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Q. How HR caused Air India failure??

Ans. Air services in India began in October 1932 under the Aviation Department of Tata
Sons Ltd, which was succeeded by Tata Airlines. This was subsequently renamed in J uly 1946
as Air India Ltd., and incorporated as Air India International Ltd., in March 1948. The Central
Legislature brought into force the Air Corporation Act 1953 w.e.f. 28.5.1953.
The Indian aviation environment has changed significantly over the last few years with
rapid increase in demand for domestic and international air services. Expansion of capacity of
current Airlines playe as well as the entry of new players has helped meet this demand and at
the same time significantly altered the competitive landscape.
The declining market, operating and financial performance posed serious threat to
future survival of the two airlines on a stand-alone basis. Sometime between the years 2006-
07, the government took a decision to amalgamate two government companies Indian Airlines
and Air India Ltd. The merger of Air India and Indian Airlines was cleared by the Government
on 1 March 2007 and on 27 February 2011, Air India and Indian Airlines merged along with
their subsidiaries to form Air India Limited.
There have been problems of integration ever since. Employees objected to the
amalgamation scheme on the apprehension of change of their service conditions to their
detriment, an assurance was given by the erstwhile two companies that terms and conditions
of service of the employees in the transferred company shall not be less favourable to the terms
and conditions available to them to the transferor company.
Agitations and strikes leading to disruption of air services became frequent after this.
Civil Aviation Minister Mr. Ajit Singh even admitted that the merger had not worked out as
planned. The government also admits that the merger is only 70% complete. From a market
share that was once above 60%, the merged company now has below 20% share of the market.
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The causes for the same failure was mainly due to failed HR policies. Given below are some
of them.
Separate departments - Human resources was not a common department, resulting in
disparity in pay scales, allowances and career progression. And that was at the heart of the
dispute between Air India's management and pilots.
Union problems - There were two strong unions representing pilots from the erstwhile
companies, and they are still at loggerheads. One is the Indian Pilots' Guild, representing Air
India employees, and the other is the Indian Commercial Pilots' Association for pilots from
Indian Airlines.
Flight allotment problems Historically Air India preferred Boeing flights while Indian
Airlines ordered from Airbus. After the merger when the delivery of the new planes ordered
before merger began, the Boeings 787 came first and only pilots of the erstwhile Air India were
allowed to fly them. As more Boeings are being delivered and the Boeing 787 is the bone of
contention, the management proposed that both factions be given equal opportunities in
training to fly the 787.
But some pilots who mainly fly international routes, have been demanding their
colleagues from former Indian Airlines should not be trained to fly 787, as it may hurt the
career prospects of original Air India staff and incur more cost to the carrier.
Career progression - AI was following a system under which the department head has the
discretionary power to promote and the promotions are time- bound, while IA had a strict
Human Resources code of interviews and written tests.
Inequality - On the surface, it looked like an issue with the pilots. But when contacted by
IANS, even the cabin crew-in-charges, cargo managers and other functionaries voiced the same
resentment. Not just pilots and the cabin crew, even managers and junior staff from both sides
fight over allowances, pay scales and even holidays.
The merger created problems that cannot be solved. Our grades, work, promotions and
allowances are different. When you see your colleague from the other cadre doing the same
work, but getting easy promotions, allowances, there is bound to be resentment, a senior
official with the operations arm told to a newspaper correspondent.
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In the pilots case, while a commander of AI gets Rs.8 lakh per month that of IC gets
Rs.3 lakh per month. Even a bare minimum flying allowance of 80 hours is granted to AI pilots
while it is only 72 hours given to IA pilots.
FINAL THOUGHTS
The key lesson that we can from this case is that merging of human resources becomes
critical when two companies are merged. Compatibility issues can arise when two different
groups working in two different culture is made two work together. Also, measures have to be
taken up to conclude the misunderstandings between the management and the unions. Mergers
which are not properly planned can even lead to failure of the entire process and even to failure
of the companies as happened in the case of Air India. Here the root of the problem is with the
untimely and misjudged merger of the two airlines that became the primary reason for the never
ending ordeal of Air India.

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