Brief Background Of Air India Commerce Essay

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The global airline industry provides service to nigh on every corner of the globe, and has been a vital part of the design of a global economy. The airline industry itself is a major economic force, both in terms of its own operations and its impacts on related industries such as aircraft manufacturing and tourism, to name but two. A small number of other industries generate the amount and force of attention given to airlines, not only among its participants but from government policy makers, the media, and about anyone who has a sketch about a particular air travel experience.

All through much of its development, the global airline industry dealt with major technological innovations such as the introduction of jet airplanes for commercial use in the 1950s, after that the development of wide-body "jumbo jets" in the 1970s. At the same time, airlines were profoundly regulated all over the world, creating an environment in which technological advances and government policy took primacy over prosperity and competition. This has only been in the period since the economic liberation of airlines in the United States in 1978 that questions of cost effectiveness, operating profitability and cut-throat performance have become the important issues facing airline management. With the US chief the way, airline liberalisation or at least "liberalization" has now widen too much of the industrialized world, affecting both domestic air travel within each country and, perhaps more importantly, the progressing evolution of a highly competitive international airline industry.

Many inventions have changed how people live and experience the world as much as the invention of the airplane. During both World Wars, government subsidies and demands for new airplanes greatly enhanced techniques for their design and construction. Following the World War II, the first commercial airplane routes were set up in Europe. Over time, air travel has become so commonplace that it would be difficult to imagine life without it. The airline industry, therefore, certainly has progressed. It has also altered the way in which people live and demeanour business by shortening travel time and altering our concept of distance, making it possible for us to visit and conduct business in places once considered remote.


Air India is a statutory corporation which came into reality with the acting out of the Air Corporations Act on 1st August 1963 when the entire air transport industry in India was publicly owned. Before nationalisation, planned air transport came into life form on 15th October, 1932 as TATA Airlines established by J.R.D. Tata. This was subsequently transformed into a public limited company on 29th July 1946 and renamed Air India. On 8th March 1948 it was incorporated as Air India International with 49% Government chipping in. The Air Corporation Act was amended on 8th June, 1962 when the suffix 'International' wa.5 dropped to read the airline's name AIR-INDIA. The conglomerate was specially constituted to organize to international markets and has been working in that direction till date.

In effect of the government of India's policies en route for economic liberalisation and privatisation of public sector, a bill has been it shaped in the Parliament (in May 1992) to rescind the Air Corporations Act, 1953 as an outcome of which Air-India is jump to lose its statutory status. In the meantime, a company has been registered under the Companies Act, 1956 named Air-India Limited in New Delhi which proposes to take over the functions of Air-India consequent upon the revoke of the Air Corporations Act, 1953. Being a statutory corporation; Air-India submits an yearly report of its activities to the Parliament through the Ministry of Civil Aviation. It enjoys functional sovereignty and its management is through a Chairman and Managing Director (CMD) who works under a Board of Directors. The Board is re-structured every two years by the Government. The Board of Directors is the chief central body of Air-India. Chairman cum Managing Director (CMD) 1s the Chief executive of the corporation.


Organisational structureC:\Users\Sooraj ganapathy\Desktop\Assignment files\Untitled.png







SafetyThere are various departments for Air India ltd. They are floated below:-



Customer service

Human resource

Departmental Structure



AIR INDIA's mission is to provide convenient connectivity in the short range and international routes at the most affordable prices to passengers.


Strive to give the passengers the best and serve them as an integral part of the business.


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Source: (Batra, 2010)


The role of economic development of any nation depends on the degree of effective mobilization of the human resource. The economic planning envisaging material progress should count on the role of human labour for harnessing the physical resource of the economy. Human resource department is the backbone of all companies. So the management of human resource is very critical for the smooth functioning of the business. Recently the concept of human resource management has been updated as strategic human resource management. HRM is expected to add value to the strategic utilization of employees and the effect of these programs on the workers helps the concern to attain its targeted goals in a reckonable way. Managing personnel is a key function of Human resource department because the employees are now considered as the assets of an organisation. They are the people who create a success or failure in the company. A well planned management structure leads a company to its prime goal. Commonly the main functions of Human resource management are to plan, to organise, to acquire human resource, to direct and to control. Apart from these functions there are some key activities of personnel management.

