HISTORY OF AIR INDIA
J. R. D. Tata founded Tata Airlines in 1932 as a division of Tata Sons Ltd. (now Tata
Group).
After World War II in 1946, regular commercial service was restored in India and Tata
Airlines became a public limited company under the name of Air India.
Under the Air Corporations Act of 1953, the Government nationalized the air
transportation industry and Air India International Limited was born.
In 1960, Air India flew its first international flight to New York via London.
In 1962, Air India became the world's first all-jet airline and its name was officially
truncated to Air India.
Services to Shanghai and to Air India's third US gateway at Newark Liberty
International Airport in Newark were introduced in the year 2000.
In 2007, Air India and Indian Airlines merged into one airline, with its name
remaining Air India. Air India is now a part of Star Alliance and is supposed to be
joined by Alliance Air and Air India Express soon.
On 1 March 2009, Air India had made Frankfurt Airport at Frankfurt am Main as its
international hub for onward connections to United States from India; however, the
airline shut down the Frankfurt hub on 30 October 2010.
However on 14 July 2010, Air India chief, Arvind Jadhav announced their intention to
make the new terminal 3 at Delhi's Indira Gandhi International Airport the hub for
international and domestic operations with the plans of starting new direct flights to
Chicago (USA) and Toronto (Canada) and also taking almost all international long
haul flights away from its former Primary hub at Mumbai's Chhatrapati Shivaji
International Airport due to lack of space.
This would streamline passenger movements and reduce operating costs. The airline
also plans to open a new hub for its international flights at UAE's Dubai International
Airport
The national flag carrier of India with a worldwide network of passenger and cargo
services, Air India is the only state-owned airline in the country, having recently
merged with Indian Airlines.
1
With its main base at Chhatrapati Shivaji International Airport, Mumbai and Indira
Gandhi International Airport, Delhi, Air India connects 146 international and domestic
destinations around the world, including 12 gateways in India with Air India Express,
a fully-owned subsidiary of Air India.
On 27 February 2011, Air India and Indian Airlines merged along with their
subsidiaries to form Air India Limited.
2
INTRODUCTION TO AIR INDIA
Air India, the state-owned international carrier of the country, today has an extensive
worldwide network offering both passenger and cargo services to more than 140
destinations across east and South Asia and the Middle East, East Africa, South East
Asia, Western Europe and the UK.
With Air India and Indian Airlines aligning their resources together, it has now become
a part of National Aviation Corporation of India Ltd along with two of their subsidiaries,
i.e. Alliance Air and Air India Express.
In addition to together servicing 52 cities within the country, both these airlines offer
direct connections to more than 35 international destinations all over the world.
Air India Baggage Allowance
As per Air India baggage policy, luggage more than 115 linear centimeters (55 + 40
+ 20) in size needs to be checked-in. Anything less than that, as per baggage rules,
can be treated as cabin luggage and taken inside the cabin.
However, the baggage weight should not exceed 8 kgs. The Air India check-in
baggage policy states that 25 kgs of luggage can be checked-in by Economy Class
passengers, 35 kgs by Executive Class Passengers and 40 Kgs by First Class
Passengers, free of charge.
Baggage restrictions deny passengers to carry on board, items such as scissors,
lighters, explosive materials, firearms and all kinds of flammable items.
Air India Destination & Services

Air India International
Air India flies to and from many international destinations today. These
include Osaka and Tokyo in Japan, Lahore in Pakistan, Seoul in South
Korea, Male in Maldives, Dar-e-Salaam and Nairobi in Africa, Shanghai and
Hong Kong in China, Dhaka in Bangladesh, Kathmandu in Nepal, Toronto
in Canada and Colombo in Sri Lanka.
In addition to these, Air India flies to United States of America's major
airports such as John F Kennedy International Airport, Chicago O'Hare
International Airport, Newark Liberty International Airport and the Los
Angeles International Airport.
It now offers direct non-stop flights to JFK International Airport from starting
from the cities of Mumbai and Delhi. The recently added Boeing 777-200LR
aircrafts have been chosen to operate on these routes.
3
Additionally, Air India has code share agreement with many international
carriers such as including Air France, Thai Airways, Lufthansa, Singapore
Airlines and Malaysian Airlines. Schemes abound, flight tickets to these
destinations come at highly subsidized prices.
Other than these, many middle east destinations are serviced as well such
as Kuwait, Dammam, Riyadh, Doha, Dubai, Jeddah, Abu Dhabi and
Sharjah.

