Professional Documents
Culture Documents
Industry: Manufacturing
BACKGROUND NOTE
IA was formed in May 1953 with the nationalization of the airlines industry through
the Air Corporations Act.
IA and its subsidiary, Alliance Air, provided domestic air services.
IAs network ranged from Kuwait in the west to Singapore in the east, covering 75
destinations (59 within India, 16 abroad).
In 1999, the company
In 1999, it had a fleet strength of 55 aircraft - 11 Airbus A300s, 30 Airbus A320s, 11
Boeing B737s and 3 Dorniers D0228.
In 1994, the Air Corporation Act was repealed and air transport was thrown open to
private players.
Corporate houses entered the fray and IA saw a mass exodus of its pilots to private
airlines.
To counter increasing competition IA launched a new image building advertisement
campaign.
Improved its services by strictly adhering to flight schedules and providing better in-
flight and ground services.
Launched several other new aircraft, with a new, younger, and more dynamic in flight
crew.
These initiatives were soon rewarded in form of 17% increase in passenger
revenues during the year 1994.
Competitors like Sahara and Jet Airways (Jet) provided better services and network.
Unable to match the performance of these airlines IA faced severe criticism for its
inefficiency and excessive expenditure human resources.
Staff cost increased alarmingly during 1994-98.
These costs were responsible to a great extent for the companys frequent losses.
ANSWER:
It is true that IAs human resources problems were due to its poor human
resource management policy.
Recurring human resource problems were attributed to its lack of proper
manpower planning and underutilization of existing manpower.
Employee unions were infamous for resorting to unscrupulous methods
on the slightest pretext and arm-twisting tactics to get their demands
accepted.
In turn, the management of the airline was more interested in making
peace with the unions rather than looking at the companys long-term
benefits.
Mounting wage bills as a result of the many employee wage friendly
schemes depicted the simplistic approach of the management.
Improper monitoring by management and abuse by employees of the
Productivity linked incentive scheme reflects the inefficient functioning.
Uncontrolled increase in the number of employees and the number of
surplus and redundant posts with maximum number of employees per
aircraft.
This abnormal increase in staff was attributed to inefficient manpower
planning, unproductive deployment of manpower and unwarranted
increase in salaries and wages of the employees.
The recruitment and creation of posts were done without proper scientific
analysis of the manpower requirements of the organization.
In place of 6 directors in departments there were 9 directors.
In total there were 30 full time directors, who in turn had their retinue of private
secretaries, drivers and orderlies. These were superfluous staff that just added to the
organizations bill.
There were no basic educational qualifications or job specification
prescribed for senior executive posts.
A matriculate also could be a manager, by acquiring necessary job-
related qualifications & experience.
Illiterate employees drew salaries that were on par with senior civil
servants.
Retired employees were re-employed by the airline in an advisory
capacity.
Frequent Dissonance between the union and the management made a
hostile environment in the organisation.
Though, the airline at times held its ground, by and large, it acceded to
the demands for wage hikes and other perquisites.
Various allowances such as out-of-pocket expenses, experience
allowance, simulator allowances etc. were paid to those who were
ineligible.
Excessive expenditure was incurred on benefits given to senior
executives such as retention of company car, and room air-conditioners
even after retirement.
CASE STUDY
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