STRATEGY ANALYSIS REPORT ON AIR INDIA

Submitted To, By, Prof. Dr. Supriti Mishra Joseph Strategy Formulation Chauhan IMI-Bhubanes ar Dash

Submitted Jubin Ajeet Singh A!itya Anshuman P"DM #$%#-%& IMI-Bhubanes ar

Strategy Analysis 'eport on Air In!ia

March, 2 !"

TABLE O# $ONTENTS
Dec%aratio& Ac'&o(%ed)eme&t !+ E,ecuti-e Summary 2+ Bac')rou&d 2+!+ 2+2+ Brie/ 0i1tory o/ Air I&dia Or)a&i2atio& Structure a&d A)reeme&t . 3 " * .

"+ Strate)y A&a%y1i1 "+!+ "+2+ "+"+ "+*+ "+.+ A&a%y1i1 o/ I&du1try 4PESTLE5 A&a%y1i1 o/ $om6etitor1 A&a%y1i1 o/ Strate)ic Grou6 A&a%y1i1 o/ $om6etiti-e Ad-a&ta)e 8a%ue $hai& A&a%y1i1 !! !. !3 !7 !9 2! 22 2" 2*

*+ Bu1i&e11 Strate)y .+ $or6orate Strate)y :+ $o&c%u1io& 3+ Re/ere&ce1

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

DE$LARATION

It is hereby e(pli)itly !e)lare! that this pie)e of

or* is purely

subje)ti+e of our obser+ation an! analysis of the firm, Air In!ia. -he fa)ts an! figures are base! on the proje)t material as mentione! in the referen)es se)tion. -here has been no infringement on the )opyrights of any other proprietary or* of any form or )ontent.

;ubi& ;o1e6h Da1h

A<eet Si&)h $hauha&

Aditya A&1huma&

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

A$=NO>LEGEMENT

/e ta*e this opportunity to )on+ey our gratitu!e to our "ui!e for the proje)t Pro/+ Dr+ Su6riti Mi1hra, ho gui!e! us ith all the ne)essary insights an! helpe! us un!erstan! the intri)a)ies the proje)t subje)t. /e are also greatly oblige! to Pro/+ Rame1h Beh%, Dire)tor, IMI-B an! all the staff members of IMI-B, ithout hose *in! )o-operation an! en)ouragement, e oul! not ha+e been su))essful in the )ompletion of this proje)t.

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

!+ E,ecuti-e Summary In this proje)t, e ha+e trie! to analy0e the strategy

formulation of Air In!ia, hi)h is the national airline of In!ia. Air In!ia is o ne! an! a!ministere! as a part of Air In!ia 1imite!, by the a+iation ministry of the "o+ernment of 'epubli) of In!ia. -he analysis of the subje)t ill in)lu!e its operating in!ustry, )ompetitors, +alue )hain an! strategi) group. 1ater on, in the report e ill also try to gain an insight of the business an! )orporate strategy of Air In!ia.

2+Bac')rou&d 2+!+ Brie/ 0i1tory o/ Air I&dia

In July %2.#, Air In!ia, initially )hroni)le! as -ata Airlines, a

business unit in the -ata Sons 3no *no n as -ata "roup4 by J.'.D -ata. It ma!e a publi) limite! )ompany an!

as foun!e! as

as in #2 th of July %2&5, that the -ata Airlines

as re)hristene! as Air In!ia. -he

Maharaja being its lu)*y mas)ot, the Air In!ia as the pri!e of In!ia.

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

In %2&7, the ne ly forme! "o+t. of In!ia a)8uire! &29 of its e8uity sta*e an! In!ia International ith an option of a)8uiring an a!!itional #9, as gi+en the status of Air hen it:s as )ost ith an operational right to ply on international nationali0e! the airline. /ith this, Air In!ia

routes. Air In!ia International entere! the jet age in %25$ !eli+ere!.% In May #$$&, Air In!ia laun)he! a

