Organizational Study

Air India Ltd .

Conducted At

AIR INDIA LTD

Submitted by

AMOGH S MIRASHI

Registration No : PG13099

In partial fulfillment o f the requirement

For award

Of

II Yr PG Diploma

IN

Marketing

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January 2013-1015

Certificate

This is to certify that Mr.Amogh S Mirashi, Roll no PG13099 student of PGDM has successfully completed his project “Organizational Study On Air India Ltd”,in partial fulfillment for the award of degree of 2 Year PG Diploma during the academic session 2013-15.The project report has been approved as it satisfies the academic requirements prescribed for the said degree.

Guide HOD

 Examiner

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COMPANY LETTER HEAD

CERTIFICATE

Certified that this project/Internship report titled ……………………………………………..” is

the bonafide work of “…………..<NAME OF THE CANDIDATE(S)>.…………” who carried

out the project/Internship work under my supervision.

SIGNATURE

Corporate Guide (Full Name & Designation)

Company Seal

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Declaration

I Mr.Amogh S Mirashi, Roll no PG13099., student of PGDM, ISBR Business School, Bangalore hereby declare that the research project report on “ Organizational Study Of Air India Ltd .”, is an original and authenticated work done by me. I further declare that it has not been submitted elsewhere by any other person in any of the University for the Award of any degree or diploma.

Date: Amogh S Mirashi

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Acknowledgement

I would like to thank my Project Guide Dr. Saptarshi Mukharjee for his immense guidance, which led me to complete the project under his guidance

.I would like to thank all the staff members of Air India Ltd ( Goa) to have cooperated with me during these 30 days , I would like to mention special thanks to Mrs Manjiri Shirodakr ( Satation Manager Air India Goa ) & Mr Harish kalthe ( Accounts manager Air India Goa ) for giving a deep insight into the organization and its functioning .

Contents

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Executive Summary Page no.

Chapter I

i. Introduction Page no.

Chapter II

i. Importance of study Page no.ii. Company profile / Industry Detail / Products /Services Page no. iii. Objective of Study Page no.

Chapter III

i. 7 S Framework Page no.ii. SWOT Analysis Page no.

Chapter IV

i. Conclusion and recommendations Page no.ii. Suggestions Page no.iii. Limitations of the study Page no.

Appendix

i. Bibliography Page no.

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Letter Of Acceptance

This is to certify that Student of ISBR Business School , Amogh S Mirashi will be doing his project organizational studies starting form 7th Jan to 6th feb 2014 in our organization Air India Ltd.

Signatory authority

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(Station manager Air India ltd (goa) )

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CHAPTER I

Introduction

INDIAN AIRLINES INDUSTRY- AN OVERVIEW

Defining Aviation sector

The airlines industry comprises passenger air transportation; both scheduled

and chartered, but exclude air freight transport. Industry volumes are defined as the total number of passengers enplaned at all airports within the country or region. Industry value is defined as the total revenue obtained by airlines

from transporting these passengers.

The Indian airlines industry generated total revenues of $6 billion in 2006,this representing a compound annual growth rate (CAGR) of 27.6% for the

period spanning 2002-2006.

The domestic segment was the industries most successful in 2006,generating total passenger volumes of 36.4 million, equivalent to 90.9% of

the industry's overall volume.

The performance of the industry is forecast to accelerate, with an anticipated CAGR of 39.3% for the five-year period 2006-2011 expected to drive the

industry to a value of $31.5 billion by the end of 2011.Airline passenger volumes increased with a CAGR of 25.6% between 2002 -

2006, to reach a total of 40.1 million people in 2006. The industry's volume is expected to rise to 205.2 million people by the end of 2011, this

representing a CAGR of 38.6% for the 2006-2011 period.9

AIR INDIA

History of Air India

Air India is India’s national Airline. Air India’s history can be traced to October 15, 1932. On this day J.R.D. Tata, the father of Civil Aviation in India and founder of Air India, took off from Drigh Road Airport, Karachi, in a tiny, light single-engine de Havilland Puss Moth on his flight to Mumbai via Ahmedabad. Air India was earlier known as Tata Airlines. At the time of its commencement, Tata Airlines consisted of one Puss Moth, one Leopard Moth, one palm-thatched shed, one whole time pilot, one part-time engineer, and two apprentice-mechanics. Tata Airlines was converted into a Public Company under the name of Air India in August 1946.On March 8, 1948, Air India International Limited was formed to start Air

India’s international operations. On June 8, 1948, Air India started its

international services with a weekly flight from Mumbai to London via Cairo and Geneva with a Lockheed Constellation aircraft. In early 1950s due to deteriorating financial condition of various airlines, the Government decided to nationalize air transport. On August 1, 1953 two autonomous corporations were created. Indian Airlines was formed with the merger of eight domestic airlines to operate domestic services, while Air

India International was established to operate the overseas services. The word 'International' was dropped in 1962. With effect from March 1, 1994,

the airline has been functioning as Air India Limited.

