AIR INDIA

MANAGEMENT DISCUSSION & ANALYSIS REPORT

1. ANALYSIS OF THE FINANCIAL/PHYSICAL PERFORMANCE

I. REVENUE :

 Total revenue increased from Rs.160,721.1 Million in 2012-13 to Rs.190,934.9 Million (an increase of
Rs.30,213.8 Million) during 2013-14.
 Operating Revenue was Rs.183,709.6 Million as against previous year’s revenue of Rs.160,278.4
(increase of Rs.23,431.2 Million)
 Passenger Revenue increased from Rs.124,944.4 Million last year to Rs.141,507.3 Million (an
increase of Rs.16,562.9 Million) which was mainly due to increase in Passenger Load Factor from
72.4% to 73.3%.

II EXPENDITURE :

 The total expenditure incurred during the year was Rs.264,201.9 Million as compared to the previous
year’s figure of Rs. 237,039.5 Million (an increase of Rs.27,162.4 Million)
 Operating expenses increased from Rs.198,349.9 Million to Rs.223,488.5 Million (an increase of
Rs.25,138.6 Million)

EXPENDITURE BREAKDOWN 2013-14

4 8%
4.8%
3.0% 1.0% 11.9%

7.2%
7 2% 0.5%

15.4%

3.4%
35.7%

2.3% 1.3% 5.6% 2.6% 5.3%

Staff Costs Insurance Fuel & Oil
Landing / Navigation Hire of Aircraft Material & Outside Repairs
Commission Pax Amenities Handling
Finance Cost Depreciation Reservation Systems
Travelling Expenses Other Expenses

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2. MEASURES TO IMPROVE PERFORMANCE

2.1 Plans to turnaround performance :

The Company continued to take several initiatives to improve the performance of the Company including
inter-alia
• Rationalization of certain loss making routes.
• Return of leased aircraft.
• Induction of brand new fleet on several domestic & international routes thereby increasing passenger
appeal.
• Phasing out old fleet and consequent reduction of maintenance cost.
• Reduction of contractual employment & outsourced agencies.
• Critical analysis of Fuel consumption on all flights by setting up a Fuel Council and Fuel Manager.
• Implementation of the recommendations made by IATA Group of Fuel Efficiency Gap Analysis
(FEGA).
• Increase in passenger, cargo, excess baggage revenue through aggressive sales & marketing strategy
including a separate Cell for attracting Government traffic.
• Implementation of Quickwin IT Solutions including upgrade of Revenue Management System,
introduction of SAP-ERP throughout the network.
• Upgradation of FFP and Introduction of several marketing initiatives including Companion Free
Schemes, Apex fare, GOI packages, Preferred Agents Partnership, Promotion of web bookings and
other promotional schemes like AI Holidays, etc.
• Operationalisation of the two subsidiary companies formed for Ground Handling and MRO activities
effective February 2013.
• Implementation of the Financial Restructuring Plan and the Turnaround Plan to improve the Financial
and Operating efficiencies.
2.2 Infusion of Additional Equity-Linked to the Turnaround Plan of the Company
The Government infused Equity Capital of Rs 60,000 Million during 2013-14 thus bringing the total paid
up Capital to Rs.153,450 Million. During the year 2014-15 the Government was expected to bring Equity
Capital of Rs.71,060 Million including the arrears of the earlier years. However, the Government could infuse
only Rs.57,800 Million due to certain budgetary constraints. During the year 2013-14, the Company could
achieve significant improvements in its operating performance as compared to the corresponding period
last year. Its On-time punctuality (OTP) improved on domestic sectors to 80.4% and on International to
73.6% resulting in a network OTP of 77.9%. Similarly, its domestic load factors improved to 75.3% despite
many challenges faced from the Low Cost Carriers and International Load factors improved to 72.4% taking
the Network Load factor to 73.3%. There was also an increase in the yield per kilometer throughout the
network with domestic yield improving to Rs.6.05 and international to Rs.3.52. The utilization of the Airbus
fleet continued to improve to 10.3 hours a day on total fleet and 12.8 hours on operating fleet and that of
the Boeing 777 fleet to 11.1 hours a day on total fleet and 14.9 hours on operating fleet. Similarly, the 787
aircraft averaged around 12.5 hours a day. During the year 2013-14 seven Dreamliners (787) were delivered
to AI by M/s Boeing Company which were deployed in its network. These 787 were used both for domestic
and international operations from Delhi. The domestic routes which were covered were Kolkatta, Chennai
and Bangaluru and the international routes covered were Paris, London, Frankfurt, Sydney, Melbourne,
Singapore, Hong Kong, Osaka, Tokyo, Birmingham, Seoul, Dubai and Shanghai. The 787 will continue to
be the mainstay of the Company’s wide body operations as the Company plans to take delivery of 14 more
aircraft up to the period September 2016.
2.3 Product Development
a) Premier Clubs
The Flying Returns Programme has four levels of membership viz. Base, The Silver Edge Club, The
Golden Edge Club and the Maharajah Club :

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The Maharajah Club (TMC)

