AIR INDIA

FOM CASE STUDY

Submitted by - Sohil Khan (2k19/ME/246)
Subhash Sharma(2k19/ME/247)
 HELLO!
Aviation And Marketing Experts Said -
“There was a time when Air India was considered one of the best airlines in the
world.
The level of luxury travel and world-class food, and the interior decoration of
the planes was so amazing that even Singapore Airlines took inspiration from
Air India.
But today, the situation is so terrible that after hundreds of millions in losses, the
government is forced to sell off this airline. To Privatize it.”
 WHO IS AIR INDIA?

EXPERTs of Aviation and Marketing said -

"Of India's several airlines, the largest, Air India, is Tata controlled. Operating over 6,000 miles of routes, it has
built up an excellent reputation for efficient operations. Established in 1932,the airline connects the large cities of
India, and now maintains international service reaching London.“
THE HISTORY OF THE COUNTRY'S CIVIL
AVIATION.
 INDIA’S FIRST FLIGHT
• Lets Start with 1903,the year, When the Wright
brothers flew the first airplane of the world.
• About 8 years later, in 1911,the first airplane was
flown in India. Its pilot was a Frenchman, Henry
Paquette flight from Allahabad to Niani lasted 15
minutes and carried thousands of letters.
• The first flight in India was actually carrying mail.
• About 17 years later Tata became the first Indian
to acquire a flying license.
• on 15th October 1932, JRD Tata flew the first Air
India plane from Karachi to Mumbai.
• Then it wasn't called Air India. Its name was Tata
Airlines at the time.
 CIVIL AVIATION IN INDIA
Mr. tata, Flying planes was his passion. It was his dream to bring
civil aviation to India.
But it wasn't easy for him to achieve this.
Civil aviation meant giving the commoners the opportunity to fly in an airplane.
But it wasn't easy to do this.
To do this, cooperation from the government was needed. But during the 1930s, India was under
British Raj.
And the British government was obviously not very helpful.
They saw no profits in paying JRD Tata or giving him subsidies to enable him to fly his domestic
planes in the country.
At the time, Sir Dorabji Tata was a prominent person and he agreed to invest in JRD Tata's dreams.
Tata tried a lot to make the British government agreeable by the government rejected all of his
offers.
 CIVIL AVIATION IN INDIA
The government rejected all of his offers. And then one day, around
in 1930s, they went to the British government and told them that
they didn't need their money, and that they would donate their
services they only wanted some aircraft and permission to fly those
aircraft.
And finally, the British government agreed to it and thus the Tata
Airlines was born in India.
After this, the first Tata Airlines flight was flown from Karachi to
Bombay. Carrying letter weighing 25 kg.
And obviously, JRD Tata piloted this flight.
In the same year, Tata Airlines started domestic flight operations for
the passengers.
Then, one return ticket from Bombay to Madras cost ₹256.
You can imagine how much it would've been in today's money.
 INITIAL TIMELINE
• 1946
It was the year when Tata Airlines was renamed Air India.
In the same year, Air India became a public limited company.
In A company, in which even you and I can purchase shares.
• 1948
India was already independent
The new Indian government bought 49% shares of Air India.
JRD Tata started Air India International.
• 1953
The next major change was in 1953.
It was a disheartening event for JRD Tata.
The Indian government decided that
The entire airline sector of India would be nationalized.
 NATIONALIZATION OF AIR INDIA
The Indian government decided that the entire airline sector of India would be nationalized.
Meaning all the Indian airline companies would become government-owned.
The government then merged 8 domestic airlines into 1,and Indian Airlines was thus created.
The domestic wing of Air India was one of these 8 companies.
Additionally, the government had also nationalized Air India International. And it became a Public Sector Unit.
Owned by the government.
Nationalizing major sectors in the 1950s was a major policy of the Nehru Government.
The objective of the government was to support these industries so that there could be progress in the country.
But it also meant that the private businessmen and investors, lost their opportunities.