The physical presence of labour combines with his attitude creates a special place for labour in the production function. The approach of labour toward the worker holds the vital for his routine and unless a labour is passionate, dedicated and loyal, the fruit of his abilities instinctive acquired and developed cannot be frequent. It can be said without any doubt that all industrialist should realize that "one can buy a man's time the physical attendance at a particular place , even few physical movements, but eagerness , initiatives, loyalty and devotion to duty cannot be bought".


Management of human resource is critical because of the human element in the organisation. So the personnel management is that much important for the success and existence of a company. The Human resource policies and decisions are to be taken with maximum concern to develop a well established company and a congenial atmosphere within. The key activities of Human Resource Management are described below:

Source: (C.R, 2004)

Manpower Planning (Workforce)

Manpower planning or human wealth planning is a key decision which is the first step human resource management process. Before everything the manager should assess and decide what the current manpower position in the company is and is there any need of further recruitment and selection. So the planning and forecasting are to be done for acquiring skilled personnel. If the planning is effectively done then the other procedures will be carried on resourcefully. Research is an integral part of this process.


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Recruitment is the course of planning and acquiring the manpower of the concerned company. It is a procedural and structural process of developing a successful and fruitful human wealth in a company for the achievement of its goal. Recruitment is the bread and butter of all companies which facilitates a smooth functioning of the organisation and helps to withstand in the competitive market. Recruitment is the process of hiring right candidate for the right job, at right time and at a minimum cost.

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The selected candidates should be worked for years without any layoffs. So the organisation should go all-out to retain them. Retention is an important function which reduces cost and recruitment expenses. If the existing employees are retained in the organisation there's no need to acquire further more and create unnecessary expenses. So the employees should be retained by providing them all expected compensation and benefits, well maintained working condition and a friendly relationship.


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The acquired candidates will be put through the training and development process to make them able and professional in the assigned job. Training and development is an activity of moulding the employee to work in the competitive world. Training is a process of learning a procedure of programmed performance. It improves the employee's present job and prepares them for a proposed job. Development not only improves job concert but also brings about the growth of the personality. Workers not only mature regarding their prospective capacities but also become professionally skilled. Training means imparting new skills and Development simply means perfecting existing skills.


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The compensation and benefits what an employee gets is his motivation to work hard in the work environment. The reward system should be planned strategically and systematically. A well organised structure of payments make a worker more dedicated towards the work imparted. This will encourage the employee and develops a commitment. The attractive rewards like allowances, bonus.etc influences the employee to a great extent in his career.

Rewards can be of various types:

Basic pay





Employee development should be concentrated in areas that smooth the progress of staff developing their careers to attain their personal goals and to assist the company in meeting current and future potential needs. Planning the career is a crucial moment for every persons and the succession planning is important for the company. Career planning is person oriented and succession planning is organisation centred. Career and succession planning has two key objectives. One is to bring professional development within the company and the other is to meet the manpower requirements in the company. Succession planning is important for the company for acquiring the sufficient personnel requirements and to utilise the human resource fruitfully.

Source: (James, 2010)

Human resource strategies and basic HR policies



Personnel management is the central activity in any business. In AIR INDIA also it's an important function for which they make every effort to top in the airline industry. So they always focus on systematic planning, recruitment and development process. There are some key activities of human resource management which are carried on strategically for the well being and survival of the airline business and also to withstand in the industry. The various functions which are considered as the key activities are as follows:


Planning the manpower requirements in AIR INDIA LIMITED is a crucial step in the HR management like all other companies. They are very much successful in the planning personnel requirements in the company and they follow a procedural process for this matter.

By manpower planning AIR INDIA focuses on the process of acquiring:

The right candidate

At the right time

At the right position

At a desired cost

At the adequate skill

Personnel planning model of AIR INDIA LIMITED

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Source: (CHAUDHURI, 2011)

Human Resource Management - Policies to Close the Employee Gap in AIR INDIA

The key HRM activities to manage the personnel gap include:

- staffing plans (how many people, where, what type, how)

- Training plans

- Laying-off plans

- Employee Retention Plans (how the business intends to keep the staff it wants to retain)

At first the company plans and forecasts the present need of the staffs and develops strategies to acquire them quickly. The profiling process is a crucial step because it's the foundation of manpower planning. For filling the gap between the analysis and developing strategies they plans how to do staffing, training, laying off and employee retention.

Manpower planning is an important function for all companies in the airline industry. For example, Air Asia has implemented new strategies for the planning the manpower needs. They use 'Delphi method' of forecasting the employee needs. In this method the management depends on the expert opinions and seek their views and response for planning the number of people to be employed.