The Maharajah Club is the highest Tier in the Flying Returns Programme. Membership of this Club is
on the basis of earning 75,000 miles in a span of twelve months. Members may also be invited to join
the Club on the basis of their status. Membership of the Club entitles members to enhanced privileges
which are:
Bonus mileage points, additional baggage allowance, priority check-in, priority confirmation from the
waitlist and lounge access, etc.
The membership base as on 30 September 2014 was 1629.
Golden Edge Club (GEC)
The Golden Edge Club is the second highest Tier in the Flying Returns Programme. Membership
of this Club is on the basis of earning 50,000 miles in a span of twelve months. Members may also
be invited to join the Club on the basis of their status. Membership of the Club entitles members to
enhanced privileges which are :
Bonus mileage points, additional baggage allowance, priority check-in, priority confirmation from the
waitlist and lounge access at select airports, etc.
The membership base as on 30 September 2014 was 3300.
Silver Edge Club (SEC)
The Silver Edge Club is the third highest Tier in the Flying Returns Programme. Membership of this
Club is on the basis of earning 25,000 miles in a span of twelve months. Members may also be invited
to join the Club on the basis of their status. Membership of the Club entitles members to enhanced
privileges which are :
Bonus mileage points, additional baggage allowance and priority check-in.
The membership base as on 30 September 2014 was 15014.
b) Flying Returns Programme
Flying Returns Programme is designed to recognise and reward frequent flyers of Air India. The
benefits and privileges of Flying Returns include :
• Increased check-in baggage allowance, tele check-in, personalized check-in counters at select
airports, priority for confirmation from the waitlist, priority baggage handling, pooling of mileage
points and wide array of special offers.
• Apart from earning and redeeming on Air India, members can also earn and redeem on all 26
Star Alliance partner carriers.
• Members can accrue miles while traveling on select flights of our code share partner airlines.
• Members can transfer reward points from our non-airline partners to Flying Returns.
• Non-airline partners are American Express, HDFC Bank, ITC Welcome Group, Emirates Bank
Group, SBI Cards, Kotak Bank, Citibank Travelling Connect, UAE Exchange, Holiday IQ.
BASE Card membership base as on 30 September 2014 was 15,40,240 as under:

Region
India (including Premium Clubs) 9,70,350
Overseas (including Premium Clubs) 5,69,890
Total 15,40,240
The highlights of Flying Returns Programme are as follows :
• Earn and redeem miles on 27 Star Alliance partner airlines
• Access to more than 1000 airport lounges worldwide

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 AIR INDIA

• Premium passenger benefits across the partner flights

• Membership extended worldwide
• Update profile details online
• Claim missing miles online
• Redeem miles online at www.flyingreturns.co.in
• No redemption threshold limit for redemption tickets
• Purchase miles at Re.1 per mile on shortfall of redemption
2.4 Marketing Initiatives :
Corporate House Scheme
Corporate House Scheme was launched for the period 1 November 2013 to 31 March 2014, under which
special offers are made to Corporate Houses having significant travel budgets. Target or growth based
incentives are offered separately for international sales and domestic sales. The incentives are based on
front end or cut and pay as well as growth based back end incentives.
Performance Linked Bonus (PLB)
PLB Scheme has been renewed and launched for the year 2013-14, based on the feedback from the field
and industry practices. Like last year, this year also PLB was offered only on International Sales and not on
Domestic Sales. The PLB Scheme is expected to achieve higher growth and increased productivity on Air
India. Separate incentives were also offered for increase in F&J class International Sales.
Short Term Promotions
Various short term promotional initiatives were undertaken :
• Cut and pay incentives for Domestic Leg of International Flights and Hub & Spoke Flights
• Joint promotion with Amadeus
• Additional Incentives to agents for a limited short term period (cut and pay)
2.5 Going Concern
In order to improve operational and financial performance, the Company had formulated a Turn Around
Plan (TAP) which entailed both operational and financial turnaround of the Company. Based on the
assumptions on TAP, a Financial Restructuring Plan (FRP) was prepared and implemented effective 1
October 2011 which envisaged aligning of the debt repayments of the Company in line with the projected
Cash Flows.
As proposed in the TAP, the MRO and Ground Handling activities were hived-off and operationalised in
February 2013, the assets would be monetized and cargo and mail revenues would be enhanced, the HR
Policy has also been reviewed across the Company and a new Organisation Structure was approved by
the Board in order to right-size the position at various levels in the Organisation hierarchy. An integrated IT
System has been put in place for improving operational performance. An Oversight Committee has also
been formed at the Government of India Level to ensure implementation of the TAP and closely monitor the
actual performance against the milestones.
As on 31 March 2014, GOI has infused Rs.132,000 Million by way of equity into the Company from the time
the FRP was implemented. An amount of Rs.65,000 Million is provided in Union Budget for the Financial
year 2014-15 as equity to Air India.
Due to the support of GOI as well as the various measures taken by the Company towards improving
operating and financial position, it is expected that the financial condition of the Company would continue
to improve in the future. Accordingly, the Accounts are prepared by the Management on the Going Concern
Basis.