Air India Domestic
Sonee of the major Domestic destinations served by Air India include
Amritsar, New Delhi, Jaipur, Ahmedabad, Mumbai, Bangaluru, Coimbatore,
Kochi,
Madurai,
Khozikode,
Chennai,
Tirupati,
Hyderabad,
Vishakhapatnam, Kolkata, Gaya, Varanasi and Port Blair.
Air India Fleet
Air India's fleet has a total operational fleet of a whopping 149 passenger
planes, out of which 35 are Wide Body Planes and 114 are Narrow Body.
Other than these, there are 10 freight careers. While most of the planes are
used by Air India itself, a few of them have been leased out as well.
4
Airlines Agencies
* Air India
* Jet Airways
* Kingfisher Airlines
* Air India Express
* Emirates Airlines
* Lufthansa Airlines
* Thai Airways
* Singapore Airlines
* American Airlines
* British Airways
* Sri Lankan Airlines
* Malaysia Airlines
* Etihad Airways
* Qatar Airways
* Air Arabia
* Alaska Airlines
* Delta Airlines
* Gulf Air
* Continental Airlines
* Air France
* Cathy Pacific Airlines
* KLM Airlines
* United Airlines
* Air Asia
5
LOGO-LIVERY
“The logo of the new airline is a red coloured flying swan with the `Konark Chakra' in orange,
placed inside it. The flying swan had been morphed from Air India's characteristic logo, `The
Centaur', whereas the `Konark Chakra' was reminiscent of Indian's logo”.
The new logo would feature prominently on the tail of the aircraft. While the aircraft will be
ivory in colour, the base will retain the red streak of Air India. Running parallel to each other
will be the orange and red speed lines from front door to the rear door, subtly signifying the
individual identities merged into one. The brand name `Air India' will run across the tail of
the aircraft.
The painted on red palace style carvings on the outside of the windows refer to their slogan "your
palace in the sky" which is written on the back of the aircraft
The Maharajah began merely as a rich Indian potentate, symbolizing graciousness and high
living. And somewhere along the line his creators gave him a distinctive personality: his
outsized moustache, the striped turban and his aquiline nose.
The Maharajah began merely as a rich Indian potentate, symbolizing graciousness and high
living. And somewhere along the line his creators gave him a distinctive personality: his
outsized moustache, the striped turban and his aquiline nose.
6
VARIOUS SCHEMES FOR TICKETS
Special Schemes:
Air-India keeps launching special schemes to attract tourists to India. Of these, two
successful schemes are as follows:
i)
Stopovers
The Air-India stopovers, specially designed for the convenience of tourists
and business travellers who would normally overfly India, provide them an
excellent opportunity to enjoy a complete holiday at budget rates.
The stopover scheme also applies to select cities overseas. In India stopover
packages are offered at the four metro cities of Delhi, Bombay, Calcutta and
Madras.
.
ii) India Super Summer Saver Scheme
To make India a year-round destination by increasing traffic, in the lean
summer months period of April through September, Air-India introduced
Super Summer Savers in 1992. This special scheme is on with the
collaboration of the Department of Tourism, Indian Airlines, and leading
hotel chains, and helps use the summer months underutilized hotel capacity.
For this scheme Air-India. Indian Airlines, and the participating hotels, offer
special concessional fares, and all tariffs remain frozen for the duration of the
scheme which is April-September, These packages have proved to be
popular, and in 1992 generated some 10,000 additional tourists.
Other schemes:
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1) Air India American Express Gold Card
Enjoy 10% discount on Business Class tickets and 15% on Economy
Class tickets. Pay 10% less on full fare Business Class tickets and 15%
less on full fare Economy Class tickets - every time, on any domestic or
International
sector
on
Air
India.
The discounts mentioned above are not available when you book
through Air India Call Centers, Air India's website or any other online
portal.
2) Complimentary upgrades to Business Class
Get a complimentary upgrade voucher to Business Class the moment
you become an Air India American Express Gold Card member. These
vouchers can be used on any of Air India destinations.
3) Complimentary Tickets when you fly anywhere on Air India*
The Air India American Express Gold Card offers you amazing value
and benefits:
Spends on Air India tickets charged to your
Air India American Express Gold Card
(over a 12-month period)
Complimentary Tickets
Rs.4,00,000
One Economy Class return ticket* to any Air India
online point in USA
Rs.3,00,000
One Economy Class return ticket* to any Air India
online point in Europe OR Far East
Rs.1,40,000
Two Economy Class return tickets to Dubai OR One
Economy Class return ticket to any domestic sector
on Air India
Rs.1,00,000
One Economy Class return ticket to Dubai OR
Singapore OR Bangkok
User Development Fee (UDF), Passenger Service Fee (PSF) and any
other govt taxes are applicable for all Domestic complimentary tickets.
Fuel Surcharge, User Development Fee (UDF), Passenger Service Fee
(PSF) and any other govt taxes are applicable for all international
complimentary tickets.
Any two offers / schemes cannot be clubbed together. Complimentary
tickets for domestic sectors are only applicable for AI flights. The port
of origin for all complimentary tickets must be India.
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4) Enjoy Global Acceptance with No Preset Spending Limits
With no pre-set spending limit you can now charge virtually all your
expenses to the Card, without being constrained by a credit limit,
anywhere in the world. Your charges are approved based on your
financial particulars and spending and payment patterns. What's more,
you can pay conveniently in Indian Rupees.
5) Accident Insurance up to 75 lakhs
You are automatically insured against loss of life in an air accident for
up to Rs. 75 Lakhs when you purchase your Air India ticket on the Card
(up to Rs. 40 Lakhs if the tickets are not purchased on the Card) and
Rs. 3 Lakhs for non air accidents. What's more, an insurance cover of
Rs. 4 Lakhs is available to your supplementary Cardmembers as well.
Benefits on Air India Silver Card Holders