Air India's worldwide network today covers 44 destinations by operating services with its own aircraft and through code-shared flights. Important destinations covered by Air India are Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Osaka, Singapore, Tokyo, Seoul, Dar-es-Salam, Nairobi, Frankfurt, London, Paris, Birmingham, Abu Dhabi, Al Ain, Bahrain, Dammam, Doha, Dubai, Jeddah, Muscat, Riyadh, Kuwait, Los Angeles, Chicago, Newark,

New York, and Toronto. Air India’s fleet consists of 38 aircrafts. These include 12 Boeing 747-400, 1Boeing 747-400 COMBI, 2 Boeing 747-300 COMBI, 19 Airbus 310-300,and 4 Boeing 777-200 & 11 Boeing 787-8 Dreamliners

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CHAPTER II

INCORPORATION

Established in 1953 under Air Corporations Act

Became Public Limited Company in 1994

Registered Office: New Delhi

Head Office : Mumbai

Authorized Capital : Rs 500.00 Crores

Paid-up Capital: Rs 153.84 Crores

Subsidiary Companies

Air India has the following Subsidiary Companies:

(a) Hotel Corporation of India

(b) Air India Charters Ltd.

(c) Air India Air Transport Services Ltd

(d) Air India Engineering Services Ltd.

Subsidiary Companies

Hotel Corporation of India Ltd (HCI)

Centaur Hotels at Juhu, Mumbai Airport and Rajgir :Sold

Centaur Hotel at Delhi, Chefair-New Delhi and Chefair-Mumbai : Under Disinvestment

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Air India Charters Ltd (AICL)

New Airline Air India Express set-up under AICL

All AI Express operations carried out on B-737-800 with a current

fleet strength of 12

Air India Air Transport Services Ltd(AIATSL)

Incorporated in June 2003

Set up to undertake ground handling & other allied activities

Being operationalized at all domestic airports

Air India Engineering Services Ltd(AIESL)

Incorporated to undertake engineering and other allied activities

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ORGANIZATION STRUCTURE

This is somewhat simplified organizational structure chart of Air India Ltd.

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Organizational Structure of the booking office Air India (goa)

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CORPORATE VISSION MISSION & OBJECTIVES

Vision

To be among top five Asian airlines in terms of Yield,

Profitability, Productivity, Size and Quality

Mission

Focus on customer satisfaction

Grow with emphasis on sustained profitability

Provide exciting and satisfying work environment to retain and

Train employees committed to Corporate Vision

Focus on social responsibility – environment & community

Objectives

Achieve unit revenue, unit cost, profitability, productivity and

Service level targets, based on benchmarked parameters

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BUSINESS STRATARGY

A Multi-pronged approach

Capacity & Network Expansion – to increase market share & garner competitive strength

Achieve dominance in core markets (USA/UK/Gulf/SEA)

Increase market access through strategic alliances

Product Up gradation:

Deploy modern aircraft with state-of-art passenger amenities

Operate customer friendly schedules with increased network

Connectivity

Operations Improvement – to reduce unit costs through

Increased asset (aircraft & manpower) productivity

Out-sourcing/hiving-off of non-core activities to subsidiaries

Technology up gradation

Benchmarking & adoption of “Best Practices”

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ACHIEVEMENTS

Awards and Recognitions

Air India was conferred the ‘Best West Bound Airline from India’

Award at the Galileo Express Travel and Tourism awards 2005function held in Mumbai on 7 December 2005.

The ‘Most preferred Brand’

Award in the international airlines category by CNBC AWAAZ, a leading Hindi business television channel, was presented to Air India at the AWAAZ consumer awards 2006 function held in New Delhi on 18 July 2006.

‘Reader’s Digest Trusted Brand Gold’

Award was presented to Air India at a function held in Mumbai on 18 May 2006.

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Chapter III

SWOT ANALYSIS OF AIR INDIA LTD .

Air India is the leading airlines in the India. Air India is based on domestic enplaned passengers and scheduled domestic departures. Air India has shown a strong performance in revenues in 2008. Strong operating performance lends financial stability to the company which could be leveraged to seek more growth

avenues of growth in future. However, the rising prices of aviation turbine fuel has put the airlines in trouble and has not been running profitably for several years.

STRENGTHS:

Operational performance

Air India registered a strong operational performance for fiscal 2008-09.The company recorded revenues of Rs 15000 Crore during the fiscal year, an increase of 70% over 2005-06. During fiscal year 2008, the company’s revenue growth was driven by increase in passenger segment revenue and merger with Indian airlines. The increase in passenger revenues primarily was due to an increase in capacity,

and an increase inload factor. In addition the revenue growth is backed by growth in freight and cargo revenues, which was a result of higher rates charged. This growth was also partly driven by improved efficiency in the company’s operations. Strong operating performance lends financial stability to the company which could be leveraged to seek more growth.