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3. HIGHLIGHTS

Awards & Recognition

Air India was chosen by the Selection Committee of Business
Initiative Directions (BID), Spain for the International Quality
Crown Award (IQC) in the Diamond Category in the year 2014.
Air India won this award for the third consecutive year for
commitment to quality and excellence and on the basis of IQS
Regulations and criteria of the QC100 Total Quality Management
Model.
4. REVENUE GENERATION THROUGH OTHER SERVICES

4.1 The Revenue earned by Ground Handling Department/

Security Department by providing services to about 59
Customer Airlines at Indian Stations and Engineering
Department during the year 2013-14 is Rs.5,042.62
Million.
4.2 Cargo Revenue
For the first time Air India Cargo achieved revenue of more
than 10,000 Million. During 2012-13 the cargo revenue
was Rs.8,549.0 Million.
5. FLEET SIZE, NETWORK, JOINT VENTURES ETC.

5.1 Fleet Size

As of 31 March 2014, Air India had the following aircraft in its fleet :

Aircraft Type Owned Leased Sale & Lease Back Total

B777-200LR 3 - - 3
B777-300ER 12 - - 12
B747-400 3 - 2 5
B787-800 9 - 4 13
A320 18 - - 18
A319 19 3 - 22
A321 20 - - 20
A330-200 - 2 - 2
TOTAL 84 5 6 95
As on 30 September 2014, the fleet consisted of :

Aircraft Type Owned Leased Sale & Lease Back Total

B777-200LR 3 - - 3
B777-300ER 12 - - 12
B747-400 3 - 2 5
B787-800 12 - 5 17
A320 17 - - 17
A319 19 3 - 22
A321 20 - - 20
A330-200 - 2 - 2
TOTAL 86 5 7 98

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5.2 Network
The pattern of operations during 2013-14 for international operation was as under :

Routes Summer 2014 Winter 2014 Summer 2013 Winter 2013

India/New York 7 7 7 7

India/Chicago 7 7 7 7

India/Newark 7 7 7 7

India/London 21 21 21 21

India/Birmingham 4 7 4 (eff. 1 August 2013) 4

India/Frankfurt 7 7 7 7

India/Paris 7 7 7 7

India/Italy 7 (eff. 6 June 2014) 7 - -

India/Russian Federation 4(eff. 18 July 2014) 7 - -

India/Gulf 141 141 155 141

India/Australia 7 7 7 (eff. 29 August 7

2013)

India/Tokyo 3 3 3 3

India/Shanghai 4 4 4 4

India/Hong Kong/Osaka 3 3 3 3

India/Hong Kong/Seoul 4 4 4 4

India/Singapore 21 21 28 21

India/Bangkok 14 14 14 14

India/Yangon 3 3 3 3

India/Kathmandu 22 22 22 22

India/Colombo 7 7 6 6

India/Male 14 14 14 14

India/Dhaka 14 14 14 14

India/Kabul 6 6 6 6

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 AIR INDIA

5.3 Joint Ventures and Code Share Arrangements

As on 31 March 2014, Air India had code share arrangements with the following foreign carriers :

To : Operating Airline Marketing Airline Type of Code

Share
London -New York v.v. Kuwait Airways Air India Block Space
Frankfurt -India v.v. Lufthansa Air India Free Flow
Munich- India v.v. Lufthansa Air India Free Flow
Frankfurt-Berlin/Munich/Dusseldorf/ Lufthansa Air India Free Flow
Stuttgart/
Amsterdam/Copenhagen/Oslo/
Stockholm v.v.*
Frankfurt-Chicago/Los Angeles/ Lufthansa Air India Free Flow
Washington/
Denver/Detroit v.v.*
Delhi-Frankfurt v.v. Air India Lufthansa Free Flow
Mauritius -Bangaluru Chennai Mauritius Air Mauritius Air India Block Space
Mauritius-India v.v. Air Mauritius Air India Block Space
Vienna -Delhi v.v. Austrian Airlines Air India Block Space
Mumbai-Bangaluru, Chennai, Delhi, Air India South African Free Flow
Hyderabad, Trivandraum v.v.* Airways
Mumbai- Johannesburg v.v. South African Airways Air India Free Flow
Johannesburg-Durban, Capetown v.v.* South African Airways Air India Free Flow
Columbo- India v.v. Sri Lankan Airlines Air India Block Space
India- Zurich v.v. Swiss Air India Block Space
Singapore - Kolkata, Bangkok, Singapore Airlines Air India Free Flow
Kualalumpur, San Francisco, Los
Angeles v.v.
Addis Ababa- India v.v. Ethiopian Airlines Air India Free Flow
Addis Ababa -Dar es Salaam v.v.* Ethiopian Airlines Air India Free Flow
Addis Ababa-Nairobi v.v.* Ethiopian Airlines Air India Free Flow
Mumbai-Bangaluru/Kolkata/Delhi/ Air India Turkish Airlines Free Flow
Hyderabad/Ahmedabad/Chennai v.v.*
Delhi-Bangaluru/Kolkata/Hyderabad/ Air India Turkish Airlines Free Flow
Ahmedabad/Chennai/Amritsar v.v.*
India-Istanbul v.v. Turkish Airlines Air India Free Flow
Istanbul-Ankara/Izmir/Antalya/Adana/ Turkish Airlines Air India Free Flow
Dalaman v.v.*
Mumbai-Delhi v.v.* Air India Egypt Air Free Flow
Mumbai-Cairo v.v. Egypt Air Air India Free Flow
Delhi-Seoul v.v. Air India Asiana Airlines Free Flow
Seoul-Delhi v.v. Asiana Airlines Air India Free Flow

* For carriage of through 3rd/4th freedom traffic only and subject to connectivity.