As you can imagine, the industrialists and the large businessmen in the country weren't happy with this decision, Including
JRD Tata.
Because JRD Tata and Pandit Jawaharlal Nehru
were good friends.
Nehru always encouraged scientific progress in the country and was very happy to see how Air India had changed civil
aviation in India.

And JRD Tata also admired Pandit Jawaharlal Nehru a lot,

but when the government passed The Air Corporations Act, 1953
thorough which Air India was nationalized, JRD Tata saw it as a betrayal.
He clearly disagreed with Pandit Nehru's this decision.
 NATIONALIZATION OF AIR INDIA
JRD Tata's opinion on nationalization was always against it. He said,
"Nationalization of industries, the way it is done, those considerations made me oppose the
nationalization of industries. Though, quite accepting the fact that some industries, some
activities must be done by the state."
Whenever JRD Tata tried to talk about it with his friend Nehru, Nehru would look the other way.
"And then I would try to bring the conversation to economics nationalization, bureaucracy, he
was not only not interested but he wasn't willing even to talk. The moment I began something,
he'd turn around and look out of the window. And I got the message."
Later,
Pandit Nehru wrote a letter explaining why the decision was taken.
He said that the Congress party wanted to do it for over 20 years but couldn't do it. The
government wasn't actually against Air India. But Nehru did feel that it would be better for the
country to nationalize it. Even though JRD Tata was against it, he couldn't do anything against
the government's decision.
Air India was finally nationalized one thing that needs mentioning Tata still remained a part of
Air India.
He was made the Chairman of Air India International and he became the Director of Indian
Airlines.
 GLORY DAYS OF AIR INDIA
Caviar on ice.
The finest steaks, champagne, a menu prepared by the chefs of
the Taj Hotel.
Grand lounges, designed by the artists of Shanti Niketan.
Had you travelled in Air India in the 1950s and 1960s, then
descriptions such as these would have been used for your
journey.
Air India was known as a 'Palace in the Sky.’
As told, luxury travel, world-class food, such that international
airlines like Singapore Airlines took inspiration from Air India.
The credit for these goes largely to JRD Tata.
It's said that he would fly in Air India's flights to ensure that the
services ran efficiently.
If he saw any imperfections like a dirty corner, he went and
cleaned it himself.
 APART FROM JUST AIRLINE
(THE MARKETING STRATEGY)
During the 1960s and 1970s, Air India wasn't merely an airline, it was a representation of India.
How our country was viewed on the international stage.
Air India was associated with hospitality, Indian culture, food and even art.
Talking about art, Air India had an art collection of more than 8,000 works.
Paintings, textiles, sculptures, glass paintings,
they have collected this collection over the last 60 years.
And this was a calculated move.
The thing is that there weren't many international airlines at the time.
so the airlines competing against Air India, were giving it a stiff competition.
Air India had to do something to stand out as an airline. To be different from the others.
To do this, the advertisement department of Air India decided to reflect Air India's identity
by displaying Indian art and artefacts in their airplanes and lounges.

The Indian fliers were often very loyal to Air India.

And that makes it even more shocking how the situation could worsen so much.
Why did Air India fail in the last 20-30 years?
 SWOT ANALYSIS OF AIR INDIA
Strengths Air India Weaknesses
Strong backing by the government Political intervention
Updated fleet, competent repairs, Maintenance Low profitability
expertise Growing competitor base
Presence in 20+ countries Lack of clarification about the strategic path
Covers approximately 50 destinations Low productivity, low power usage
Largest Air carrier in traffic volume and company
assets
In-flight entertainment and Lounge services
Online ticketing and low prices

Air India Opportunities Air India Threats

Expansion of routes and international Stiff competition on its foreign routes
destinations Small local airlines and their prices
Solve internal issues Rising fuel costs
Tourism would raise demand Losing market share
Increase in India’s GDP Rising labor costs
Opportunity to launch Low-Cost Carrier
 AIR INDIA MARKETING MIX
7P MODEL

