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Home » Finance Case Studies » Indian Airlines' HR Problems

Indian Airlines' HR Problems Finance Case Studies

Indian Airlines (IA) the name of India's national carrier conjured up an image of a monopoly gone berserk with the absolute power it had over the market. Continual losses over the years, frequent human resource problems and gross mismanagement were just some of the few problems plagued the company. Widespread media coverage regarding the frequent strikes by IA pilots not only reflected the adamant attitude of the pilots, but also resulted in increased public resentment towards the airline.

IA's recurring human resource problems were attributed to its lack of proper manpower planning and underutilisation of existing manpower. The recruitment and creation of posts in IA was done without proper scientific analysis of the manpower requirements of the organization. IA's employee unions were rather infamous for resorting to industrial action on the slightest pretext and their arm-twisting tactics to get their demands accepted by the management.

During the 1990s, the Government took various steps to turn around IA and initiated talks for its disinvestment. Amidst strong opposition by the employees, the disinvestment plans dragged on endlessly well into mid 2001. The IA story shows how poor management, especially in the human resources area, could spell doom even for a Rs 40 bn monopoly.

IA was formed in May 1953 with the nationalization of the airlines industry through the Air Corporations Act. Indian Airlines Corporation and Air India International were established and the assets of the then existing nine airline companies were transferred to these two entities. While Air India provided international air services, IA and its subsidiary, Alliance Air, provided domestic air services. In 1990, Vayudoot, a low-capacity and short-haul domestic airline with huge long-term liabilities, was merged with IA. IA's network ranged from Kuwait in the west to Singapore in the east, covering 75 destinations (59 within India, 16 abroad).

Its international network covered Kuwait, Oman, UAE, Qatar and Bahrain in West Asia; Thailand, Singapore and Malaysia in South East Asia; and Pakistan, Nepal, Bangladesh, Myanmar, Sri Lanka and Maldives in the South Asian subcontinent. Between themselves, IA and Alliance Air carried over 7.5 million passengers annually. In 1999, the company had a fleet strength of 55 aircraft - 11 Airbus A300s, 30 Airbus A320s, 11 Boeing B737s and 3 Dorniers D0228.

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