first Boeing ;$;<&#$, name! "auri Shan*ar 3registere! =--DJJ4, holly o ne! lo

airline )alle! Air-In!ia >(press. Air In!ia >(press )onne)te! )ities in In!ia ith the Mi!!le >ast, Southeast Asia, an! the In!ian sub)ontinent. ?ntil #$$;, Air In!ia an! In!ian Airlines operate! as t o )ompletely !ifferent airlines, though )ompletely o ne! by the go+ernment of In!ia. Air In!ia mainly operate! on International longhaul routes hile In!ian Airlines operate! on !omesti) an! international short-haul routes. Both airlines ha! !ifferent fleet e(pansion an! retirement plans. In #$$;, the go+ernment !e)i!e! to bring both the airlines, in)lu!ing Air In!ia >(press an! In!ian Airlines@ lo subsi!iary Allian)e Air un!er the )ontrol one bo!y. -he "o+ernment of In!ia announ)e! that Air In!ia be merge! )ompany )alle! the Aational A+iation Company of oul! In!ia ere )ost

ith In!ian Airlines. As part of the merger pro)ess, a ne as establishe!, into hi)h all four airlines

1imite! 3AACI14 along

1

merge!. Again in February #$%%, Air In!ia an! In!ian Airlines merge! ith their subsi!iaries to form Air In!ia 1imite!, hi)h no

http://en.wikipedia.org/wiki/Air_India

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

operates only three Airlines, namely Air In!ia, Air In!ia >(press an! Air In!ia 'egional.

2+2+ Or)a&i2atio&a% Structure a&d A)reeme&t1

-he Air In!ia registere! offi)e an! hea!8uarters in the In!ian Airlines Bouse in Ae Delhi. Air In!ia has three subsi!iaries. -ogether Air In!ia, Air In!ia Cargo, Air In!ia >(press, an! Air In!ia 'egional form the Air In!ia 1imite!. 2+2+!+ Air I&dia $ar)o? In %26&, Air In!ia Cargo starte! its freighter operations ith a Douglas DC-. Da*ota air)raft, gi+ing Air In!ia the !istin)tion of being the first Asian airline to operate freighters. -he airline operates )argo flights to many !estinations. -he airline also has groun! tru)*transportation arrangements on sele)t !estinations. A member of IA-A, Air In!ia )arries all types of )argo in)lu!ing !angerous goo!s 3ha0ar!ous materials4 an! li+e animals, pro+i!e! su)h shipments are ten!ere! a))or!ing to IA-A Dangerous "oo!s 'egulations an! IA-A 1i+e Animals 'egulations. At the arehouse in Mumbai, Air In!ia has

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

!e+elope! a system of in+entory management for )argo han!ling of importCe(port fun)tions. -his ta*es )are of the entire management of )argo, supports >le)troni) Data Interfa)e 3>DI4 messages ith In!ian Customs an! repla)es to a great e(tent e(isting paper )orrespon!en)e bet een Customs, airlines, an! the )usto!ians. -his also repla)es manual han!ling an! binning of )argo at the Air In!ia. arehouse in Mumbai by

2+2+2+ Air I&dia Re)io&a%? Air In!ia 'egional as starte! as a lo -)ost arm of In!ian ith Air In!ia, it as ee*ly flights to #6 as Allian)e Air As part of In!ian@s merger rename! Air In!ia 'egional. It operates .6;

!omesti) !estinations as a subsi!iary of Air In!ia. Its main hub is Delhi@s In!ira "an!hi International Airport. As Allian)e Air, the airline operate! a fleet of %# Boeing ;.;-#$$ air)raft. All these air)raft phase! out post the merger. Air In!ia 'egional no fleet of A-' &#-.$$ an! Bombar!ier C'J;$$ air)raft. 2+2+"+ Air I&dia E,6re11? Air In!ia >(press is the airline@s lo -)ost subsi!iary hea!8uartere! in Mumbai, operating mainly from In!ian state of Derala. ere operates a mi(e!