Product Price
Air India is one of the leading airlines in India The route of air traffic, the distance, and the
providing international and domestic travel number of halts on the way are some of the
services. Air India once had 2 products; factors that affect the prices. It follows
passenger and cargo transport. However, the competitive pricing as airlines are a highly
cargo transport was decommissioned in 2012. competitive space. At the same time, there
It only operates through passenger transport. It are two types of price, within a flight :
uses Boeing and Airbus planes for the same. Economy class and
Premium lounges and flight entertainment are Business-class
some of its main products. To reduce cost and Air India prices airline tickets are easily
maintain the quality level, it even leases a few accessible to middle-class families. Premium
of its fleets. The vast network of routes pricing is primarily done to target Business class
possessed by Air India enables it to cater passengers as they have a high tendency to
services across the most important cities and pay and avail themselves of premium
business centers globally. It provides a high services.
level of safety to ensure repeat service
purchase of its passengers.
 AIR INDIA MARKETING MIX
7P MODEL
Place
Being the primary choice of airline travel, Air India’s service base has been increasing year on year.
Place in Air India doesn’t matter much as nowadays everything is online. Online retail sites like
yatra.com, make my trip, Expedia has Air India airlines listed on their portal, and this is where people
can buy Air India tickets. They have also tied up with various agencies to sell their tickets, thus
increasing their service base and capabilities.
Physical Evidence
Air India has its physical evidence through very spacious airplanes, accessible airport kiosks, easy-
to-use websites, etc. their premium lounges are very comfortable to be in. With a fleet of excellent
airplanes and a high level of amenities, it provides consumers the best travel experience and so
they make multiple purchases.

People
Air India’s expert and professional work base have helped him to achieve the top position in the
industry. From pilots to security personnel everyone believes in the best service quality to the
customers to give them the best flight experience. This has been possible only because of the highly
professional working base of Air India.
 AIR INDIA MARKETING MIX
7P MODEL

Process
Air India has numerous processes to ease the business. From the purchase of tickets to delivery of
luggage, Air India has it all step by step so that customers can have a smooth transition. Premium
lounges make waiting for aircraft easy. Online portals of booking tickets make these processes easy
for both passengers and Air India. In case of any unfortunate incident such as flight reschedule,
delay or cancellation, Air India makes sure that the passengers don’t face any kind of
inconvenience.

Promotion
By promoting their tagline, “Air India.. Truly Indian”, it sets up a standard as it is fully controlled by
the government. It offers trade discounts and trade tie-ups to promote its business. Their point of
purchase is ticketing counters at traveling agencies, online options, tourist packages, etc.
Besides this, regular banners and promotional activities are done by Air India. Its promotion
activities continue via the IRCTC portal.
 COMPETITIVE ANALYSIS
Whether the famous Maharaja mascot or the fact that the public sector undertaking is backed by the government and many
others have collectively helped Air India to emerge as the largest international Carrier out of India.
With more than 1400 pilots and 2100+ cabin crews, Air India is reaching out to more than 30 countries globally in addition to
domestic locations.
Air India commands more than 16% market share through its international operations.
Cost structure plays a pivotal role in the operations and competitive landscape of the companies operating in the industry
which consists of fuel, administrative cost, rental of flight equipment, ticketing sales & promotions, user charges, Pax services,
flight crew Salary & expenses.
Air India along with its wholly-owned Kochi based subsidiary Air India Express Limited (AIEL) compete with companies like
• Indigo
• Jet Airways
• Go Air
• Air Asia
• Jet Airways
• SpiceJet And more in the national & regional market.
While companies like
• Etihad
• Oman Air
• Thai Airways
• Singapore Airlines
• Emirates Are some rival airlines in the international space.
 AIR INDIA MARKETING CAMPAIGNS
Marketing campaigns promote products through different types of media, such as television, radio, print,
and online platforms. It not only promotes the product but also sends a meaningful message to connect
with the customer. Campaigns carried out by Air India guarantees the best and the safest travel
experience.
Mascot - The Maharaja A Dig at IndiGo
 AIR INDIA’S DIGITAL PRESENCE
Digital presence is as important as a marketing strategy. In today’s time, each one of us is hooked up with
different social media and to be active on each platform is a must.
@Instagram @Facebook