10% discount on Normal Full Fare Business Class sector travel
on domestic and on IATA fare on international Air India sector
Travel.
15% discount on Normal Full Fare Economy Class sector travel
on domestic and on IATA fare on international Air India sector
Travel.
Air Insurance of INR 50 Lakhs
Non air insurance of INR 3 Lakhs
(Above is applicable only on self travel of Co-brand Card
member)
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Special Travel Privileges
As a Card member, enjoy special privileges from Air India including:





FFP membership (for non Flying Returns members)
Extra-baggage Allowance, Priority confirmations, Tele check-in
facilities as part of FFP membership benefits on IC Code flights.
Global Calling Card and Global Assist
Convert everyday purchases on your Card into air-miles
Redeem flights faster by clocking 100% more Membership Reward
points on all your Card spending. These points are freely
transferable to the Air India (IC)/Air India Flying Returns program as
add on mileage points. (facility available by paying a fee of Rs. 400
per annum).
10
11
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PROMOTION & OFFERS
Air India is proud to announce UNICONNECT as its telecom partner, to all members
of "FLYING RETURNS". It reduce theirr mobile expenditure by more than 70% on
roaming charges
UNICONNECT specializes in providing the most cost effective global roaming
solutions across the globe through its wide portfolio of country specific SIMS &
Global SIMS. With coverage across 200 countries and totally FREE Incoming calls
in over 60 countries, rest assured of dramatic savings on your overseas mobile bills.
Exclusive offer for all Air India Domestic Passengers, Buy or Redeem amazing deals.
13
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MTV Promotion
Air-India, In association with the Department of Tourism and the Taj Bengal,
Calcutta,sponsored a promotional programme through the popular MW channel
network. The programme focussed on Calcutta. Calcutta being the gateway to
Eastern India, this promotion generated good publicity for this key metropolis and
enhanced its position on India's tourism map.
Indian Crafts Exhibition in Austria
From mid-April till September 93 a major exhibition of Living Indian Crafts was
organised at Schallaburg Castle (Lower Aush).
This was the first time that an Indian presentation was made in Austria on such a
large scale.India is the first non-European theme to be so featured.
The exhibition featured a display of contemporary Indian handicrafts.The event was
organised jointly by Air-India. ICCR, the Crafts Museum, and the Department
of Tourism.
Food & Culture Festivals
Following the popularity of the Goan Food and Cultural Festivals organised in
Singapore and Kuala Lumpur in 1992, Air-India is planning to organise more such
events. These festivals will feature other Indian states like Rajasthan, and will be
organised in collaboration with the respective tourism bodies involved.
Magasin du Nord India Promotion '
Indian handicrafts and goods will be prominent in Scandinavia, thanks to an India
promotion by Magasin du Nord, the largest department stores chain in those
countries. The promotion to be held in 1994, will feature Indian handicrafts in the
Store's catalogues. Before the promotion, a team of photographers will visit India to
film a cross-section of this country's crafts. An Air-India theme song in Hindi was
produced on video and distributed to sales offices within India and to stations with
subshtial ethnic market.
Theme Campaign
A theme campaign in colour "Fly With Your Very Own" won the awards of the
Adveqising Club and also Adve Rising & Marketing magazine. Besldes, the
advertisement given by Air India not only mention the qualities of the airline but talk
of India as a destination.
15
AI Environment policy
16
Oldest man flies AI to Delhi
A very special passenger, Adigalar Asiriyar, was among the group of Tamil scholars
and dignitaries who flew to Delhi on May 4, 2011 by flight AI 439.
Ambedkar Jayanti celebrated
Employees of Air India proudly celebrated the birth anniversary of Dr B
R Ambedkar on April 14, 2011 by paying rich tributes and holding various functions
in his honour in different offices all over the country.
17
Air India introduces mobile check-in
The mobile check-in facility is available to all domestic passengers from the six