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6. FINANCING INITIATIVES

Aircraft Financing :
AI financed five of the 787 aircraft through Bridge Loans obtained from the Standard Chartered Bank and Boeing
Capital Corporation. Since the collateral values of the 787 was not determined some of the financial institutions
asked for alternate security of aircraft instead of the B787. The take out financing of these aircraft will be through
a Sale and Lease Back arrangement whereby the Company would sell these aircraft to a selected bidder and in
turn lease these aircraft under an operating lease for 12 years. Till date the Sale and Lease back arrangements
have already been completed on 7 of the 13 delivered B787 aircraft as of 31 March 2014 and the bridge loans from
various financial institutions have been repaid.
The Company has also sold 5 of its 8 B777-200LR aircraft to Etihad since the 200 LR aircraft is being slowly
removed from the fleet due to the high cost of operations of this aircraft. The delivery of these aircraft have been
planned to take place in 2013-14 and 2014-15. Till 31 March 2014, the Company has already delivered 3 of these
aircraft to Etihad and the rest were delivered in the first quarter of financial year 2014-15.
7. AIR SAFETY

• A dedicated website flightsafety@airindia.in has been set up which aids dissemination of vital safety related
information in a cost effective manner to all employees of the Company.
• Cockpit and Cabin Surveillance checks are routinely carried out to monitor safe operation of flights.
• Cockpit Voice Recorder (CVR) monitoring on a regular basis with crew interaction through email to ensure
adherence of SOP in flight.
• Counseling of personnel is regularly conducted for safety enhancement and recommendations are sent to
various departments requiring time bound ATRs (Action Taken Reports).
• Flight Duty Time Limitations (FDTL) for pilots and Cabin Crew are monitored with violations addressed
appropriately.
• International and Domestic Safety Audits are carried out on a periodic basis.
• An Internal Audit is conducted for safety evaluation of the airline and findings are actioned in a time bound
manner. The associated report is filed with the DGCA.
• Airport Surveys/Risk Assessments are carried out before commencement of flight operations to a new
airport.
• Safety Action Group (SAG) meetings are conducted on monthly basis.
• Quarterly Exceedance Trend Analysis are generated which analyse exceedance of operational parameters.
These reports are sent to Operations/Training Departments for necessary remedial measures.
• Base audits at Mumbai and Delhi are conducted once a year. At other stations audits are conducted once in
two years.
• Compliance checks of DGCA CAR, MEL requirements, Safety Enhancement Training (SET)/Safety
Enhancement Recommendations (SER)/Corrective Training (CT) and Flight Duty Time Limitations (FDTL)
are carried out on a periodic basis.
• Safety Review Meetings with DGCA being held on monthly basis to brief DGCA on safety related issues.
8. GROUND HANDLING

As on 31 March 2014, Air India provided Ground Handling services at 43 domestic airports and 18 international
airports. Apart from this, AISATS, a Joint Venture Company of Air India is providing ground handling services at
5 international airports viz. Bangaluru, Hyderabad, Mangalore, Delhi and Thiruvananthapuram. During the period
2013-14 flights handled were as follows:

2013-14 2012-13
Air India 74,397 1,33,884
Foreign Carriers 30,004 27,759
Air India Express 9,141 7,193
Other flights 402 138
Haj flights 176 272
Total flights handled 1,14,120 1,69,246

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Renewal of Ground Handling Agreements for various ground handling services were undertaken and finalized
at Chicago, Colombo, Doha, Dubai, Frankfurt, Hong Kong, Jeddah, Kabul, Kuwait, London, Madinah, Muscat,
Newark, New York, Paris, Rihyadh, Seoul, Shanghai, Singapore and Tokyo. Further tender process undertaken for
arrangement of ground handling services and Ground Handling Agreements finalized at new online stations viz.
Birmingham, Melbourne and Sydney.
Joint Venture Agreement between Air India Limited and Singapore Airport Terminal Services (SATS) on
ground handling :
The Company has entered into a Joint Venture (JV) agreement with SATS, Singapore in the equity ratio of 50:50
to provide ground handling services to airlines at certain metro airport. This was in pursuance of Government of
India Notification on the Ground Handling policy.
During the year, total bills raised by AI SATS towards handling charges and other services provided to Air India
amounted to Rs.2,196.0 Million and total bills raised by Air India on AI SATS amounted to Rs.1,311.7 Million. As
per the books of the Company, the net balance payable to AI SATS as on 31 March 2014 was Rs.430.7 Million
and as per the balance confirmation received from AI SATS, net balance payable is Rs.442.7 Million. The net
difference of Rs.12 Million is under reconciliation and necessary accounting adjustment will be dealt with in due
course.
AISATS has made a Profit after Tax of Rs.421.5 Million during the year ended 31 March 2014. Dividend of 15%
was declared by the Joint Venture during the year.
9. Quality Management System (QMS)

