Air India traded four of its craft in March 2009 for $18.57 million, as well as the airliner A300 and a Boeing 747-300. Air India was considering service improvement as the simplest way to save lots of cost on craft prices. Four crafts were sold on a “where is” basis. In 2008, Air India sold thirteen aircrafts on a “return to sale and lease” basis. Twelve craft were traded for $1451.88 million. It let out forty-six crafts, as well as Boeing and airliner, for $18.945 million a month. Air India was taking steps to scale back overhead prices, rationalizing routes, recalling hired craft, rationalizing human power prices and reducing contract employment, and establishing a global board.
On August 9, 2011, Air India funding deficiency happened. Moody’s Investor Service Inc. said that Air India aforementioned the recovery of the default may be a “credit negative” for SBI and PNB. The carrier had not seen the payroll for the last three months and was failing to pay the interest. The government had permitted Rs.500 crore to make sure interests are received and payments made. Air India was moving to amass 111 craft for the loan, that was dangerous for the Controller and Auditor General (CAG). This was stated as the everlasting significant explanation for debt issues at Air India. The merger between Air India and Indian Airlines was thought-about as a “bad time”. The merger closed with total debt with total equity inflows. The CAG report lined variety of aspects of Air India’s losses, as well as ship acquisition, mergers, serious debt burden, delays in connection the worldwide airline, grouping of the star alliance and its monetary and operational performance. The service acquisition took “unnecessarily long time”.
On 14 July 2010, Air India President Arvind Jadhav proclaimed the intention to create the new Terminal three for international and domestic operations, with plans to launch new direct flights to Chicago and Toronto, taking up most international long-haul flights which was due to lack of area. This provided additional convenience for commuters who have to be compelled to relocate between international and domestic terminals settled on fully completely different sides of the landing field. Now, they could catch connecting planes at identical terminals. Arvind Jadhav wished to alter 111 crafts ordered in 2006 to induce a slender body craft rather than wide body craft.
Air India has won several awards and accolades as well as Reader’s Digest, Best South Asian Airlines, World’s 1st All-Jet Airlines, World’s Largest Operator of Airbus and lots of additional titles. However, rising fuel costs caused a pointy decline in traffic. With dynamical government rules, Air India had to deal with international airlines that provide higher services and cheaper prices including Kingfisher Airlines and Jet Airways. Second, there was a scar and a loss of Rs.7200 crore when it united with Indian Airlines. The merger display several challenges to Air India’s survival. Air India borrowed US $ 534 million from the government of India to hide its losses. In July, SBI Capital Limited determined to arrange a revival strategy for Air India. Arvind Jadhav conjointly made a breakthrough set up with the assistance of Accenture and SBI Capital, however it turned out to be unsuccessful. The structure of the system became overlarge and inefficient because of the incomplete association. There had been two set of managers for every position, and none shared. The strength of its workers was thrice that of an airline of its size. The unions were firmly committed to resisting any plan to cut teeth and cut back prices. It had a terrible name for service and even worse for timely arrival and departure. Being government-owned, Air India had to fight the strain of politicians and bureaucrats – demands that might not be rejected. Most significantly, political issues played a larger role than economic logic once creating any strategic call. Once Jadhav took charge in 2009, he started with a good quantity of goodwill. He was seen as a competent, smart and effective authority “with a fireplace within the stomach” who would perceive the essential issues of flight and take acceptable action. Sadly, by giving a very honest interview to the present magazine, Jadhav was ready to alienate all the workers of the organization at intervals a brief time of taking charge. Within the interview, Jadhav slammed the work culture, sluggishness at each level of management and the general lack of energy and skills among his staff. Jadhav conjointly mentioned that he was saddled with 32,000 individuals when he did not ask for any more than 12,000. There were a lot of people in and out of the doors of the Ministry of Civil Aviation who supposed he is not guilty. “Jadhav spoke the reality, that is incredibly harsh to most ears. however if AI is to survive, these things should be said,” stated a senior AI official, who highlighted a little cluster of Jadhav supporters on the plane. The inconsistency of the leader’s concepts and the lack of worker commitment permit the airline to fail. Survival was still an issue ahead of the airlines and it required a strategic leader, underneath whose steering this ship will float with success.