ID: @officialairindiaexpress ID: @AirIndia

No. of followers: 52.4k No. of followers: 5.6M+
No. of posts: 429 No. of Posts : 800+
 SOCIAL HANDLE’S ACTIVITIES
On Instagram, Facebook and Twitter,
• Promotes new operations and routes
• Contest results
• Pictures of their meals provided by them
• Pictures of their fleets
• Pun intended captions
• New features like “web check-in”
• Their pilots in their workplace
• Interaction through festive posts
• Engagement with their followers is nearly equal to zero as there are no such activities or campaigns carried out on either of their
social media platforms.
• Covid protocols
• Some undeniable procedure before boarding the flight
• They retweet the news articles which are about them
On LinkedIn, the posts are the same as Instagram, Twitter, and Facebook. Insights and job vacancies are updated by the company.
The impact of social media on business is no doubt huge. Organizations understand the essence of social media in building the
brand and increasing the overall revenue.
Air India should boost their social media game real quick because it is what can result in a big impact on its marketing.
 PRIVATIZATION VS
NATIONALIZATION
Since Air India was a government company, meaning the ultimate authority of decision-making was with some
politicians, and some government officers.
And they did not have much knowledge of the airlines' industry.
Which airplanes to buy?
How many should they buy?
On which routes should the airline be flown Incompetent people were at the top. They couldn't make the right
decisions because they lacked knowledge and they did not have much experience. And neither did they have the
motivation to make the right decisions. Because it is often said about government jobs that once one gets the
job, they are set for life. Regardless of how one works. As compared to a private job, where one has to work
properly to impress the boss to move ahead in career, and the profit motivation is always present in a private
job.
So how could Air India be successful?
Although another point to note here is that the nationalization of Air India had already taken place in the early
1950s.
And till the 1970s, the airline was flying quite well. It was a world-famous airline.
Considered one of the best airlines in the world.
Even though it was a nationalized airline. Perhaps because the top management was working well and was
motivated.
JRD Tata was handling it himself. Who had founded the airline.
So he had the motivation to keep the airline in top shape.
Perhaps that's why Air India study is less about the success and failures of privatization versus nationalization,
and more about improper management and bad decision-making.
Which can be seen in a private company as well as a nationalized company.
 THE DOWNFALL
The list of top management blunders that broke Air India Maharajah’s back are:
• Ordering new fleet of 111 Boeing aircraft:
Boeing was given this order in 2005-06 to coincide with the India visit of then US President, George W Bush
II. In his book Not just an accountant, ex-CAG (Comptroller and Audit General) Vinod Rai describes how Air
India’s board of directors had originally placed an LOI on Airbus for 10 MCLR (A330) aircraft. But the Air
India board was “nudged” to change the order to Boeing, and increase the order size from 10 to 111
aircraft.
Terming it a supply-side proposal, the Planning Commission raised a red flag. Reading between the lines, it
appears that the Boeing order was placed with the tacit approval of the then PM as a quid pro quo for
waiver of NRC (Nuclear Regulatory Commission) action against India by the US Congress.
Air India’s miniscule equity capital was quickly wiped out, and with accumulated losses the airline’s net
worth turned negative.
• Faulty aircraft configuration:
The long haul B777 and B747 aircraft had “vanity first class cabin” that was rarely filled. This meant that the
break-even load factor capacity for meeting even cash operating costs went beyond 130 per cent. And Air
India’s policy of deploying fuel guzzling wide-body B747s on certain domestic routes added to its operating
losses by an estimated ₹350-400 crore per year.
 THE DOWNFALL
• Inability to offer direct non-stop flights from major growth centers:
Air India, for example, simply forced passengers going from Kerala to the Middle East or from Bengaluru to the US
to travel via Mumbai/Delhi, adding 8-16 hours to total travel time. Before Air India Express started offering direct
flights from the South to the Middle East, Air India offered only few such flights as its crew and engineering bases
were in Mumbai
• Heterogeneity of fleet:
Air India’s fleet complexity further exacerbated with the order of 18 Boeing 737s for Air India Express. Indian
Airlines as well as Air India had historically used Airbus (A-319/320/321) fleet for short-haul services. Adding
Boeing 737s for short-haul flights added to inventory costs and further training of the crew.
• Forced (failed) marriage between Air India and Indian Airlines:
The merger between Air India and Indian Airlines has remained only on paper. The public sector airlines were
merged in 2006-07 to facilitate better synergies of their resources, yet resources, aircraft, men, material and
machines remained divided. There were no synergies. The merger without employee lay-offs simply magnified
problems like excess manpower. Air India, Indian Airlines and Air India Express maintained separate kitchens even
after their marriage.
 THE DOWNFALL
• Poor Maharajah but rich employees:
Air India paid a heavy price for “buying peace” with unions during mid-1990s. Paying huge salaries to its pilots
and aircraft maintenance engineers (AMEs) hit the airline hard.
The unions of pilots and AMEs demanded US equivalent salaries in rupees. This robbed Air India of its cost
competitiveness.
• Inability to face change:
The change brought in by liberalization of the airline industry post 2005 meant all flagrant wastages of monopoly
times had to go. The reactive management style (instead of proactive) ensured Air India was poorly placed to face
the challenges of liberalization.
Lack of customer focus, bad financial management, and arrogance of unionized employees made things even
worse.
• Lack of professional management:
There was a lack of continuity or accountability of the top leadership. The IAS babus who come to run Air India
have little aviation experience and generally fail to understand that aircraft capacity and fares need to be aligned
to trade winds.
• Failure of asset monetization:
Air India, during its golden days, invested in the entire aviation value chain, starting with aircraft maintenance
with Boeing in Nagpur, cabin catering through subsidiary (Chef air), setting up Centaur Hotels at Santacruz Airport
and Juhu, and investing in GHA (ground handling agency) at many airports. These assets were ill-managed and
were later sold for a song
 MAHARAJA BACK TO HOME