major metro cities viz. Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bengaluru
from April 7, and will be subsequently extended to other stations
and international flights.
Health camp
Northern Region Medical Department had organised a Diabetes Awareness Week
from May 9 to May 13, 2011, at Terminal I. The camp was held for two hours daily
to screen, educate and guide employees on the health problems triggered by
increase in blood glucose (sugar).
18
International Women’s Day International Women’s Day
Celebrations started a day earlier in Western Region in Mumbai.A “greenery drive”
was organised at the New Engineering Complex Sahar, Mumbai, on March 7, 2011.
Saplings were planted by women employees near the security department. The
team, led by GM Finance WR, Mrs Sarit Sharma, turned up dressed in green, to
spread a message about nurturing the environment
through greenery.
Savings in electricity bills
The Civil Engineering unit at New Engineering Complex, Mumbai, has effected an
average savings of Rs 5 lakh per month by changing the electricity power supply
provider from Reliance Energy to Tata Power from February 11.
19
Blood donation camp
As part of its third anniversary celebrations, Air India SATS (Singapore Airport
Transport Services) Limited organized a blood donation camp in association
with Lions Club of Bangalore – Sanjay Nagar, on May 23. As many as 100 employee
donated blood during the day, with a total of 134 units being donated to the Lions
Club.
AI participates in Lavasa Women’s Drive Car Rally
The Lavasa Women’s Drive is a popular event in Mumbai that seeks to spread
awareness about cancer. This year, the drive was held on February 27 and Manager
Personnel, Ms Mohana Kumar, took part in it representing Air India. Having been
selected out of 352 entries to take part in the rally,
20
PUBLIC RELATIONS AND TOURISM GENERATING ACTIVITIES
Air-India undertakes a number of activities to attract individual tourists, special
interest groups,- c conventions and congresses, adventure lovers, etc. The whole
idea of these exercises is to:
 a project India as an attractive tourist destination, and
 a how Air-India can make it much more convenient and meaningful.
These activities can be listed under two main categories:
i) Mainline Activities
ii) Ancillary Activities
i) Mainline Activities:
These include:
 Participation in major international travel trade shows and meets.
Such as ITB (Berlin), WTM (London). JATA (Japan), FITUR (Spain), and
EIBTM (Switzerland). At the meets, promotional literature is distributed, audiovisuals are screened, press briefings held, and information is gathered relating
to contemporary world tourism trends.
 Sponsoring visits to India of travel agents and writers (FAM trips), thereby
increasing awareness of the country's various attractions for the foreign
tourists.
 Arranging Indian cultural events and food festivals and department stores
promotions overseas, thus providing foreign countries a taste of India's rich
cultural heritage and culinary range. Goan food and cultural festivals held in
Singapore and Malaysia were very popular and several similar events are
planned in the coming months.
 Creating awareness and interest overseas of the range of Special Interest
activities available in India, like fishing, wildlife and golf etc. Also organising
buyer-seller marts involving foreign agents and local tour operators. a
Involvement with the International Congress and Conventions
Association(ICCA), to tap the extensive and growing market of conventions
and congresses. Assisting state governments to promote their tourist facilities
overseas, specifically high-lighting salient features of interest to the foreign
tourist.
ii)
Ancillary Activities:
21
These include:
 Providing mandatory order passages to the Department of Tourism for
inviting travel agents, travel writers and media representations,
Organizing 'Know India' seminars' overseas to update the travel
trade
about India and the country's tourism product,
 Producing and screening of audio-visuals highlighting select aspects of
India. These films are sent to various Air-India offices overseas for screening
to help in their tourism promotion efforts. The films cover various subjects such
as golf, wildlife, trekking, convexitions etc.
 Publishing a bi-monthly newsletter to bring about effective communication