Market leadership18

Air India is the leading airlines in the India. The airline has been ranked the top in India’s domestic airline (in terms of number of passengers) by the bureau of transportation statistics (BTS) in 2005. Air India newly orders about 68 from Boeing and 43 from Airbus. Air India dominates the markets it serves, ranking first in market share in India. Its strong market position is driven not just by consistent delivery of low fares but also due to reliable service, frequent and convenient flights, comfortable cabins, in-flight experience, frequent flyer programs, hassle-free airports ,and friendly customer service. Strong market position gives the company the advantage of scale and helps it in strengthening its brand image.

WEAKNESSES

High dependence on passenger revenues

Passenger revenues accounted for major part of the Air India total revenue. Cargo services allow airlines to generate additional revenues from existing passenger flights. In addition, cargo revenues are usually counter-cyclical to passenger

revenues and have lower demand elasticity than passenger business, which allows airlines to pass on fuel price hikes to customers. Small cargo business exposes Air India to the demand fluctuations in passenger business.

Lower load factor

Though the overall operating performance has been steady, Air India passenger load factor of 63.2%, which was the company’s record, lags the industry average of 75% in 2006-07.The load

factor difference is even greater when compared to other low fares carriers such as Air Deccan. The company’s load factor is decreasing year by year, in 2005-06 load factor is 66.2% which is more than present load factor. Air India load factor is likely to be low because of the much higher frequency operated on each route. Lower load factor could decrease the company’s margins.

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OPPORTUNITIES

Growing demand for low cost airlines

In mature markets demand for air travel is increasingly being driven by ticket price and consumer confidence. A survey by the US Commerce Department shows that ticket price is the number one criterion for passengers when selecting a flight, well ahead of the availability of anon-stop service. As markets have progressively matured, the GDP elasticity of air travel demand has declined. In the US for example, a 1%growth in GDP will typically result in a 1.2% growth in domestic air travel, compared with a growth of almost 2% in air travel some 20 years ago.

Growth in freight business

The Indian economy is one of the fastest growing in the world, but the boom is not without its stops, starts, and bottlenecks, all of which also make themselves felt in the country’s freight transport sector. Air India had also launched a major cargo incentive scheme for cargo agents of Air India and erstwhile Indian on the entire network. The scheme, which generated enormous response, entitled top producing agents of each region to become eligible for an all-inclusive incentive trip on Star Cruise.

In January 2008, Air India registered a growth of 6.4% whereas industry showed negative growth of 12% compared to September 2007. In the month of March 2008, industry grew by 24.8% over January 2008carriage whereas Air India cargo showed an increase of 43.4%. Strong economic and foreign trade growth is underpinning the freight upturn.

Expanding passenger traffic in Asia Pacific

The demand for air travel to the Asia Pacific is rising driven by increased economic activity in emerging Asian countries such as China and India. Traffic is projected to grow at 7% in China and India combined, above the world average of 5%. Further, the share of Asia Pacific region in world passenger traffic (revenue passenger kilometers) is forecast to rise from 25% in 2003 to 31% in 2023. Against this backdrop, Air India is well positioned to benefit with its increasing emphasis on Asia-Pacific operations.

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THREATS

Increasing aviation turbine fuel prices

The price of aviation turbine fuel (ATF) has soared to record highs in the past few years and continues to hold at that level. Last few years have once again clearly highlighted the highly cyclical nature of the Aviation industry worldwide. ATF consumption has roughly doubled from 2002 to2007The ATF prices in India are substantially higher than its price in international markets. Aircraft fuel is a major contributor to Air India operating expenses. Moreover, the bonded price applicable for international flights ex-India is higher than the ATF price in the international markets. Priced 65% higher in India on an average, compared to international benchmarks. Therefore ,this will need stronger revenue growth and greater cost controls in other areas to overcome the increase in fuel prices.

High interest rates

The past few years have seen Central Banks impose higher interest rates to check inflation and the over heating of regional economies. The Reserve Bank of India has led the way raising interest rates. Inflation fears in the India may see another raise in the short-term. According to Economics times, the India real GDP growth is 9.20% in2007 to 9.00% in 2008 and this downward trend is also seen in 2009.This in turn could depress consumer spending and offset some of the positive trends in the India for the company

Intensifying competition

AIR INDIA is now competing against more credible low cost carriers such as Spice jet, Go air, Indigo Airline, and Jet lite etc. Indigo Airlines remains Air India strongest competitor because

of its competitive cost structure, strong brand name and ambitious growth plans over the next seven years. Air India also faces increased competition from Air Deccan low-fares subsidiary, Song. Moreover, major legacy airlines have been focusing on restructuring costs, which has improved their competitiveness. With costs restructured, the legacy airlines are becoming more

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formidable competitors in terms of increasing capacity, matching prices and leveraging their frequent flier programs. Increasing competition could adversely affect the company’s margins.

Chapter iv

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BIBLIOGRAPHY

www.airindia.co.in

www.wikipedia.org

www.economictimes.indiatimes.com

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