Indian Airline's HR Problems

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Case Details:

Case Code : HROB006
Case Length : 07 Pages
Period : 1994-2001
Organization : Indian Airlines
Pub Date : 2001
Teaching Note : Available
Countries : India
Industry : Aviation and Airlines

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"There could scarcely be a more undisciplined bunch of workers than IA's 22,000 employees."

- Business India, January 25, 1999.

Flying Low

Indian Airlines (IA) - the name of India's national carrier conjured up an image of a monopoly gone berserk with the absolute power it had over the market. Continual losses over the years, frequent human resource problems and gross mismanagement were just some of the few problems plagued the company. Widespread media coverage regarding the frequent strikes by IA pilots not only reflected the adamant attitude of the pilots, but also resulted in increased public resentment towards the airline.

IA's recurring human resource problems were attributed to its lack of proper manpower planning and underutilisation of existing manpower.

The recruitment and creation of posts in IA was done without proper scientific analysis of the manpower requirements of the organization. IA's employee unions were rather infamous for resorting to industrial action on the slightest pretext and their arm-twisting tactics to get their demands accepted by the management.

During the 1990s, the Government took various steps to turn around IA and initiated talks for its disinvestment. Amidst strong opposition by the employees, the disinvestment plans dragged on endlessly well into mid 2001. The IA story shows how poor management, especially in the human resources area, could spell doom even for a Rs 40 bn monopoly.

Background Note

IA was formed in May 1953 with the nationalization of the airlines industry through the Air Corporations Act. Indian Airlines Corporation and Air India International were established and the assets of the then existing nine airline companies were transferred to these two entities. While Air India provided international air services, IA and its subsidiary, Alliance Air, provided domestic air services. In 1990, Vayudoot, a low-capacity and short-haul domestic airline with huge long-term liabilities, was merged with IA...

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