within Air India offices worldwide. This publication highlights tourism and travel
events of interest and concentrates on imparting information which is of
interest and use to our overseas offices in promoting inbound traffic into India.
 Organising orientation seminars for Air-India officers being posted overseas
to familiarise them with the latest news and trends regarding the Indian tourism
product and its infrastructure. These activities help in creating favourable
conditions of tourist attraction. Apart from these
some special measures with specific target groups are also undertaken..
22
Achievements
 Tourism has a direct bearing on air transport. 90% of the tourists arriving into
India come by air. However, India's share in the world tourist traffic is less than
1%. Further India's share of total world international air passenger’s traffic has
been quite low at 3%.
 Out of total traffic of 4218 thousand passengers (1984) travelling to and fro
between India and various foreign countries, Air India carried 1473 thousand
(35%).
 In 1992-93 Air India carried 2201 thousand passengers. However, Air India's
share in the home market has declined to 26% from 35% in the early eighties.
Various studies have projected an average annual growth of 5.2% for
international passenger traffic to and fro India.
 This growth has shown stagnation decline due to economic recession and
political instability in the sub-continent as a whole. The Open Sky Policy
pursued by the Government-of India under the economic liberalization
program has also shown negative impact on Air India since 1990.
 Inspite the setbacks and negative trends Air India's foreign exchange earnings
and Savings improved to 750 crores in 1993.
23
INTERNAL CONTROL SYSTEMS
The Company continues to ensure proper and adequate internal control systems and
procedures commensurate with its size and nature of business. These control systems
ensure that all assets are safeguarded and protected against loss from unauthorized use
and that transactions are authorized, recorded and reported correctly.
The internal control system enables documented policies, guidelines, and authorization
and approval procedures.
The Company has an extensive system of internal controls which ensures optimal
utilization and protection of resources, IT security, accurate reporting of financial
transactions and compliance with applicable laws and regulations as also internal policies
and procedures.
The internal control system is supplemented by extensive internal audits, regular reviews
by management and well documented policies and guidelines to ensure reliability of
financial and other records to prepare financial statements and other data.
The Company has a well defined manual on delegation of authority and administrative
powers, based on which, the authorities exercise their powers. This manual is reviewed
periodically to cope with the changes necessitated by the needs of the organization. The
said manual, along with the Company’s key functional process manuals, further
strengthens the internal control system of the organization.
The Company has independent internal audit systems to monitor the entire operations
and services spanning over all locations, business and functions on a regular basis. The
Company has also employed outside consultants in its various areas of functioning in
order to reduce/monitor its cost platform.
24
FINANCIAL MANAGEMENT
Balance sheet
(Rs crore)
Mar ' 09
Mar ' 08
Mar ' 07
Mar ' 06
Mar ' 05
Equity share capital
145.00
145.00
153.84
153.84
153.84
Share application money
-
-
-
-
-
Preference share capital
-
-
-
-
-
Reserves & surplus
63.35
5,668.13
-261.97
185.96
171.12
Secured loans
2,365.95
2,891.75
1,846.69
1,243.24
565.95
Unsecured loans
28,542.07
15,521.65
5,818.41
2,378.67
695.74
Total
31,116.37
24,226.53
7,556.97
3,961.71
1,586.65
Gross block
24,329.40
18,654.56
6,471.27
7,109.88
7,121.60
Less : revaluation reserve
-
-
-
-
-
Less : accumulated depreciation
1,838.05
760.12
4,366.85
4,914.43
4,641.18
Net block
22,491.35
17,894.44
2,104.42
2,195.45
2,480.42
Capital work-in-progress
5,011.37
3,972.63
2,994.75
1,185.33
21.91
Investments
123.18
90.12
90.70
87.02
58.26
Current assets, loans & advances
8,746.02
7,478.95
4,386.48
3,164.77
2,116.88
Less : current liabilities & provisions
5,255.55
5,209.61
2,019.38
2,670.86
3,090.82
Total net current assets
3,490.47
