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BY: SHREEKANT NAIR

HISTORY

• Air India was founded by J. R. D. Tata in 1932 as Tata Airlines, a division of Tata Sons Ltd.
• By the end of world war II commercial service was restored in India & TATA Airline became
public company on 29th July 1946.
• Government of India acquired 49% of Airlines after independence.
• On 1 August 1953, the Government of India exercised its option to purchase a majority stake in
the carrier and Air India International Limited was born.
• Air India International entered the jet age in 1960 when its first Boeing 707-420, named
Yashoda Maiyya and registered VT-DJJ, was delivered.
• In1971 with introduction of first Boeing 747-200 named as Emperor Ashoka Air India Branded
itself as ‘Palace in the sky’.
 In 1986 introduced fleet of Airbus A310 to its fleets.
 In 1990’s Liberalization of aviation Industry .
 In 2007 Air India merged with Indian Airlines into 1 giant with a fleet of 130-140 aircraft.
PRESENT CRISIS

• The combined losses for Air India and Indian Airlines in 2006-07 were Rs 7.7 billion.
• After the merger of the airlines, this went up to Rs 72 billion by March 2009.
• Air India has 10% of Total global airlines revenue loses with
just 0.35% of global traffic.
 It owes Rs. 1400 Crore. (US $ 700 millions) to state own airport operator and
aviation turbine company.
• Increasing competition from private players :
CAUSES

• Administrative Reasons
II. Complete lack of Ownership
III. Deeply ingrained corruption in all levels.
IV. City corporator onward everybody in the Government exploiting Air India.
V. About 31500 employees annual wage bills of Rs. 3000 Crore (US $ 600 millions) for
fleet size of 150.
VI. Highest Employees per Aircraft in the world 200:1 where as desirable is 130-170:1.
VII. Lot of interference form political powers.
VIII.The head of Air India who are appointed from IAS cadre may be good administrator
but little exposure to global Air lines industry.
CONT…
• Market Environment
II. Global meltdown
III. Increasing oil prices.
IV. Increasing competition .
V. High cost of bailout : NHAI highways cost roughly Rs.5 crore per
kilometer. Hence, if government puts Rs.5,000 crore into Air India, this
comes at the opportunity cost of 1000 km of four-lane highways.
PORTER GENERIC STRATEGIES

• AI comes under differentiation and focused


cost leadership due to the following reasons:
II. Air India is differentiated due to its
expanded network.AI has a monopoly in
Gulf region.
III. AI is national flag carrier of India.
IV. Main differentiating factor is : Oldest airline
in country.77 years old.
V. Air India’s has new subsidiary AI Express
being the country’s only international low
cost carrier which also operates in domestic
market.
ANSOFF MATRIX
• Market Penetration
2. Companion free scheme between selected
routes like India- US/Canada/UK/Europe.
3. Students fares : Passengers on student visa
can avail discounts on their tickets.
4. Auction through IndiaTimes.com
5. Flying Returns Program
6. Aircraft Cabin Up gradation

• Market Development
9. Medical Tourism.
CONT….
• Product Development
2. The Maharajah Club (TMC) and The Leading Edge Club (LEC)
3. Wi-Fi Internet Access - In the Mumbai maharaja lounge and the transit
lounge Wi-Fi internet access is provided along with network printing
facility.
4. SMS Alert in case of Rescheduling of Flights
5. Wholesale Travel Discounts-Scheme for passengers travelling frequently to
South east Asia
• Diversification
7. AI Express of AI is for new market that is the middle class who wants to
travel internationally and is definitely a new product as it is a low cost.
SWOT ANALYSIS
STRENGTHS WEAKNESSES

• Strong brand name • Poor HR Strategies


• Oldest Airline • High Competition, Loss of market share
• Monopoly in certain international routes • High cost , poor cost control
• Government backup • Inefficient usage of resources
• Rights to travel 96 destinations. • Bad Reputation, Poor Services
• Established infrastructure • Poor Aircraft maintenance
• It has prime parking space/slots. • Highest manpower ratio to aircraft
• Corruption in company.

OPPORTUNITIES THREATS

• 40 million people of total population (4%) • Competition by low cost carriers (LLC)
travel by air. Highly potential sector.
• Concentrate more on cargo business.
REVIVAL STRATEGIES

• Highly untapped sector .Only 40 million people travel by air.


• Bail out plan of 5000 Crore.
• Concentrating more on cargo business.
• Air Craft Leasing and renting.
• Provide more better & world class services.
• Privatization could be an option.
• Air India is expected to join STAR ALLIANCE by 2010.
• Induct professional managers and business leaders to the board of Air India.
• Better air hostess……
THANK YOU