On August 30 2020, Civil Aviation Minister Hardeep Singh Puri told in an exceedingly virtual meeting that governments should not operate airports and planes, adding that he hoped to privatise Air India by the top of this year.
“Air India has been an asset, with good-record and honest and well-trained professionals. As a growing concern, we want to privatise it to draw in potential bidders.” Said the Aviation Minister. There are multiple extensions once it came to bidding for Air India because of COVID-19 pandemic and its impact on the globe economy. This was the fourth extension of sales that began on January 27.
Puri’s comments came when Kerala Chief Minister Binarayi Vijayan wrote a letter to Prime Minister Narendra Modi difficult the choice to lease the Thiruvananthapuram International Airport, to Adani Enterprises for fifty years.
The Modi government on August 19 approved a concept to lease the airports of Jaipur, Guwahati and Thiruvananthapuram to Adani Enterprises through a public-private partnership (PPP).
The Pan American World Airways is known for its historic flight days. Until its death in 1991, the aircraft was the largest international airline in the United States and was a founding member of IATA. At its peak, the airline set two around the world record using the B747. The airline was very old when the plane was grounded due to bankruptcy. Founded in 1927, the aircraft would have survived to this day by 91 years. Instead, it ceased operations in 1991 at the age of 64. However, the name Pan American World Airways still lived, and now it is accepted by a private rail transport company. Despite many successful years in the 1970s, the airline eventually had to come to an end. Pan American World Airways, that once called itself “the most experienced airline in the world,” finally filed for bankruptcy protection in January 1991. The aircraft began to operate at a loss due to rising fuel costs and inability to operate domestic routes. In 1988, the airline suffered a number of public relations successes. It saw the crash of a Pan Am B747 in Lockerbie, which triggered a $ 300 million lawsuit, as well as additional fines from the FAA for 19 security breaches. In late 1991, Delta reported that Pan Am was losing about $ 3 million a day. Still needing $ 25 million to fly for a week, Pan American World Airways was able to convince a bankruptcy judge. Follow-up activities with TWA took place on December 3rd. The plane opened for business as usual on December 4, however, and closed within an hour. About 7,500 employees immediately lost their jobs. Although many airlines have tried for years to renew the Pan Am brand, in the end no one has succeeded. Today the legacy lives on as one of the biggest names in aviation history.
SWOT Analysis
Strengths
- Traffic volume and company assets were the two major strengths of Air India as an enterprise.
- Air India is considered as a reputed air service provider in both domestic and international markets. It is majorly because of the quality of service delivered and the good will built over ages. Because of the same, the interests of other major organizations is still into Air India.
- Indian Government has provided financial support to the organization which adds to its value.
Weaknesses
- Air India’s operation is widely spread among the international and domestic markets equally. This leads to lack of clarity owing to the strategic direction. Consequently, its brand image is compromised and its capabilities underestimated.
- Air India has been receiving low profitability in the past few years despite financial support from the Indian government. In addition to this, the utilization of capacity at the organizational level is below the line.
- Air India has compulsions to be in the public sector which leads to its losses and affects its profitability to great heights.
- It also has a high-cost structure which needs to be upgraded to improve the market share.
Opportunities
- Aviation industry in our country has greater growth graphs and as the gross domestic product rises more opportunities arise for Air India as well. This shall continue as soon as there is retreatment of the slow-going process.
- The deregulations over the world makes it easier to reach the skies; the route agreement is easier to be achieved. In addition, the number visitors and investors from foreign countries to India is increasing rapidly.
- Industry like tourism will act as a complement and thus, increase demand for airline service. The Civil Aviation Ministry’s provides opportunities for consolidation and optimization. This is majorly because of its strong regulation and protection policies.
Threats
- Air India faces aggressive competition, which is always on the cards, particularly from world leading airlines. It also goes through price wars triggered by domestic players of the industry.
- Increment in speed and services by the Indian Railway Ministry over the medium and long distance routes is posing as a great threat for Air India. The passengers from the airlines are more attracted towards the railways because it is offering prices which are almost at par with the airline but with low carrier cost.
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