68 aircrafts which was supposed to improve the image of the airline. However in the process they had to take a debt of around 25000 crore, for which the company pays around 4 crore as interest daily.  However just as the aircrafts started arriving there was recession and also it's ill fated merger with Indian. Indian had separately placed an order for 43 aircrafts which resulted in excess capacity for the combined entity. Maintaining and servicing debt of the combined entity is currently proving to be expensive. In the hindsight it now appears that it would have made sense to place a single order for the merged entity rather than place separate orders and then merge the entities

2. Air India over the years has had a bloated workforce. Compared to other international airlines which have a employee/aircraft ratio of around 150 Air India has around 250. These excess employees are not just overheads but are also difficult to manage. As seen recently with little or no provocation the employees of Air India go on strike resulting in not only monetary loss but also a loss of face in front of its customers. For the company to be successful there is a need to move towards building a leaner environment

3. HR issues is one of the most important reasons why Air India has become almost bankrupt. Merger with Indian was a little premature with people management issues yet to be sorted out. Even after almost 5 years of it's merger the pay structure of the employees and seniority levels are not rationalized. Even though they are highly paid, not rationalizing the pay scales and their seniority levels was the first step towards disaster which we are currently witnessing.

4. The final and the most important issue is the efficiency of the top management which is actually running the airline. Over the years the head of Air India has been a handpicked person from the aviation ministry. The person has little or no experience running a airline. He takes time to understand and is normally not given a independent charge. So for the airline to function smoothly a professional management should be put in place with no interference from government.

Even though Air India has been the pride of India and many patrons would vouch for its comforts, it has been grossly mismanaged. The attitude of the employees has been poor who have no fear of loss of jobs as they are well aware that government would bail them out. The management on the other hand has not been able to make swift changes depending on the conditions prevailing in the market. Finally the government has been using it for its own benefits and does not look sure of wanting to revive the glory of Air India. It has been a great brand and hope sense prevails to all these 3 stakeholders and they work together to bring back the glory days of Air India.


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