In 2017, the government decided to privatize Air India.

By 31st March 2020, Air India had accumulated losses of over ₹700 billion in total.
This burden kept on increasing every year.
To the extent that the government found it increasingly difficult to sell this airline.
But finally on 8th October 2021, the government successfully sold off this airline to Tatas,
Mr. Ratan Tata.
For ₹180 billion.
This decision is seen as a big celebration.
The airlines have returned to their original owners again.

The Tatas.
 WRAP-UP
Only time can tell if Air India could once again become a successful airline after
this decision??
Whether it could recreate its identity in the world or not. But I would definitely
like to tell you one thing at the end, that if we look at the best airlines in the
world today,
Singapore Airlines, Emirates, Etihad Airlines, Japan Airlines, Lufthansa, in this
long list, you will find nationalized airline those airlines controlled by the
governments, like Singapore Airlines with the Singaporean government holding
the majority stake, or Emirates and Etihad, that are 100% government-
controlled airlines.
On the other hand, you will find private airlines as well.
Like Lufthansa and Japan Air.
In my opinion, it doesn't make a difference if an airline is owned by the
government or privately.
In the end, it is about good decision-making and good management.
THANK YOU

SOHIL KHAN(2K19/ME/246)
SUBHASH SHARMA(2K19/ME/247)