Planning manpower is important in other industries also. For example in SAINT GOBAIN GLASS INDUSTRIES they have systematic planning criteria for manpower planning and acquiring and they make use of 'Thumb rule' method which is on the basis of company's beliefs with regard to forecasting manpower needs.

Source: (Khera, 2012)

AIR INDIA makes use of 'Time and motion study' for personnel planning and forecasting. In this method the engineer assess and observes the movements of an employee and his productivity in terms of time taken for finishing the activity.

In recent years the planning and forecasting process of AIR INDIA is in a critical situation because of some managerial and government regulations.


Recruitment is the process of acquiring right employees for the right position. Like other companies AIR INDIA gives more attention to the recruitment process. Recruitment is the bread and butter for an airline company because of the human wealth are the back bone of the company. The crew works behind the operations should be recruited efficiently for the purpose of attaining the organisational goal. The employees of AIR INDIA are well qualified and skilled so that the day to day operations of the company runs smoothly. They maintain a strategic and systematic process of recruitment.

Air India's recruitment process goes through different activities for hiring the cream from the available group of candidates.

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AIR INDIA follows a chronological process of recruiting the employees so as to utilise them fruitfully. Apart from this company there are some other companies like Deloitte; they have more effective and intelligent way of acquiring and retaining employees. For that purpose they create a friendly atmosphere in the organisation at the time of interview and during the work also.


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AIR INDIA adopts structured and unstructured interviews to evaluate the employees' skill, knowledge, mental strength, weaknesses, capacities and behavioural factors.

During recruitment and selection AIR INDIA make use of some selection methods:

Among these the graphology method is conducted vary rarely in the organisation. In some recruiting agencies of AIR INDIA they make use of graphology examination which is a method based on the handwriting of the candidate.


The selected employee must be retained in the company. Air India Limited is a company which is operating in the competitive airline industry. To bring the wandering employees to the mother ship is considered as the main function of AIR INDIA LIMITED in their personnel management process. The employee retention plan is important because the human wealth in the organisation should not think to leave the organisation at any situation. AIR INDIA uses the following techniques to retain the employees:

Source: (DESSLER, 2010)

However, in airline industry the AIR INDIA faces a tight competition due to some recent issues going on within the organisation. In that situation the Singapore airlines like companies make use of the situation by enhancing their business. They have a well planned and the best recruitment and retention techniques to compete. They create a challenging environment in the industry.


After the successful completion of recruitment and selection the company should focus on the training and development of the candidates. The employees are to be trained in the competitive manner and developed in the best possible way to work and make company a well established company. Training is the process of imparting knowledge and skills to the employees by conducting some on-the job and off-the job training methods. Before conducting the training the need for training is assessed first. For that matter they conduct task and routine analysis.

There are some extensive lists of developmental activities conducted by the AIR INDIA to develop the existing employees regarding their mental and work abilities. Development is done by them for the purpose of developing new skills and nurture the employees in his work by providing them challenging job or new responsibilities to feel him secured and considered.

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Methods used by AIR INDIA LIMITED for training




On the job training such like audio visual training, distance internet based training, computer based training are used.

Off-the job training like case studies, work related games, seminars and role playing are adopted for moulding the employees in the organisation.


In all companies the compensation or benefits an employee gets is the basis of level of motivation. If he gets paid high he will be satisfied otherwise he feels unhappy and insecure. AIR INDIA is a public limited undertaking so that the pay scale of the employees remains consistent and impartial. They maintain a well built payroll system within the organisation. Compensation and benefits plan is a major issue in all organisations if it's not in the structured manner. The rewards may be in monetary or non-monetary terms. AIR INDIA provides both.


Main objective of providing better compensation is talent management. AIR INDIA concentrates on to create a talent pool by rewarding and considering them high Compensation is the practices of maintaining balance between interests of working the company within the fiscal budget and attracting, enhancing, retaining, and satisfying high quality staff through wages and salaries which are competitive with the existing rates for parallel employment in the markets. This is the cornerstone of an efficient talent management strategy. The compensation and benefits which they provide to employees make them work hard to achieve their personal as well as organisational goals.

For example, Infosys Technologies is a company focus on the employee satisfaction and benefits for performance. They have a well designed structure of rewarding the employees. They pay and treat them high.