2,269.34
2,367.10
493.91
-973.94
Miscellaneous expenses not written
-
-
-
-
-
Total
31,116.37
24,226.53
7,556.97
3,961.71
1,586.65
NOTES: Book value of unquoted investments
122.42
89.36
90.05
-
-
Market value of quoted investments
43.03
47.07
36.78
-
-
Contingent liabilities
25,918.42
26,340.93
25,994.75
-
-
Number of equity sharesoutstanding (Lacs)
1450.00
1450.00
1538.36
1538.36
1538.36
Sources of funds
Owner's fund
Loan funds
Uses of funds
Fixed assets
Net current assets
25
Capital structure
From
Year
To
Year
Class
Share
Of Authorized
Capital
Issued
Capital
Paid Up Shares Paid
Up Paid
Up
(Nos)
Face Value
Capital
2005
2006
Equity
Share
425.64
153.84
153836427
26
10
153.84
FINANCIAL PERFORMANCE:
The financial performance of the Company during the year 2010-11 was as under :
(Rupees in Million)
Particulars
2010-11
2009-10
Profit / (Loss) Before Depreciation (51735.7)
(41621.4)*
& Tax: Depreciation
16901.0
13887.6*
Less
(68636.7)
(55509.0)*
Profit / (Loss) Before Tax
15.0
15.4*
Less : Provision for Tax
Add : Deferred Tax Benefit Net Profit / (Loss)
(68651.7) (55524.4)
OTHER FINANCIAL INFORMATION
Share Capital :
Authorized Share Capital
The Authorized Share Capital of the Company is Rs. 50,00,05,00,000/- (divided into
5,00,00,50,000 equity shares of Rs.10/- each).
Issued, Subscribed & Paid-up Share Capital
The Issued, Subscribed & Paid-up Share Capital of the Company, is
Rs.2,145,00,00,000/- divided into 214,50,00,000 fully paid up equity shares of Rs.10/each. During the year 2011-12, Government of India infused Rs.12,000 million
towards equity capital.
Aircraft Project Loans :
As on 31 March 2011, the position of aircraft loans, including future lease obligations
in respect of finance leases, was as under :
(Rupees in Million)
Total Loan due as on 1 April 2010
1,98,801
Add : Amount drawn during April 2010 to March 2011
22,939
Less : Amount repaid during April 2010 to March 2011
14,954
Less : Exchange adjustments due to revision in rates of Currencies
(1,003)
Add : Interest accrued and due as on 31 March 2011
1,098
2,06,881
Balance as on 31 March 2011
27
Annual Plan Outlay 2010-11
The Government had approved an Annual Plan Outlay of Rs.56,348.0 million
(including Rs.12,000.0 million for equity infusion) for the year 2010-11. Against this
outlay, the actual expenditure for the year was Rs.34,189.6 million (including
Rs.12,000.0 million for equity infusion) as detailed below :
Annual Plan Outlay 2011-12
The Annual Plan Outlay for the year 2011-12 is Rs.57,493.6 million including
Rs.12,000.0 million for equity infusion from Government. The Company has spent
Rs.14,595.5 million upto September 2011.
Twelfth Five Year Plan – 2012-13 to 2016-17 :
Air India has submitted an outlay of Rs.329,637.0 million for the Twelfth Plan period
as detailed below:
(Rupees in Million)
Aircraft Projects
Non-Aircraft Projects
Budgetary support from Government
111,8
77
18,6
50
199,1
10
Aircraft Financing
During the year 2010-11, Air India availed a Bridge loan amounting to US$473 million for
financing 3 B777-300ER aircraft and 1 GE spare engine. Subsequently, this Bridge loan
was re-financed through US Exim financing in August 2011 at a highly competitive interest
rate structure resulting in savings of Rs.800 million p.a. by way of interest.
Similarly, the loan for acquisition of Airbus aircraft amounting to Rs.55000 million given by
a Consortium of Banks led by IDBI was refinanced in September 2011 with the ICICI Bond
issue maturing in 15-20 years at a lower rate of interest which resulted in a saving of
approximately Rs.1800 million p.a.
For the B787-8 financing, the airline is exploring a number of options including Sale and
Lease Back. The US Exim Bank has already issued a Commitment Letter to support
delivery financing for the first 12 B787-8 aircraft to be inducted into the fleet. As of date,
bids for the first 7 B787-8 aircraft for Sale and Lease Back have already been floated and
the response is awaited.
28
FINANCIAL CRSIS AND RESTUCTURING
Around 2006–2007, the airlines began showing signs of financial distress.
The combined losses for Air India and Indian Airlines in 2006–07 were 770
crore (US$140.14 million). After the merger of the airlines, this went up to
7,200 crore (US$1.31 billion) by March 2009. This was followed by
restructuring plans which are still in progress.
In July 2009, SBI Capital Markets was appointed to prepare a road map for
