Employees at Air India are not getting their salaries for 3 consecutive months. Yet they are continuing to work. How is Air India able to achieve this. This is as part of a project submission at college.

1. EMPLOYEE PREDICAMENT IN AIR INDIA LTD.
Viswanath Kashayi

2. OBJECTIVE
 We shall address the difficulties faced by the
employees amidst adverse human resource
conditions and financial trouble in the Air
India Ltd. (here after referred as AI).
 Employee survey (Qualitative research;
personal interviews) conducted to
understand their situation & its findings.
 Perspective of Organizational Behavior in
this case.

3. BACKGROUND OF ORGANIZATION
 Air India was founded by J. R. D. Tata in July
1932 as Tata Airlines, a division of Tata Sons
Ltd.
 Tata Airlines became a public limited company
on 29 July 1946 under the name Air India.
 In 2007, Air India merged with Indian Airlines to
form National Aviation Company of India Limited
(NACIL).
 October 26, 2010 Air India and Indian Airlines
merged along with their subsidiaries to form Air
India Limited (w.e.f 27 February 2011).

4. ADVERSE FINANCIAL SITUATIONS
 Air India Limited (AI), is running into huge losses,
according to report. It has accumulated losses over Rs.
7000 cr; working capital loan of Rs 16000 cr, Annual
infusion of Rs 5000 cr to keep paying the oil and airport
charges and wages.
 Currently the employees are not being paid for almost 4
consecutive months and are facing uninformed transfers
as well as change of reporting structure.
 The financial ill-health of Air India is attributed by a civil
aviation expert to a “systematic failure of the political and
bureaucratic masters who have run the airline like their
own principalities for years now. And the merger of Air
India and erstwhile Indian Airlines in March 2007 under
Praful Patel’s directives has led to an unmitigated
disaster”

5. COMPANY’S ANNUAL GROWTH (OVERALL)

6. COMPANY’S ANNUAL GROWTH (SALES & MARKETING)

7. DEFINING THE EMPLOYEE PROBLEMS
 Employees not paid salaries. Salary is as per productivity and 6th Pay
commission is not applicable.
 Issues related to structure mapping and level mapping w.r.t to rank and
basic pay.
 Hierarchy issues. Reporting issues due to no non level mapping.
 Consolidation of work force through out-sourcing of activities mainly at
lower level (Cleaning, Maintenance etc)
 Since 1990- Young cabin crew employees are hired on contractual basis
 Different HR policies for AIR INDIA and INDIAN AIRLINES post merger
also which further exaggerate the current situation.
 Staff integration and training issues.
 DHARMA ADHIKARI committee was made to resolve employees issues
but without having capacity to impose the recommendations

8. COMPANY’S ANNUAL GROWTH IN TERMS OF LEADERSHIP
PRODUCTIVITY-LINKED INCENTIVE IS NOT THE PROBLEM
(Air India’s salaries are even lower than those of their rivals
despite the much-reviled productivity-linked incentive)
Gross Rival
Designation PLI Total
Salary Airlines
Executive
82,000 39,574 121,574 400,000
Director
General 150,000 to
72,000 39,574 111,574
Manager 300,000
300,000 to
Pilots 350,000 50,000 400,000
550,000
20,000 to
Cabin Crew 16,000 10,000* 26,000
50,000
Service
10,000 to
Engineer 12,000 7,000 19,000
25,000
Level 3
Chief Aircraft 150,000 to
80,000 160,000 240,000
Engineer 200,000**
The salaries are indicative and vary depending upon age and
experience
* Flying allowance, get no PLI ** Executive engineers
The above salary table shows that even the
No growth in leadership. Executive Directors & General Managers
are not being paid enough.

9. SURVEY DETAILS
 AI was not prepared for competition it faced after the liberalization of
India economy in 1990.
 Overstaffed: Highest Employee per Aircraft ratio in the world 200:1
where as desirable is 130-170:1
 A culture of complete sloth in administration and faulty policies has
brought Air India to this crisis level.
 Complete lack of Ownership and responsibility for results and failures.
 Deeply ingrained corruption in all levels.
 Employee strikes further taking it out of business, and competitors taking
advantage.
 The airline has not posted a profit since merging with former duopoly
partner Indian Airlines in 2007 and relies on handouts from New Delhi to
survive.

10. FEEDBACK – SUMMARIZED SURVEY
 When Pilot went for Strike in May 2011, instead of talking to them
then CMD Mr. Arvind Jadav decided to “teach the Pilots a lesson”.
 When Jet Airways pilots went on strike a few years ago, Mr.
Naresh Goyal, the airline's chairman, talked to pilots and pleaded
them to work. But Jadhav has decided that he will not even talk to
the pilots. Even the Delhi High Court has noted this fact. “It
appears that the management wants to make the pilots
scapegoats for its successive failures”. It was looking for an alibi
and feels that the pilots have provided it one.
 There is a severe shortage of trained commanders across Indian
carriers and this has been forcing airlines to hire expatriates -
often those with less than the best skills. If Air India sacks the
striking pilots they can easily get jobs in other airlines within three
months. But the pilots want to work for Air India. They, however,
also want their dues. In Parliament, we were told that Air India
loses Rs 20 crore a day. It is surprising then the management is
fighting over what is essentially a matter of a few crores.

11. EXPECTED OUTCOME – OUR RECOMMENDATION
 AI should increase the equity base from Rs 145 Cr
 Focus on risk management practices.
 AI should be given a autonomy in decision making.
 The Govt. should provide capital in the form of Convertible debts as an option to convert
equity.
 The lending decision should be made by the syndicate comprising the Govt. as the largest
lender and consortium of commercial banks.
 Corporate governance issue is needed to be taken into consideration.
 Privatization – to make AI free from government interference.
 To clear $9 billion debt as well as outstanding dues both to airport developers and state oil
firms.
 To tackle a bloated cost structure, a difficult task given a workforce that is heavily
unionized to do some downsizing.
 To cut unprofitable routes and create a new plan that would focus on a hub-and-spoke
route model.
 Require visionary leader, who could drive AI in better way.

12. CONCLUSION
The important aspects of OB that are observed in this case are:
 Leadership: AI lacks
 Employee oriented leader who emphasizes interpersonal relations, takes
personal interest in the needs of employees, and accepts individual
differences among members.
 Leader-Member relationship which is the degree of confidence, trust, and
respect, subordinates have in their leader.
 Motivation
 Self-Concordance: The degree to which peoples’ reasons for pursuing goals
are consistent with their interests and core values
 Employee Involvement, Participative Management, Representative
Participation.
 In spite of these factors, employees are still rendering their services to AI
in anticipation for revival of the company, by way of Govt. assistance,
change in management policies, debt clearance, transformation of HR
policies and company’s perception building.