Emergency Response Plan

As continuous efforts to be prepared to face an emergency, mock drills and table top exercises as per the
Emergency Management Manual (EMM) requirements were carried out. Also, various activities carried out as per
the Corporate Emergency Response Plan prepared for the year 2014. As a part of Air India becoming member of
Star Alliance, EMM was completely revised and now ERP is part of Star Alliance.
Documentation Management System(DMS)
Since 1 January 2013 when DMS went live, fair amount of DMS usage has been done by Departments. DMS
repository is used for safe keeping of documents as per Guidelines of Public Record Act, 1993 and Rules 1997.
Regular trainings are organized for Air India personnel on usage of DMS.
DMS is a major initiative moving towards near paperless office and for better transparency and document repository
to comply with Government requirements as well as regulatory requirements. This not only generates cost savings
for the Company but also improves efficiency, saves time as well as environment.
IATA Safety Audit for Ground Operations (ISAGO)
Head of QMS attended ISAGO Oversight Council (GOC) Meeting as Chairperson on 23-24 September 2014.
The ISAGO Renewal Audit of Headquarters of Air India Air Transport Services Limited (AIATSL), a wholly owned
subsidiary of Air India, was conducted by M/s AQS Auditor from 2-3 June 2014 with Nil findings and the Registry
has been renewed till 2016. Further, audit of AIATSL, Mumbai Station was conducted by the South African Airlines
Auditors from 28-30 July 2014 and the Registry has been renewed till 2016.
Operational Efficiency & Fuel Management
Environment Management System/Fuel Management Information System have been monitoring and
ensuring quality enhancement in all areas of fuel management, operational efficiency, cost reduction besides
implementation of green initiatives as well as emission reduction. Aviation Fuel Consulting group of IATS
were entrusted with the work of conducting the Fuel Efficiency Gap Analysis (FEGA) on the consumption
of aviation turbine fuel as well as implementation of specific cost saving opportunities. Implementation of
the recommendations of FEGA helped in saving fuel. Huge monetary, fuel savings and reduction in Carbon
Dioxide emission were achieved. Upto March 2014, 316,121,673 kgs of fuel was saved and carbon dioxide
emissions were reduced by 995,783,274 kgs.

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 AIR INDIA

Flight Planning System

The Flight Planning System has been implemented on all fleets i.e. B777, B787, B747 and A320 family. Besides Air
India, the system trials for Air India Express have commenced with the target date of project cut-over for B737-800
aircraft from 1 January 2015.
Corporate Safety Management System (CSMS)
Corporate SMS Plan 2014 covering various activities as per Audit Plan 2014 was prepared and followed.
Personnel in Air India and its subsidiary Companies are encouraged to make use of every channel to report
issues of concern which affect quality, safety and security of operations through the detailed standardised
formats.
IATA Operational Safety Audits (IOSA)
For continuous improvement as per the E-IOSA requirement, an internal Quality & Safety Audit was conducted as
per the E-IOSA Audit Programme.
IOSA validity of Air India is upto January 2016. For timely renewal of IOSA Registry, an agreement has been signed
with M/s Quali-Audit, France (Auditing Organisation) for conducting IOSA Renewal Audit in the year 2015.
10. INFORMATION TECHNOLOGY

Web Application for Visitor Entry Pass (WAVE)

WAVE was implemented in May 2013 for online registration of visitors visiting the Company’s premises and
generating Visitor Entry Passes. A Unique Reference Number and Unique Entry Pass Number is generated
for every visit. All the details of the visitors such as passport details, visa details, company information, etc.
are captured during registration which is valid for six months. The visitor can quote his reference number for
subsequent visits and need not provide his details again.
Fuel & Oil Bill Verification Application
An in-house developed server based application was implemented in July 2013 to cater the bill verification
pertaining to duty paid fuel.
Air India Datamart
AI Datamart was implemented on 22 October 2013 by rolling out the initial fifteen reports mainly pertaining to
Departure Control Services.
Air India Website
Air India website www.airindia.in was redesigned and launched on 5 September 2013. The multi-lingual multi-
country website has a Dynamic portion which interacts with Passenger Service System to provide real time
information on schedule, fares, flight status and PNR status etc., as well as providing integration to the booking
engine, sales promotion activities and customer services. The Static portion provides passenger and corporate
information in addition to mandatory government information. Flight Tracking application has been developed to
provide real-time flight status based on the flight data extracted from IOCC/Sabre.
11. SECURITY

The Security Department of the Company has a well defined security policy for safety and security of its
operations. It has a professionally managed set-up headed by Executive Director-Security, who is a senior level
IPS Officer on deputation from the Government and permanent and contract security personnel through its
subsidiary Companies viz. Air India Air Transport Services Limited (AIATSL), Air India Charters Limited (AICL),
Airline Allied Services Limited (AASL) and through Joint Venture of AISATS, who are deployed for providing
security coverage to all Air India flights and those of our customer airlines.