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

It operates ser+i)es mainly to the Mi!!le >ast an! Southeast Asia. -he airline belongs to Air In!ia Charters 1imite!, a hole o ne! subsi!iary of Air In!ia 1imite!. -o!ay Air In!ia >(press operates nearly %$$ flights per ee*, mainly from southern states of -amil Aa!u an! Derala in In!ia. Air In!ia >(press operates flights from airports in Derala, Punjab an! Mangalore to Dubai, Abu Dhabi, Al Ain, Mus)at an! Salalah in the Mi!!le >ast an! Singapore in the east. -he airline )ommunities li+ing in Mi!!le >ast Being a statutory )orporationE Air-In!ia submits a yearly report of its a)ti+ities to the Parliament through the Ministry of Ci+il A+iation. It enjoys fun)tional autonomy an! its management is through a Chairman an! Managing Dire)tor 3CMD4 ho or*s un!er a Boar! of Dire)tors. -he Boar! is re-)onstitute! e+ery t o years by the "o+ernment. -he Boar! of Dire)tors is the highest go+erning bo!y of Air-In!ia. Chairman )um Managing Dire)tor 3CMD4 is the Chief e(e)uti+e of the )orporation. -he )orporation has it:s hea!8uarter in Mumbai. Mumbai hea!8uarter has a big establishment ith ell !efine! !i+isions an! !epartments. All the poli)y matters are !e)i!e! at the hea!8uarter le+el an! e(e)ute! through fiel! an! bran)h offi)es. -he fiel! stations an! bran)h offi)es are sprea! in a large number of )ities in In!ia an! abroa!. ?n!er the Managing Dire)tor, there are the Deputy Managing Dire)tor an! a host of Dire)tors loo*ing after +arious as establishe! in May #$$&, after a long !eman! from Malayalee e(patriate

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

fun)tions an! !epartments. Chart-% represents the organisational stru)ture. 2+2+*+ De6artme&t1 o/ AI? Operations Department is responsible for flight operations an! also loo*s after na+igational problems, training an! li)ensing of air )re . Engineering Department ta*es )are of maintenan)e, repair an! o+erhaul of air)rafts. It also manufa)tures simple e8uipments re8uire! for the air)raft. Commercial Department loo*s after the re+enue, sales,

promotion, publi)ity, a!+ertising an! publi) relations.

Personnel Department is responsible for re)ruitments, training an! maintaining re)or!s of staff. Stores and Purchase Department ta*es )are of all the pur)hases an! maintenan)e of the stores. Tourism Division is a separate )ell to promote tourism. 2+2+.+ $ommercia% $o@o6eratio& A)reeme&t1?
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Strategy Analysis 'eport on Air In!ia

March, 2 !"

-here are three types of agreements for )ommer)ial )ooperation of among the airlines Pool Agreements: -hese are )o-operation agreements bet een t o national airlines, operating on the same routes. -his agreement in+ol+es sharing of re+enues of fun!s in settlement of the a))ounts. Commercial Agreements: -his )o+ers unilateral operations by one partner for partner Joint Venture Agreements: ?n!er these agreements, one partner pro+i!es the e8uipment an! operates the ser+i)es hi)h are mar*ete! un!er a joint flight number. Profits are share! subje)t to a minimum guarantee! return to the non-operating partner. In the year %22#-2. Air In!ia entere! into )ertain ne agreements, Ae year Air Ser+i)es Agreements ere )on)lu!e! !uring the ith 'ussia an! the ith Israel an! ?*raine. -al*s ere also hel! hi)h )ompensation is payable to the non-operating ith a )eiling on transfer

S)an!ina+ian )ountries of Denmar*, Aor ay an! S e!en on the te(ts of fresh Air Ser+i)es Agreement Apart from this, the bilateral opportunities a+ailable un!er the agreements ?D an! ?0be*istan ith Bangla!esh, Bulgaria, 'omania, ere enhan)e! at the intergo+ernmental

!is)ussions. Agreements ere also rea)he! at airline le+el ith >mirates

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

an! "ulf Air to re)ommen! in)reases in the bilateral entitlements. Ae )ommer)ial agreements arrangements ere )on)lu!e! ith -arom an! Bal*an ere reBulgman Airlines an! some of the terms an! )on!itions of the e(isting ith S issair, >mirates an! 'oyal Jor!anian negotiate!. -he +ali!ity of the e(isting agreement ith Femen, Air

Mauritius an! "ulf Air as e(ten!e!. In a!!ition, !is)ussions ere hel! ill% Malaysian Airlines an! >thiopian Airlines as part of the ongoing pro)ess of re+ie ing the rele+ant managements. Dis)ussions at "o+ernment le+el airline le+el ere hel! ith "ermany, Singapore an! -hailan! an! at the

ith Denya Air ays an! Sau!i Arabia to )onsi!er +arious

issues relate! to the operation of air ser+i)es.