the recovery of the airline. The carrier sold three Airbus A300 and one Boeing
747–300M in March 2009 for $18.75 million to survive the financial crunch.
As of March 2011, Air India has accumulated a debt of 42,570 crore
(US$7.75 billion) and an operating loss of 22,000 crore (US$4 billion), and
is seeking 42,920 crore (US$7.81 billion) crore from the government.
For 3 months (June–August 2011), the carrier missed salary payments and
interest payments and Moody’s Investor Service warned that missing
payments by Air India to creditors, such as the State Bank of India, will
negatively impact the credit ratings of those banks.
A report by the Comptroller and Auditor General (CAG) blamed the decision
to buy 111 new planes as one of the major causes of the debt troubles in Air
India; in addition it blamed on the ill timed merger with Indian Airlines as well.
Due to high fuel and loan costs, Indian government pumped 32 billion into
Air India since April 2009 and in March 2012 government bailed out Air India
Ltd. with a 67.5 billion ($1.4 billion) which the amount almost double of the
federal government has spent on new hospitals over the three years.
As of May 2012 the carrier invited offers from banks to raise up $ 800 million
via external commercial borrowing and bridge financing.
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RETURN TO PROFITABILITY PLANS
Revenue Passenger-Kilometers, scheduled flights only, in millions
Year
Traffic
1957
395
1960
521
1965
1074
1969
1524
1971
1781
1975
3528
1980
6597
1985
7668
1989
9082
2000
12006
Source: TATA World Air Transport Statistics
FINANCIAL REORGANIZATION
The new Chairman and Managing director wants to change the order of
some of the 111 planes ordered in 2006 to get narrow-body aircraft instead
of the wide-body aircraft.
On 4 May 2012, the airline was fined $80,000 by the U.S Transportation
Department for failing to post customer service and tarmac delay
contingency plans on its website and adequately inform passengers about
its optional fees.
On 15 May, the Union Civil Aviation Minister Ajit Singh stated that the
Government was giving Air India one last chance and that it must perform in
order to qualify for a bailout. The financial restructuring plans were hit hard
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when Air India pilots decided to go on a strike on 8 May 2012 in order to
protest management decisions to train Air India and former Indian Airlines
pilots for the newly inducted Boeing 787 Dreamliner fleets.
In spite of the Delhi High Court ruling the strike illegal, the strike continued
for 58 days. The already reeling airline lost an additional 600 crore because
of the pilot strike.
Criticism and controversy
 State ownership
Air India remains as a state-owned company through Air India
Limited. However, government ownership of the airline has
subsequently led to multiple problems, such as enormous market
share losses, declining profits, and escalating labour disputes.
Historically, there have been numerous attempts to privatise Air India
in hopes of a better future, but political interference has since
prevented this goal from being achieved. Furthermore, it is also
believed that mismanagement and corruption have impacted Air
India's financial performance.
 Star Alliance
In December 2007, Star Alliance invited Air India in an effort to
expand its presence in the Indian subcontinent. However, issues
with technology and software upgrades and the aftermath of its
merger with Indian Airlines have delayed its entry into the alliance
for roughly three and a half years.
When the final deadline for joining came in July 2011, Air India's
application was suspended, and was told it failed to meet the
minimum criteria to join. In response, many of Air India's officials
complained to Star Alliance about the suspension of its application,
claiming that they already met all of the requirements. [But in October
of that same year, talks between Air India and Star Alliance have
resumed.
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REALISTIC REVIVAL PLAN
It was in June last year that Air India Chairman-cum-Managing Director
Arvind Jadhav gave a presentation on the company’s turnaround plan to
Union Aviation Minister.
Plans to turnaround performance :
Several measures were undertaken to improve the performance of the Company :