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In addition to its primary responsibility of providing security for our flight operations and property, the Security
Department also generates additional revenue for the Company by providing security services to customer
airlines.
Investigation & Fraud Prevention Cell (I&FP Cell)
The Investigation & Fraud Prevention Cell, a vital wing of the Security Department, deals with all revenue
and property crimes/frauds, including policies and procedures to prevent the travel of inadmissible passengers
on our flights to western countries with improper documents/documentation such as stolen/counterfeit/forged
passports and visae, counterfeit/forged/stolen revenue documents like tickets, Miscellaneous Charges Order
(MCO), credit card frauds, etc. Owning to this, the British Government has, through the Home Office (Her
Majesty’s Immigration Service), bestowed upon Air India the Approved Gate Checks status, which enabled the
waiver of several fines/penalties imposed by them for the carriage of inadmissible passengers (inadvertently) to
the UK on a case to case basis. In March 2014, Air India I&FP Cell was commended by US High Commission,
Mumbai for their efforts in detecting, deterring and dismantling Alien Smuggling operation in India during the
year 2013.
Training
High emphasis is assigned to training in the form of basic/first time, refresher and security awareness programmes
to Security personnel and officers/staff from other departments viz., Operations, Customer Services, Commercial
Department, by the Security Training Centre (STGC), Mumbai and Central Training Establishment (CTE),
Hyderabad. Both the training centres are authorised by the BCAS to conduct security training programmes based
on the National Civil Aviation Security Programme (NCASTP), which in turn has been formulated on the basis
of the Standards and Recommended Practices (SARPs) contained in Annexure 17 to the ICAO Convention on
International Civil Aviation, Chicago. New Training Centres are being established at Delhi, Bengalaru, Chennai
and Kolkata to facilitate speedy and economically viable security training to Air India and other Airlines’ staff,
within the four Indian Regions.
The Investigation & Fraud Prevention (I&FP) Cell has also been actively conducting training for the benefit of all
the frontline staff at the Booking Office (Reservations), Airport Offices and Check-in Counters at the Domestic
Stations. Till date, the I&FP Cell has trained over thousands of staff from Air India, other Customer Airlines,
Customs and Immigration Authorities (Government of India), in the field of fraud prevention.
12. HUMAN RESOURCES
12.1 Staff Strength
The staff strength as on 31 March 2014 was 23258.
12.2 Long Service Mementoes
Every year all the employees of the Company who had completed 25 years of service are presented with a
long service memento i.e. a wrist watch and a Certificate, on 27 August. Accordingly, this year on 27 August
2013, the Long Service Mementoes presentation function was held Region-wise and 684 employees were
felicitated.
13. MEDICAL SERVICES
During 2013-14, a revenue of Rs.2,83,185/- was generated by way of calibrating Alcosensor IV Instruments for
commercial airlines for conducting pre-flight medical checks.
A number of measures have also been initiated to reduce expenditure and achieve savings in Medical Services
Department :
 Purchase of life saving medicines for terminally ill patients directly from the manufacturers resulting in saving
of Rs.9,30,18,068/-.
 Availing institution discounts by stocking a large number of medicines in-house resulting in saving of
Rs.1,51,51,731/-.

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 Issue of prescription was curtailed and 5% discount was obtained from Panel Chemist resulting in savings
of Rs.59,33,650/-.
 Rs.1,87,000/- was saved on the cost of pre employment medical examination as the cost is borne by the
candidates as per the new policy.
Total savings by the Medical Services Department during the year under review amounted to Rs.11,42,90,449/-.
14. SPORTS
The Air India Cricket Team won the Atharva Patson Cricket Tournament held in Pune in November 2013, All India
Public Sector Cricket Tournament held in March 2014, Nepal Cup held in Kathmandu in March 2014.
The Air India Hockey Team won the Sr National Tournaments held in Pune and Lucknow in May 2013 and February
2014, respectively. The Team also won Sahibzada Ajit Singh Hockey Tournament held in Ludhiana in December
2013.
The Air India Football Team won MLA Cup held in December 2013, All India Public Sector Tournament held in
Kolkata in January 2014, Harwood League held in March-May 2013 and Kashmir Invitation Cup held in Srinagar
in June 2014.
The Kabaddi Team won Tournaments organized by Maratha Lancer Sports Club in Nagpur from 7-10 January
2014, Panchgani Vyayam Mandal in Pachgani from 18-21 January 2014, Daspati Krida Mandal, Chiplun from 20-
23 February 2014 – both State Level Tournaments and Mumbai District Championship held in Mumbai from 18-24
October 2013.
Air India won the All India Public Sector Cultural Competition held in Dehradun in 2013. The team was 1st Runners-
Up in the Cultural Competition held in Bangaluru in 2014 for its outstanding achievements by Sports persons in
Public Sector Units and overall achievement by Public Sector Units. The trophy was presented by All India Public
Sector Sports Promotion Board in the Annual Sports Award on 29 June 2014 at Bangaluru.
In Table Tennis Men’s A Team and Women’s A Team won the Inter Office Table Tennis Championship held in
Mumbai in May 2013. Youth Team-Girls, Youth Team-Boys won Bronze Medal in 43rd All India Inter Institutional TT
Tournament where Bronze was also won in Women’s Doubles. Air India Team won the 75th Maharashtra State TT
Championship. Air India Women’s Team won Bronze in All India Public Sector TT Tournament held at Trivandrum
in December 2013.
Air India Carrom Team won State Ranking Tournament held in Mumbai in October 2013. The team was Runners-
Up in State Ranking Tournament held in Mumbai in March 2014. The team was also Runners-Up in 15th Inter-
Institutional Carrom Championships held at Gwalior.
Air India won 4 Gold Medals in Central Zone Tournament held in Bangaluru on 26-27 September 2013. During
Senior National Championship held at New Delhi from 16-23 December 2013, 1 Gold, 2 Silver and 3 Bronze
Medals were won.
During Senior All India Major Ranking Badminton Tournament held at the following stations, Air India Team won :
Cochin during 29 January – 2 February 2014
Bangaluru during 4 – 8 February 2014) 2 Gold and 2 Bronze Medals
Hyderabad 3 Gold and 2 Bronze Medals
Pune during 17 – 21 July 2014 1 Gold,1 Silver, 1 Bronze Medals
Bareilly during 10 – 14 January 2014 2 Gold and 2 Bronze Medals
Ms Arti Rao won Gold Medal and Mr Gagan Narang won 1 Silver and 1 Bronze during 57th National Shooting
Championship held at New Delhi from 11 – 24 December 2013.
Mr Narang also became the winner of 1 Silver and 1 Bronze Medal for India in 2014 Commonwealth Games held
at Glasgow.