Source: (Centre for Monitoring Indian Economy, 2012)

Even though the remuneration to the personnel is paying reasonably there's some disputes going on in the Airline sector of AIR INDIA. This creates a challenging working environment for the concern in this competitive airline industry. But with the support of the central government and the strategic management planning the danger of failure of the company reduced. The plans and policies of the company regarding remuneration are going to be amended this year for the future prospects of the company and its long term survival.


Career planning and succession planning are the two important aspects of human resource talent management. The main objective of the both concepts is to manage the talents. Succession planning is meant for the company where as career planning is for the candidate, ie, AIR INDIA LIMITED focuses on succession and the employees focus on their career. Talent management should be focussed for maintaining quality staffs.

My vision of my future

Career management

Individuals' talent identification and mapping Career and Succession planning model

Company's vision of its future

Succession planning

Organisational talent mapping &identification

Source: (RAO, 2000)

Talent management in AIR INDIA

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Source: (Khera, 2008)

The company should know is there enough manpower resource to fill the gap at the time of employee turnover, absenteeism or retirement of the employees. Succession planning is done in this company for filling the gap fruitfully.


India's national airline Air India has infrequently been out of the headlines. There are some burning issues going on in the airline industry regarding AIR INDIA. The problems were started with the unexpected hike in crude oil prices in 2008 and eventually the overall cost of the company shoot up. So government wanted to tighten the policies and rules regarding the compensation and the facilities provided by the company. The current issues in the airline sector of AIR INDIA are:

Issue regarding training and development

Trouble continues as staff staged a protest over training opportunities:

Financial snags or burning disputes with staff are a persistent issue with the AIR INDIA airline. If the employees are not treated well and they are not paid enough then they will obviously protest and make noise. About 200 pilots of AIR INDIA collectively called in sick for work - resulting in a number of international cancellations from Mumbai and Delhi. Source: (KANNAN, 2012)

Employee retention

Employees are not considered and served well in the organisation in terms of the facilities what they should get other then the compensation. AIR INDIA LIMITED recently went down to the path of total failure in their retention plans. The manpower planning was disappointing in these days. Management's decisiveness and reluctance to take difficult decision will never create a recovery.

Source: (singh, 2012)

Issues regarding recruitment and selection


The AIR INDIA AIRLINES faces a challenge of under staffing due to unstructured recruitment criterion. The understaffing created so many vacancies in the organisation but it still remains unfilled. Due to lack of much manpower in the company the AIR INDIA had to face many related problems and difficulties.

Source: (DUTT, 2012)

Issues regarding Compensation and benefits

The issue regarding crude oil price affected the airline industry and the total overall cost of the business and the new projects proposed increased unambiguously. Eventually that affected the total cost and expenditure. Due to this situation the government tightened the flow of money and remuneration policies. They hesitated to pay much benefits and rewards to the employees. The disparity in the pay scale created so many issues and between AIR INDIA's management and pilots.

Source: (Laxman, 2012)

Recommended Solutions based on Top of the Class

The Human resource management systems of AIR INDIA need to be reorganised and restructured for resolving these issues. The issues like employee retention can be reduced by introducing new methods in employee retention strategies like paying the employees as much as they work and give them recognitions, providing them more benefits and more and more opportunities and responsibilities to work high and to improve their skill. There should be a well defined recruitment and staffing process which reduces the understaffing problems and the difficulties relating to selection process. The government should make the budget policies and reward system more favourable to the employees of the organisation to eliminate the rewarding related problems.


In this era of uncertainty the airline industry is facing recession in recent years and the combination of oil price and taxes are in a boom stage. The unfair policies of the petroleum companies and the government affected the world economy as a whole. The AIR INDIA LIMITED has become the main victim for that decision. The policy to withstand in this situation which is brought forwarded by the management of AIR INDIA LIMITED was impractical and unsuccessful. The competitors like Singapore airlines, Air Asia could maintain their good name without affecting the operations. The human resource management policies and practices of AIR INDIA is well planned and systematically designed. But the limitation regarding the implementation of the plans and programmes designed was the core reason for their failure. And also the improper discourse between the management and the government created main title in the front page of dailies. So the success is not only in designing the rules and regulations but also in its fruitful implementation. To hedge the risk of business crash the planning and implementation of HR policies and practices need to be focused and reviewed periodically.


360 Degree Performance Management Feedback System:

Fair Evaluation System for Employee:

Good and healthy working condition: