The Indian Airline was set up under the Air Corporations Act, 1953 with an initial capital of Rs. 32 million and started operations on 1 August 1953. And it dominated the Indian aviation sector during the 80's and 90's. However the rules of monoploy were deregulated in 1994. Following which many carriers entered the market. However, only two strong competitors emerged during the 1990s which were the Jet Airways and Air Sahara. This competition from the new private carriers required the airline to adapt to the new order, a process which was difficult due to the fact that management did not have complete commercial freedom, and the government was unwilling to invest in the airline. Another big reason was the Human Resource Management problems including the inefficient manpower planning, unproductive deployment manpower (results of ad-hoc job analysis), and unwarranted increase in salaries and wages caused a number of strikes by the staffs and the ultimate result is losing customers and the losses in revenue. Between 1999 and 2003, the carrier’s fleet did not increase by a single aircraft – during the same period the private carriers’ fleet almost doubled to 53. Inevitably, Indian Airlines’ market share declined, from 100% in 1994 to 40% by 2004 and just 20% by 2007.
Background of IA
Indian Airlines is one of the prime airlines in India. It is based in Mumbai and focuses primarily on domestic routes, alone with a few international services to neighboring Asian countries. The airline is state-owned and also administered by the Ministry of Civil Aviation. Along with Air India, it is the flag carrier of India. The airline came into existence by the enactment of the Air corporations act in 1953. It has been renamed as 'Indian' on December 7th 2005. It started with about 99 aircrafts and was the outcome of a merger of sorts among several former independent airlines. In 1964, Indian Airlines moved into the jet era with the introduction of Caravelle aircraft and also inducted a Boeing 737-200 in early 1970. In a fresh wave of deregulation, nine new independent airlines were launched in India in the early 1990s. Vayudoot, the state-owned feeder airline, itself collapsed in 1993. On 1st March 1997 Indian Airlines became a Public Limited Company. Presently, it has about 70 aircrafts including Airbus A300, Airbus A319, Airbus A320and an ATR-4. Some of the foreign destinations that are included in its directory are Kuwait, Singapore, UAE, Qatar, Thailand and many more South East Asian countries. This airline was the first to introduce wide-bodied A300 aircraft in the domestic circuit. There are a total of 75 exclusive destinations covered by this airline, 59 within India and 16 abroad.
When the government open up the sky by privatize the industry, one of the start-ups, East-West Airlines, offered such attractive wages that they prompted a pilots' strike at Indian Airlines in December 1992 during the winter tourist season. Indian Airlines had 570 pilots at the time, making an average of Rs 30,000 ($962.00) a month. The airline lost Rs2.11 billion ($64.34 million) for the year. Chairman and managing director L. Vasudev had been hired in July 1992, filling a position vacant since the previous chairman had resigned due to the handling of yet another strike. Mr. Vasudev also resigned in May 1993 blaming the aviation ministry for undermining his authority. Russy Mody was named chairman of both Indian Airlines and Air-India in late 1994. He resigned two years later, also citing a lack of authority. During 1998 both Indian Airlines and Air-India were losing money and needed to restore their aging fleets by the end of the year, the Civil Aviation Ministry had dismissed a joint board of directors from the two airlines.
All of the chaos happened because of-
The recruitment process
Job analysis in IA was not done by scientifically
Performance appraisal and reward systems were not scientifically done...
Indian Airlines Ltd. - Company Profile, Information, Business Description, History, Background Information on Indian Airlines Ltd. http://www.referenceforbusiness.com/history2/65/Indian-Airlines-Ltd.html#ixzz180kRxs00
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