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 AIR INDIA

15. PUBLIC GRIEVANCES

During the year 2013-14, 293 Public Grievance cases were received. Out of these, 264 cases have been settled
during 2013-14 and 29 are pending.
16. STATUTORY COMPLIANCE
Air India has six subsidiary companies. The financial statements of the subsidiaries are included in this Annual
Report elsewhere. Their performance is briefly discussed here :
16.1 Air India Air Transport Services Limited (AIATSL):
(Rs.in Million)

Particulars 2013-14 2012-13

Air India’s investment in equity 0.5 0.5
Total Income 1018.2 750.1
Profit/(Loss) After Tax 21.9 5.1

AIATSL presently provides ground handling services at 63 airports. Apart from handling the flights of Air
India Limited and its Subsidiary Companies, ground handling is also provided for 29 foreign airlines and
4 domestic airlines for 115000 flights (Air India and Subsidiaries) and 27256 flights of customer airlines. A
total of 3865 staff on contract have been employed to carry out the work of ground handling on behalf of the
Company at various airports.
With the growth of the international traffic in and out of India and with Air India, the parent company, joining
Star Alliance, the number of airlines operating to and from India is likely to considerably increase in the
future.
AIATSL has an advantage of having the latest state-of-the-art equipment and skilled manpower to handle
these flights at various airports in India which no other Operator posseses presently. The Company is
therefore confident that looking into the future, the ground handling revenue would considerably increase
from handling foreign airlines and local domestic airlines.
With the Ground Handling Policy still undecided, AIATSL would also have advantage of operating from any
airport in India being the Subsidiary of Air India Limited.
As per CAPA, the growth in traffic in and out of India is likely to grow manifold. India, a growing Asian
economy, is amongst the fastest growing and currently the 9th largest aviation market handling 121 Million
domestic and 41 Million international passengers, is expected to become the third largest aviation market
by 2020 with the Country’s airports handling 336 Million domestic and 85 Million international passengers
with projected investment to the tune of US$ 120 Billion by 2020. This would lead to considerable growth in
ground handling and ancillary activities and AIATSL would stand to gain by this development.
AIATSL with pan India presence is to be the market leader in the country and with its capability should be
able to venture into few of the foreign countries wherever Air India is operating.
At all the stations Security Handling of all the flights is carried out exclusively by AIATSL staff, as the same
is not permitted to be outsourced to any agency.
16.2 Air India Charters Limited (AICL):
(Rs.in Million)

Particulars 2013-14 2012-13

Air India’s investment in equity 300.0 300.0
Total Income 20694.1 15608.8
Profit/(Loss) After Tax (3453.3) (3511.5)

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 AIR INDIA

AICL operates a Low Cost Airline under the brand name “Air India Express”. Launched on 29 April 2005 with
a fleet of 3 leased B737-800 aircraft, it operated from 3 stations in Kerala to 5 stations in the Gulf. As on 31
March 2013, AICL had a fleet of 21 B737-800 aircraft (including 4 dry leased aircraft). After the return of 4
leased aircraft during the first quarter of 2014, the Company currently has 17 owned B737-800 aircraft. It
operated to 11 Indian and 12 foreign on-line stations.
During 2013-14 AICL has carried 2.72 Million passengers as against 2.15 Million during 2012-13, an increase
of 26% against capacity increase of 17%. The Scheduled Services Revenue, before revenue sharing with
the holding company Air India Limited, increased substantially from Rs.17,750.9 Million in 2012-13 to
Rs.23,594.5 Million in 2013-14.
Air India Express began the winter 2013-14 with a total of 188 flights per week. Air India Express ended
the Winter 2013-14 schedule with 143 international and 20 domestic flights per week. The Company
made a loss of Rs.3,453.2 Million during the year 2013-14 as against Rs.3,519.7 Million during the year
2012-13.
16.3 Air India Engineering Services Limited (AIESL):
(Rs. in Million)

Particulars 2013-14 2012-13

Air India’s investment in equity 0.5 0.5
Total Income - -
Profit/(Loss) After Tax (0.03) (0.02)
The Board of Directors of Air India Limited, the parent company, at its Meeting held on 7 August 2010
approved operationalisation of Air India Engineering Services Limited. Cabinet Note for operationalisation
was submitted to the Ministry of Civil Aviation. Cabinet has approved operationalisation of AIESL on 6
September 2012. It is proposed that the assets and manpower from Air India Limited, will be transferred to
Air India Engineering Services Limited as per the decision of the Cabinet. The Company will be treated as a
separate profit centre for carrying out the Maintenance, Repair and Overhaul (MRO) activities of Airbus and
Boeing fleet. The process of operationalisation has accordingly started w.e.f. 1 February, 2013 with transfer
of Manpower to the Company. Further, steps have been initiated to obtain/fulfil various Regulatory and
Statutory approvals/compliances in order to start MRO activities.
16.4 Airline Allied Services Limited (AASL):
(Rs. in Million)

