AIR INDIA LIMITED AND INDIAN AIRLINE LIMITED MERGER
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The document discusses the merger between Air India Limited and Indian Airline Limited, highlighting the failures and issues that led to its decline, such as poor management decisions, over-staffing, and failure to establish effective synergies. Post-merger, the company's market share dropped significantly, and it faced financial challenges despite being profitable prior to the merger. Recommendations include privatization, better employee management, and focusing on cost-effective services to meet market demands.
AIR INDIA LIMITED AND INDIAN AIRLINE LIMITED MERGER
- 1. AIR INDIA LIMITED AND INDIAN AIRLINE LIMITED MERGER Presenter: Sajjad Hussain
- 2. Road-Map • Company profile • Merger proved as a recipe of disaster • Answer to questions • Evidences • Reasons of merger failure • Recommendations
- 3. Company Profile (Pre-merger) • Started in 1946 • Went Internationally 1948 • According to the Indian Parliament act 1953 two separate autonomous corporations were evolved from air India (as Air India Limited & Indian Airline Limited)
- 4. Company Profile (Pre-merger) • Until 1986 both monopolized (As AIL was conducting International Business) • Changes in civil aviation policies ( deregulation ) • Hit by “open skies policies” 1990 • Act of 1994, liberalized the civil aviation industry • Since then company’s share was declining but remained profitable until 2005
- 5. Company Profile (Post-merger) • In 2007 Govt: Announced merger with Indian Airline Limited which officially took place in 2011 as NACIL • Later on the name was retained as Air India
- 6. Merger proved as a recipe of disaster • Failed to meet up invitation of Star Alliances • Market share declined ( 19.2% – 14% ) • Dropped down its market position from 1st to 4th • Over staffing
- 7. Merger proved as a recipe of disaster • Short of working capital ( purchased unplanned aircraft i.e. 28 – 68) • Disregarded Indian Pilots Guild ( IPG ) • Gave away two prime routes Kochi - Doha –Bahrain and Calicut- Doha-Bahrain
- 8. Answers to questions • No! it was not a good decision under that circumstances. • Privatization was relatively better option. • Yes! As the management was not taking the appropriate decisions and proved as inefficient in responding to market developments.
- 10. Reasons of merger failure • Lack of effective leadership • Lack of synergy • Fleet Expansion • HR integration • Lack of IT integration
- 11. LCC v/s FSC( Exhibit # 4, 2008-9) ITEMS PER DAY AIR INDA Kingfisher Spice jet Indigo Passenger per flight 83 70 111 122 Avg Passenger load factor 60% 63% 66.1% 69.6% Avg weight load factor 58% 59.8% 62.8% 67.2% Flights per day 345 337 101 110 No of pilots 1401 1025 140 255 Pilots per flight 4.0 3.0 1.38 2.32
- 12. Recommendations • We strongly recommend that AIL must introduce subsidiary for LCC ( Segmentation ) • Rather than merger, we recommend that AIL must have been privatized
- 13. Recommendations • Management should consider employee aspect regarding there salaries, promotions and health insurance rather than focusing on political issues. • We recommend that rather than focusing on Hi- Class services which lead to marketing myopia, it must have focused on market demand which was low cost.
- 14. Thanks for your patience