Does Air India Deserve a Bailout from the Government?
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Does Air India deserve a bailout from the Government?
Founded by J. R. D. Tata in 1932 as Tata Airlines
Became public Limited in 1946 under the name Air India International
In 1953, Govt. of India nationalized air transportation Industry under Air Corporations Act and took full control of Air India.
In 2007, Indian (formerly Indian Airlines) merged with Air India
Scenario before late 80s
Air India was an Overstaffed organization
Involved in sticky negotiations with Unions
High Gasoline taxes
Flying on non profitable routes for prestige reasons
Air-India was flying many flights with intermediate stops due to pilots refusal to fly more than nine hours
Revitalization of Air India
Convinced the government to reduce its gasoline tax
Convinced the pilots to fly longer flights
Increased the number of flights to Europe, making Frankfurt, Germany, a hub.
Adjusted the timing of the flight to have better connectivity.
Marketed more profitable business class seat to affluent fliers.
Pricing Strategy
Introduced Students schemes
No rise in Fuel surcharge even after it was up by Rs. 300 in private airlines, hence cheaper fares
Discounts of up to 70 per cent on 41 short-haul routes like Agartala-Guwahati, Chandigarh-Delhi, Hyderabad-Tirupati etc.
SWOT Analysis
Government backup
Strong brand name
Oldest Airline
Monopoly in certain international routes
Rights to travel 96 destinations
Established infrastructure
It has prime parking space/lots
Poor HR Strategies
Inefficient usage of resources
Aging fleet
Poor aircraft maintenance
Highest manpower ratio to aircraft
Overpriced commission to travel agents
Less advertising
Expanding tourism industry
Untapped second tier cities
Geographic location
Lower Costs, Higher Quality
Increasing competition from private airlines
Entry of foreign players, especially Middle East Aviation
Economic slowdown/Recession
Highlight the story of Air mismanagement in general
Reasons for debacle
Senior pilots on desk jobs get flying allowances even when they dont fly
111 aircraft acquisition plan for a whopping $10 billion, but when aircrafts did arrive the airlines had not planned for crew and marketing
Over a dozen aircraft , including brand new 777s were idling
Air India doesnt need all the ordered 111 aircrafts since it is finding it tough to fill seats in many of the

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