Particulars 2013-14 2012-13

Air India’s investment in equity 22.5 22.5
Total Income 2423.9 2692.6
Profit/(Loss) After Tax (2494.0) (1333.9)
The Company operates under the brand Alliance Air.
As on 31 March 2014 the Company had 4 ATR-42-320s and 4 CRJ-700s leased aircraft in its fleet. As at the
end of the year, the network of the Company consisted of 24 stations within the country. Presently, it has
been operating around 180 flights per week. As on 31 March 2014, the staff strength of the Company was
938 including 23 employees on deputation from the parent Company.
Alliance Air operated air services in the North East Region under an MoU with the North Eastern Council
(NEC) from January 2003 to December 2012. As the Viability Gap Funding (VGF) had been withdrawn by
NEC, the operations were re-structured and ultimately withdrawn in June 2014.
The matter was subsequently reviewed by the NEC and operations were restored effective 1 August 2014.

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 AIR INDIA

Alliance Air also operates flights between Agatti and the mainland under an undertaking of grant of VGF by
the Lakshadweep Administration.
16.5 Hotel Corporation of India Limited (HCI):
(Rs. in Million)

Particulars 2013-14 2012-13

Air India’s investment in equity 406.0 406.0
Total Income 505.0 463.6
Profit/(Loss) After Tax (404.7) (356.2)

Chefair Flight Catering, Mumbai

As all efforts to offer the unit under Management Contract failed, the Board of Air India Limited had advised
the Management to make the unit as a separate profit centre and give 30% of its catering business to HCI
without following the tender procedure. Accordingly, 30% catering business of Air India was granted to
Chefair without following the tender procedure.
The Unit earned a revenue of Rs.96.66 Million as against Rs.72.09 Million previous year. Expenditure
increased from Rs.182.63 Million during previous year to Rs.213.10 Million. The Unit made net loss of
Rs.137.06 Million as against Rs.120.43 Million in the previous year.
Centaur Lake View Hotel, Srinagar :
Subsequent to failure to offer the Unit of CLVH under Management Contract due to the intervention of the
State Government of Jammu & Kashmir, the Board of Air India Limited had directed the Management to
continue running the hotel after carrying out necessary renovation for upgrading the Unit.
The Unit incurred a net loss of Rs.65.06 Million as against Rs.36.08 Million previous year.
Centaur Hotel, Delhi and Chefair, Delhi
Chefair Flight Catering, Delhi (CFCD) and Centaur Hotel Delhi Airport (CHDA) were being upgraded.
During the year Centaur Hotel, Delhi and Chefair Flight Catering, Delhi incurred net loss of Rs.148.34 Million
and Rs.76.38 Million, respectively.
T3 Lounge, Delhi
The Unit started operations in January 2013 and earned a revenue of Rs.51.09 Million during the year 2013-
14 as against Rs.5.09 Million during the period January-March 2013. The Unit made an Operating Profit of
Rs.17.58 Million during 2013-14 and after providing for depreciation, the net profit for the year was Rs.17.51
Million.
16.6 Vayudoot Limited
As per Ministry of Civil Aviation Order No.AV.18013/44/92-ACVL dated 25 May 1993, Vayudoot Limited
was to be merged with erstwhile Indian Airlines (now Air India Limited). The Ministry vide its Order dated 6
February 2014 accorded its approval and Vayudoot Limited was amalgamated with Air India Limited with
effect from 1 April 2013.
17. RISK MITIGATION STRATEGIES
The Company continuously monitored the risks perceptions and taken preventive action for mitigation of risks on
various fronts.
18. INTERNAL CONTROL SYSTEMS
The Company continues to ensure proper and adequate internal control systems and procedures commensurate
with its size and nature of business to ensure that all assets are safeguarded and protected against loss from
unauthorized use and that transactions are authorized, recorded and reported correctly. The internal control

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 AIR INDIA

system enables documented policies, guidelines, authorization and approval procedures. Necessary actions were
also being taken to address some of the concerns raised by the Auditors in this regard.
The Company has an extensive system of internal controls which ensures optimal utilization and protection
of resources, IT security, accurate reporting of financial transactions and compliance with applicable laws and
regulations as also internal policies and procedures. The internal control system is supplemented by extensive
internal audits, regular reviews by management and well documented policies and guidelines to ensure reliability
of financial and other records to prepare financial statements and other data.
The Company has a well defined manual on delegation of authority and administrative powers, based on which,
the authorities exercise their powers. This manual is reviewed periodically to cope with the changes necessitated
by the needs of the organization. The said manual, along with the Company’s key functional process manuals,
further strengthens the internal control system of the organization. The Company has independent internal audit
systems to monitor the entire operations and services spanning over all locations, business and functions on a
regular basis. The Company has also employed outside consultants in its various areas of functioning in order to
reduce/monitor its cost platform.

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