Rationalization of certain loss making routes.
Return of leased aircraft.

Induction of brand new fleet on several domestic & international routes thereby
increasing passenger appeal. Introduction of non-stop services to USA & Canada.

Phasing out old fleet and consequent reduction of maintenance cost.

Reduction of contractual employment & outsourced agencies.

Critical analysis of Fuel consumption on all flights by setting up a Fuel Council and
Fuel Manager.

Removal of overtime and certain staff perks and relocation of officers from abroad
to India. Closure of some foreign stations including offline offices.

Increase in passenger, cargo, excess baggage revenue through aggressive sales
& marketing strategy including a separate Cell for attracting Government traffic.

Leveraging the assets of the company to increase MRO revenue as well as
revenue from real estate properties.

Introduction of Common Code through a common Passenger Service System
(PSS) effective 27 February 2011 which would ensure seamless connectivity on
domestic & international flights.

Implementation of Quickwin IT Solutions including upgrade of Revenue
Management System, introduction of SAP-ERP throughout the network.

Establishment of Hub Control & Networking / Crew Scheduling System.
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BUDGET ALLOCATION TO AIRLINE INDUSTRY
 Government of India has taken several steps to tide over the crisis," the statement said
mentioning that the government in the federal budget 2011-12 had allocated Rs 2,000 crore
for the airline and that another Rs 1,200 crore was expected to be infused this year".
Currently the airline, which is laden with a cumulative debt of Rs 40,000 crore it incurred over
aircraft acquisition and as short-term loans to maintain its operations, expects a fresh equity
infusion of Rs 1,200 crore in July. The cash-strapped carrier is also seeking a total infusion of
Rs 17,000 crore, which includes Rs 5,000 crore for this fiscal year alone, the report pointed
out.
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AI LINKS MORE CITIES
AI links Gwalior with Mumbai
On April 18, Minister for Civil Aviation, Mr Vayalar Ravi, and Minister of State
for Commerce and Industry, Mr Jyotiraditya Scindia, flagged off the inaugural
flight from Gwalior to MumbaI at the Rajmata Vijaya Raje Scindia Civil
Terminal in the presence of CMD Arvind Jadhav, MRO-SBU Head Vipin
Sharma, Executive Director (North) Vijay Paul and other dignitaries.
With this flight, Air India has linked Gwalior and Mumbai, thereby connecting
the city with the national capital as well as the financial capital of the country,
facilitating the movement of business and leisure travellers.
Alliance Air links Kanpur-Kolkata
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Air India continuedwith its expansion of network with Kanpur getting linked to
Kolkata. The inaugural flight of Alliance Air at Chakeri Airport in Kanpur for
Kolkata on May 24, 2011.
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