"+ Strate)y A&a%y1i1 "+!+ A&a%y1i1 o/ E&-iro&me&t 4PESTLE A S>OT5

P>S-1> analysis is the abbre+iation of Politi)al, >)onomi), So)ial, -e)hnologi)al, 1egal an! >n+ironmental analysis of the e(ternal fa)tors of Air In!ia an! it is jotte! belo G PoliticalG 1iberali0ation of the A+iation Se)tor is )reating intense )ompetition for Air In!ia Interferen)e of go+ernment is mu)h more )ompare! to other airlines. Economic: &$,$$$ )rores !ebt, highest employeeCair)raft322!4 in in!ustry

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

CASD3Cost of A+ailable Seat per Dilometer4 is highest in orl! Social: Sin)e #$$2 many instan)es of employee stri*es ha+e happene!. -ill no si( stri*es ha+e happene! 'e)ent Dharma!hi*ari report is in the implementation phase. -here are many re)ommen!ations in Dharma!hi*ari report. Some of them areG - - o separate lines of seniority, %$9-%69 salary )ut for pilots H engineers, Cross utili0ation of pilots, ='S, re!u)es in)enti+es. Technological: 1atest Boing ;7; Dreamliner or!ere!, an! 5 air)raft alrea!y !eli+ere!. ?sing mi( of Airbus an! Boeing hi)h is hampering pro!u)ti+ity in pri)e sensiti+e In!ian mar*et. Legal: 1egal noti)es from employees on issue of unpai! salaries an! or* )on!itions. 1egal issue of flying Dreamliner ithout )learan)e from Boeing. PI1 against the re)ent buying of air)rafts Environmental Follo ing re)ent >? en+ironmental gui!elines on fuel emission. First airline of a !e+eloping )ountry to or* ith the ?nite! Aations >n+ironment programme 3?A>P4.

S>OT A&a%y1i1 o/ Air I&dia2

2

http://www.marketing91.com/swot-air-india/

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

Strengths Air In!ia has been the largest air )arrier in In!ia in terms of traffi) +olume an! )ompany assets. It o ns the most up!ate! fleet an! )ompetent repairs an! maintenan)e e(pertise. Its information systems are a!+an)e! an! )ompatible ith its operation an! ser+i)e. It has a goo! reputation in both international an! !omesti) mar*ets, 8uality ser+i)e an! the age-ol! "oo! ill that has still *ept it ali+e in the interests of the res)ue operators. Bas finan)ial ba)*ing of the "o+ernment

Weaknesses Air In!ia is operating a)ross broa! international an! !omesti) mar*ets )ompeting ith orl! lea!ing giant airlines as ell as lo)al small operators. -his la)* of )larity on the strategi) !ire)tion largely !ilutes its )apabilities an! )onfuses its bran! ithin mar*ets. 1o profitability an! lo )apa)ity utili0ation. "ro ing Competitor base an! entry of 1o -Cost Carriers 31CC:s4 -he airline:s high-)ost stru)ture an! the )ompulsions of being a publi) se)tor unit are the reasons an! it ha! been ma*ing a loss an! shall )ontinue to ma*e losses for some more 8uarters.

Opportunities In!ia airline in!ustry is gro ing faster an! ill )ontinue to gro as the "DP in)reases, an! the tren! is pre!i)te! to )ontinue on)e the slo !o n re)e!es. /orl! i!e !eregulations ma*e the s*ies more a))essibleE the route agreement is easier to be a)hie+e!. -he number of foreign +isitors an! in+estors to In!ia is in)reasing rapi!ly.

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Strategy Analysis 'eport on Air In!ia

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Complementary in!ustry li*e tourism ill in)rease !eman! for airline ser+i)e. -he Ci+il A+iation Ministry:s strong regulation an! prote)tion pro+i!es opportunities for )onsoli!ation an! optimi0ation. Customers are getting ealthier, ten! to be less pri)e-)ons)ious an! prefer to )hoose 8uality ser+i)e o+er )ost. Best time for intro!u)ing 1CC:s

Threats Air In!ia fa)es imminent aggressi+e )ompetition from lea!ing airlines an! pri)e ars triggere! by !omesti) players. orl!

