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Sachin Mittal

Supratim KunduShubham

Rithesh KothariPawan Kr Singh

Isha SinghVikash Kharb

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Introduction National Aviation Company of India Limited was

setup by the government of India underthe Companies Act 1956 on 30 March 2007.

Head Office located atAir India Building in NarimanPoint, Mumbai.

Air India has the fourth largest share in India's

domestic air travel market, behind JetAirways, Kingfisher and IndiGo.

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Company Profile The Company was created to facilitate the merger of

the two main state-owned airlines in India: Air India,with its subsidiary Air India Express and Indian,together with its subsidiary Alliance Air(now called AirIndia Regional).

Division

Air India Express Air India Cargo

Air India Charters Limited

Air India Air Transport Services

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Recent History 1993 - In 1993, Air India took delivery of the flagship of its f leet

when the first Boeing 747-400

1996 - In 1996, the airline inaugurated service to its second US

gateway at O'Hare International Airport in Chicago. 1999 - In 1999, the airline opened its dedicated Terminal 2-C at

the renamed Chhatrapati Shivaji InternationalAirport in Mumbai.

2000 - Air India introduced services to Shanghai and to its third

US gateway at Newark Liberty International Airport in Newark 2004 - Air India launched flights to its fourth US gateway at Los

Angeles International Airport in Los Angeles

2009 - Air India introduced services to its fifth US gatewayat Washington Dulles International Airport in Washington, D.C

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Indian Civil Aviation SectorPlayers Market Share

Kingfisher Airlines and Kingfisher Red (previously Air Deccan) 28%

Jet Airways and Jet Lite (previously Air Sahara) 25%

Air India and Indian (previously Indian Airlines) 16%

IndiGo 14%

SpiceJet 12%

GoAir 3%

Paramount Airways 2%

MDLR Airlines 0.004%

0%

5%

10%

15%

20%25%

30%

Market Share

Market Share

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Air India

Overview

AI

WEAKNESSES

Poor Strategies,

High Competition,

Loss of market Share,

High cost, poor cost control

Inefficient use of resources

Bad reputation, Poor services

Poor aircraft maintenance

Highest manpower ratio to aircraft

STRENGTHSStrong Brand Name

Oldest Airline

Monopoly in certain routes

Govt Backup

Established InfrastructurePrime parking space / lots

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FleetType No of Aircraft Age

Owned Leased Total Owned Leased Average

A310 2 13 15 17.1 15.9 17.2

B747-300 2 - 2 18.9 18.9

B747-400 6 3 9 13.3 17.3 13.8

B777 3 4 7 0.2 10.1 5.9

Total 13 20 33 49.5 43.3 55.8

Type of Staff No

Regular 14587

Local staff at foreigh stations 150

Trainees 439

Local Staff 341

Total Staff 15517

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Organizational Strategies Marketing strategy:- outreach, corporate social responsibility Outreach-Special programmes and projects were lined up and

launched in the different states of India.

Corporate social responsibility- malyala manorama, planting 1 milliontrees

Flying Returns Program- The flying returns is a frequent flyer program Aircraft Cabin Up gradation- The up gradation of its old carrier like

A310-300 by painting, seat refurbishment and upgrading entertainmentsystem

Medical Tourism-AI has tied up with M/s Vedic India to tap growingmedical tourism market, Medical packages including airfares areoffered to all those who are willing to undergo treatment in India

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Strategies

Cont..Growth Methods/ Operations : - The fleet size of AI in 2001-02 was 29 which have grown

up to 41 in 2005-06.

However in the present scenario on comparisons with itsfull service players like jet, the fleet size is less.Finance: Operating revenue in 2005-06 is Rs 8833.70 crores which

has increased from Rs. 4751.36 crores in 2001-02.

Operating expenses has increased from Rs. 4805.89 croresin 2001-02 to Rs. 9233.30 Total Debt has increased from Rs. 1261.96 cr. in 2005 to Rs.

3622.82 cr. in 2006,

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Financial Performance

0.9 1.3 2.23.2 5.2

8.8

10.2

68.3

Revenue Breakdown 2009-10

Pool

Ex Bag & Mail

Other Receipts

Revenue Sharing - AICl

FreightCharter and Code Share

Handling & Incidental

Passenger

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Revenue / Expenditure Total Revenue declined from Rs. 134,793.8 million last yr

to Rs. 134,022.7 million (reduction of Rs. 771 ml). Reductiondue to

a. Drop in yields coupled with global rescision

b. Due to policy on bi-lateral & ground handling

Expenditure incurred was Rs. 190,358.3 ml against lastyears Rs. 206,680.1 ml (diff of Rs. 16, 321.8 ml).

a. Decrease in fuel price by Rs. 19060 ml, i.e. 29%

b. Reduction in booking agency commission by Rs. 276.8 ml

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Problems Bloated Workforce 28,000 permanent staff, double of

Jets headcount. It operates 127 aircrafs compared toJets 115.

Highest Employees per Aircraft in the world 200:1where as desirable is 130-170:1

Deeply ingrained corruption; a culture of complete

sloth in administration. Poor marketing and campaign management as

compared to spicejet, jet or kingfisher.

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Recommendations

Adopt strict cost control measures :1. AI should improve their overall efficiency and try to cut

costs in all their operations

2. AI should focus on online ticketing andremove travel

agents to cut on commissions.3. Instead of hiring expatriates pilots AI should make its

own flight training schools and making the students havebonds with the company.

Limit Government control :1. Management of AI can barely take important descision

2. government can offer portions ofAI equity to the public.It can also divest 20 percentof .

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Recommendations Cont..

Increase Fleet SizeAI is in a vacuum, the market is growing, its fleet is aging,and other airlines have started flowing into India, itdesperately needs to acquire more fleet

Refresh and Rebrand the company Follow differentiation

1. It can differentiate by serving non stop flights to routeswhich are not provided by others, flights to wide range of

destinations . 2. They need to highlight customer service as their USPs by

provide best catering and good maintenance of rest room

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Recent Strategic ImplementationsAI launched an economy class package worth Rs.

30,000 and a business class package for Rs. 50,000which will allow passengers to enjoy unlimited flightswithin the country for a minimum period.

Long pending salaries of employees would bedisbursed by June 2011.

AI in talks with 26 banks to restructure debts The latest model would focus on hub-and-spoke route

model, cut costs by redeploying staff and unload non-core real estate.

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Strategic Implementations Cont.. Route Rationalization Services were withdrawn on

Calicut/Cochin-Muscat, Calicut-Kuwait/Doha/Bahrain