-he In!ian 'ail ay Ministry has !ramati)ally impro+e! spee! an! ser+i)es in their me!iumClong !istant routes, attra)ting passengers a ay from air ser+i)e, ith pri)es almost at par ith the lo )ost )arriers.

"+2+ A&a%y1i1 o/ $om6etitor1"

Indian Low Cost Airline Industry
3

http://www.strategicbriefings.com/2011/india/ ow-cost-air ines-creating-tra!e re!o "tion-in-india/

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Strategy Analysis 'eport on Air In!ia

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-he a+iation se)tor in In!ia is one of the fastest gro ing in the orl! ith aroun! %7.29 gro th in !omesti) passenger traffi) in #$%$ ith the entry of +arious pri+ate players in the !omesti) )ompare! to #$$2. -he boom in the a+iation se)tor starte! !uring the last ten years mar*et lea!ing to a signifi)ant re!u)tion in air fares. -ill then, !omesti) flying in In!ia as as )ostly as international flights. -his as be)ause of the limite! options tra+elers ha!, to )hoose from. -he main airlines ba)* then ere Air In!ia an! In!ian Airlines. But to!ay, there are at least ten !ifferent airlines operating in the !omesti) routes, thereby gi+ing In!ian tra+elers )ompetiti+e pri)es. -his has a)tually le! to a re+olution in the ay In!ians tra+el to!ay. Main players in In!ia:s !omesti) a+iationG Jet air ays, In!igo airlines, "oAir airlines, Spi)ejet Airlines, Jetlite airlines, Paramount air ays an! In!ian airlines. -he spe)ifi) strategies of the lo in )ost in terms of the follo ing parametersG & Ao free in-flight foo! ser+i)e. Ao a!+an)e seat assignment. Ao fre8uent tra+eler lounges at the airports. Ao interlin*ing agreement ith other airlines. Intro!u)tion of paperlessCele)troni) ti)*eting. Competing primarily ith groun! transportation )ost mo!el emphasi0e a re!u)tion

http://edissertations.nottingham.ac."k/1##$/1/%ow-cost_&arriers_in_India.pdf

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Strategy Analysis 'eport on Air In!ia

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past fe

elping glo!al aviation industry !ays is not Cathay Pa)ifi) or 1ufthansa but a !omesti) player hen the !e+elope! in+estments, buying

-he biggest hea!line ma*er in the global a+iation in!ustry in the from In!ia, *no n as BI&di)o Air%i&e1C. At a time an! jobs going to !e+eloping )ountries, su)h ne

e)onomies are )omplaining about slo gro th rate, high unemployment an! )onsumer tren!s from emerging mar*ets li*e In!ia is in!ee! a boon. -hey are )reating jobs an! helping these )ompanies to sustain at a time of global )risis an! re!u)e! profits. "ising #uel prices and its a##ect on passenger growth -he in)rease in the international )ru!e oil pri)e has for)e! many !omesti) players in In!ia to go ahea! ith a hi*e in their airfares sin)e ill be lots of )riti)isms ill not the beginning of January #$%%. Although there

from +arious groups on this, su)h an in)rease in the ti)*et fares

ha+e a !rasti) effe)t on the +olume of passengers. Compare! to the time ta*en to rea)h from point A to point B in In!ia by train or other means, the number of people transportation ho ill )ontinue to use this means of ill only in)rease as years pass by. In!ian tra+elers are

slo ly getting use! to the fast pa)e! an! )omfortable tra+elling by air an! they are rea!y to spen! on this.

"+"+ A&a%y1i1 o/ Strate)ic Grou6

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Strategy Analysis 'eport on Air In!ia

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"+"+!+

;et Air(ay1

Jet Air ays, In!ia:s largest )arrier by mar*et share, merge! its t o lo -fare bran!s un!er the JetDonne)t bran! from #6-Mar-#$%#, as part of a strategi) rebran!ing an! rationalisation e(er)ise an! efforts to simplify the group:s ser+i)e proposition an! enhan)e bran! re)all. ?n!er the restru)ture, JetDonne)t be)ame the !e!i)ate! lo -fare ser+i)e ith a mi(e! fleet of Boeing an! A-' air)raft operating on metro, tier II an! III routes, ith et Air ays to )ontinue offering a full ser+i)e ith the fun!amentals of air)raft pro!u)t a)ross !omesti) an! international mar*ets. -he merger as little more than a bran!ing e(er)ise, o nership an! slot allo)ations to remain the same as un!er the )urrent mo!el. Bo e+er, the )arrier loo*e! at opportunities to optimally !eploy an! )ross-utilise )ommon resour)es of Jet Air ays an! Jet1ite possible an! this rebran!ing e(er)ise here ill Ihelp further in synergising

)arrier:s )olle)ti+e operations Jet Air ays to )ontinue offering a full ser+i)e pro!u)t a)ross !omesti) an! international mar*ets.6 Jet "roup poste! impressi+e J% performan)e ith re)or! gro th an! strong >BI-DA' margins in #$%#. Bigh traffi) gro th in J% helps Jet "roup to post a profit after ta( of 's. 76 million 3?S K %.7 million4 for J% FF%$ +s loss of 's. -#,#.% million 3?SD -&5.5 million4 in the same perio! last year. >BI-DA' of 's.;,$.& million 3?SD %6%.& million4 for J% FF%% +s 's. &,25. million 3?SD %$..5 million4 for the same perio! last year, up &#9. 5
$

http://centrefora!iation.com/ana 'sis/(et-airwa's-to-conso idate-and-rebrand-its- owfare-prod"cts-(et ite-to-be-merged-into-(etkonnect-)02*)

*

http://www.(etairwa's.com/+,/I,/-ress.e eases//10111.asp2

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Strategy Analysis 'eport on Air In!ia

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As Jet Air ays an! >tiha! jointly )on!u)t a series of meetings *ey In!ian Ministers an! offi)ials in Ae e!!ing. If )onsummate! this Delhi in the first

ith

ee* of

February, the )arriers appear to be see*ing blessing for an impen!ing oul! be the first foreign airline in+estment transa)tion in In!ian a+iation sin)e the long-o+er!ue Sep#$%# !e)ision by the In!ian Cabinet to permit up to &29 foreign in+estment in In!ian airlines.; Allo ing foreign airline in+estment is a +ital step in establishing a more professional an! )orporatise! se)tor in In!ia. It offers the promise not only of intro!u)ing strategi) )apital an! e(pertise into the mar*et, but also !eli+ers a mu)h nee!e! )onfi!en)e fa)tor for other institutional fun!ing.

"+"+2+

=i&)/i1her Air%i&e1

-he li)ense of the Dingfisher is )an)elle! right no . It no more e(ists as a player in the strategi) group of Air In!ia.

"+*+ A&a%y1i1 o/ $om6etiti-e Ad-a&ta)e Air In!ia has one an! only )ompetiti+e a!+antage o+er its )ompetitors an! that is the full support of the "o+ernment of In!ia. >+ery time the airline falls into trouble the go+ernment is rea!y to bail out the airline as it o ne! by the go+ernment itself. >()ept this there is no other pro!u)t or ser+i)e pro+i!e! by the airline hi)h )oul! be a )ompetiti+e a!+antage.
)

http://centrefora!iation.com/ana 'sis/etihads-potentia -in!estment-in-(et-airwa's-tobe-a-game-changer-for-india-9*11#

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Strategy Analysis 'eport on Air In!ia

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"+.+ 8a%ue $hai& A&a%y1i1 "+.+!+ Primary Acti-ite1 Inbound ogistics: It in)lu!es 'oute Sele)tion, Passenger Ser+i)e System, Fiel! Management System 3Pri)ing4, Fuel, Flight S)he!uling, Cre S)he!uling, Fa)ilities Planning, Air)raft A)8uisitions. For e(ample there is rise in pri)es of a+iation fuel an! the )ompany is ba!ly hit by it an! re)ently the )ompany a)8uire! Dream liner hi)h are groun!e! for faulty oil )ooling system Operations: It in)lu!es -i)*et Counter Lperation, "ate Lperations, Air)raft Lperations, Ln-boar! Ser+i)e, Baggage Ban!ling, -i)*et Lffi)es. /ith M'L 3Maintenan)e, 'epair an! Lperation 4 not fun)tioning properly their operating losses ere at ##$$$ )rore 3appro(.- & billion4 Outbound ogistics: It in)lu!es Baggage System, Flight Conne)tion, 'ental Car an! Botel 'eser+ation System. -he ser+i)es pro+i!e! are spe)ially ma!e for +alue )reation for the )ustomers. !ar"eting and Sales: It in)lu!es Promotion, A!+ertising, -ra+el Agent Programs an! "roup Sales. 'e)ently the )ompany has )reate! an a!+ertisement hi)h sho s their re)ently a)8uire! Boeing ;7; promoting their IMaharajaM or majesti) style of Air In!ia. Again they ha+e tie! up ith the tra+el agents to sell out their ti)*ets an! also promote Air In!ia an! also pro+i!ing group sales !is)ounts. Services: It in)lu!es 1ost Baggage Ser+i)e an! Complain Follo -up. -his also again is to a!! +alue for the
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Strategy Analysis 'eport on Air In!ia

March, 2 !"

)ustomers e+en if )ompetitors )an )opy but the )ompetitors oul! not be able to )opy their +alue a!!ition.

"+.+2+ Su66ort Acti-itie1 #irm$s In%rastructure in)lu!es Finan)ial Poli)y, A))ounting, 'egulatory Complian)e, 1egal an! Community Affairs. As you )an see they really nee! to re+amp their finan)ial poli)y an! a))ounting stan!ar!s be)ause for the same fa)tors they are into a huge !ebt. But they re)ently groun!e! their Boeing in a!heren)e to regulations &uman 'esource !anagement in)lu!es flight, route an! yiel! analyst training, Pilot Sele)tion Safety -raining, Baggage Ban!ling -raining, Agent -raining, In-flight -raining. >+en if they pro+i!e training to all persons after re)ruiting an! sele)tion of employees, the employees )on!u)te! a stri*e that laste! 67 )ru)ial !ays. -his sho s that their B.' poli)ies are at fault. Technolog( Development in)lu!es Computer 'eser+ation System, In-flight System, Flight S)he!uling System, Fiel! Management System, Computer Ser+i)e Impro+ement, Mar*et 'esear)h an! Baggage -ra)*ing System. >+en if te)hnology has been installe! properly, the man po er re8uire! to run the te)hnology 3M'L4 are not fun)tioning properly. Procurement )o+ers Information -e)hnology Communi)ation an! the hole of primary a)ti+ities pro+i!ing ea)h of them a le+el platform here the effi)ien)y an! effe)ti+eness are highest.

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

*+ Bu1i&e11 Strate)y
Air India recentl( launched various lo) %are schemes to attract the summer holida(ing customers* The o%%er o% %l(ing )ith Air India at AC train %are )as ver( lucrative and it is increasing its sales The e%%ort o% AI to attract lo) income customers b( increasing the seats o% econom( class in AI %lights in +,-+ is also current business strateg( The promotion o% AI emplo(ees )hich )as on hold %rom the period o% AI.Indian Airlines merger is set to start %rom the %inancial (ear +,-/.-0* AI has also started ne) process to address customer grievances )hich cost them 's* 01 Crore loss in / (ears 2+,,3.-+4 due to dela( o% %lights* To cut short its vast emplo(ee resource5 ma6orit( o% )hich is under.utili7ed and less productive5 V'S scheme )as introduced in +,-+ to impact 8,,, emplo(ees and )hich )as e9pected to cost the e9che:uer 's* --,- Crore* The management e9perience curve also predicts o% AI to improve the cost e%%icienc( o% more o% its +,+ %light routes5 o% )hich onl( -0 )ere good enough so %ar*

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

5. $or6orate Strate)y3
"lobal A+iation In!ustry is )urrently going through the most !iffi)ult phase. Airlines ha+e )olle)ti+ely lost o+er ?S K%$.& billion last year, an! are estimate! to lose a further ?S K2 billion this year, of hi)h ?S K# billion 3's %$,$$$ )rores4 ill be the share of In!ian )arriers. /ith Air In!ia operating in a global en+ironment, the national )arrier has been impa)te! as a!+ersely as other airlines the orl! o+er.

Causes #or the losses su##ered !y Air India N >s)alating )osts, parti)ularly of A-F. N Fe er passenger numbers, parti)ularly in the premium )lass. N 1o fares ith a gra!ual shift of passengers from lega)y full ser+i)e airlines to lo )ost airlines. N De)line in )arriage of )argo. N >()ess )apa)ity in a Ofalling: mar*et.

$easures #or operational and #inancial turnaround N Pro!u)t up gra!ation through impro+e! on time performan)e an! enhan)e! )ustomer tou)h point e(perien)e.
3

http://www.airindia.com/45&64/7own oads/AirIndia_+mbarks_on_a_8"rn_aro"nd_- anI.p df

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

N Seamless )onne)ti+ity from interior points of In!ia to !estinations abroa!. N Pre-mature retirement of ol! air)raft, in)lu!ing lease! air)raft, an! their repla)ement ith a ne er fuel effi)ient fleet. N Ae air)raft ith best-in-)lass passenger amenities. N 'ationali0ation of routes an! )apa)ities.

;oi&i&) Star A%%ia&ce? -he re)ent resume! tal*s of AI joining the orl! famous Star Allian)e is

)onsi!ere! as a major )orporate strategy for AI in )oming future. Star allian)e is a major mar*eting group of #; airlines. -he subs)ription )ost of joining it is %$ million >uros. -he tal*s #$%#. By this allian)e, AI hi)h faile! fi+e years ago has again resume! in ill be able to impro+e on its Ln -ime

Performan)e, Mar*et Share, Passenger 1oa! Fa)tor an! use e)onomies of s)ale an! s)ope to fully utili0e its +ast resour)e of fleet, manpo er an! infrastru)ture. Consi!ering the impa)t an! )ompetiti+eness that this allian)e ill infuse in AI, the plan of joining Star Allian)e seems to be a /IA-/IA strategy P%a& o/ Re1tructuri&) 4Pri-ati2atio&5? -here as also a plan of restru)turing the sharehol!er base of AI. A stu!y authori0e! by "o+ernment of In!ia ha! re)ommen!e! in #$%# about the benefits of pri+ati0ing the airlines. But the then )i+il a+iation minister Ajit Singh ha! temporarily o+er-loo*e! the proposal. So this plan is in the ba)*burner for the time being
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Strategy Analysis 'eport on Air In!ia

March, 2 !"

:+ $o&c%u1io&?
Air In!ia hi)h enjoye! monopoly in %22$:s is ran*e! &th by mar*et share 3%;94 has a !ebt bur!en of &$$$$ )rores an! losses amounting to 666% )rores an! this the orst hit in its ;2 years of history. -he )on!itions orsene! hen it merge! ith In!ian Airlines. 'ising fuel pri)es, )ompetition, unplanne! merger, mismanagement, i!esprea! e)onomi) gloom an! stri*es ha+e resulte! in a huge li8ui!ity )run)h. A number of initiati+es li*e finan)ial restru)turing, stri)t monitoring, impro+ement on-time performan)e, passenger ser+i)e, rationali0ation of routes ith full go+ernment support has been ta*en up to re+i+e Air In!ia to its full potential.

3+ Re/ere&ce1
/i*ipe!ia http://www.marketing91.com/swot-air-india/ , Mar)h #n! #$%. http://www.strategicbriefings.com/2011/india/ owcost-air ines-creating-tra!e -re!o "tion-in-india/ , January %7th #$%% http://edissertations.nottingham.ac."k/1##$/1/%owcost_&arriers_in_India.pdf/ , September #$$;

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Strategy Analysis 'eport on Air In!ia

March, 2 !"

http://centrefora!iation.com/ana 'sis/(et-airwa's-toconso idate-and-rebrand-its- ow-fare-prod"cts-(et iteto-be-merged-into-(etkonnect-)02*) , ##n! Mar)h #$%# http://www.(etairwa's.com/+,/I,/-ress.e eases//101 11.asp2 9 :"ne 30th 2010 http://centrefora!iation.com/ana 'sis/etihadspotentia -in!estment-in-(et-airwa's-to-be-a-gamechanger-for-india-9*11# 9 2nd 0ebr"ar' 2013

http://www.airindia.com/45&64/7own oads/AirIndia_+ mbarks_on_a_8"rn_aro"nd_- anI.pdf ,

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