project report on air india

8/12/2019 Project Report on Air India

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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 andTata Airlines became a public limited company under the name of Air India.

Under the Air Corporations Act of 1953, the Government nationalized the airtransportation 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 officiallytruncated to Air India.

Services to Shanghai and to Air India's third US gateway at Newark LibertyInternational Airport in Newark were introduced in the year 2000.

In 2007, Air Indiaand Indian Airlinesmerged into one airline, with its nameremaining Air India. Air India is now a part of Star Alliance and is supposed to bejoined 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, ArvindJadhav 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 ChhatrapatiShivaji

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.


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With its main base at ChhatrapatiShivaji 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 theirsubsidiaries to form Air India Limited.


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INTRODUCTION TO AIR INDIA

Air India, the state-owned international carrier of the country, today has anextensive 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 nowbecome a part of National Aviation Corporation of India Ltd along with two of theirsubsidiaries, i.e. Alliance Air and Air India Express.

In addition to together servicing 52 cities within the country, both these airlines offerdirect 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-inbaggage policy states that 25 kgs of luggage can be checked-in by Economy Classpassengers, 35 kgs by Executive Class Passengers and 40 Kgs by First ClassPassengers, 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. Theseinclude Osaka and Tokyo in Japan, Lahore in Pakistan, Seoul in SouthKorea, Male in Maldives, Dar-e-Salaam and Nairobi in Africa, Shanghaiand 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 majorairports such as John F Kennedy International Airport, Chicago O'HareInternational Airport, Newark Liberty International Airport and the LosAngeles International Airport.

It now offers direct non-stop flights to JFK International Airport fromstarting from the cities of Mumbai and Delhi. The recently added Boeing777-200LR aircrafts have been chosen to operate on these routes.


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Additionally, Air India has code share agreement with many internationalcarriers such as including Air France, Thai Airways, Lufthansa, SingaporeAirlines and Malaysian Airlines. Schemes abound, flight tickets to thesedestinations come at highly subsidized prices.

Other than these, many middle east destinations are serviced as wellsuch as Kuwait, Dammam, Riyadh, Doha, Dubai, Jeddah, Abu Dhabi andSharjah.

Air India Domestic

Sonee of the major Domestic destinations served by Air India includeAmritsar, 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 passengerplanes, 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 planesare used by Air India itself, a few of them have been leased out as well.


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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


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LOGO-LIVERY

The logo of the new airline is a red coloured flying swan with the `Konark Chakra' inorange, placed inside it. The flying swan had been morphed from Air India's characteristiclogo, `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 beivory in colour, the base will retain the red streak of Air India. Running parallel to eachother 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 runacross the tail of the aircraft.The painted on red palace style carvings on the outside of the windows refer to their slogan "yourpalace in the sky" which is written on the back of the aircraft

The Maharajah began merely as a rich Indian potentate, symbolizing graciousness andhigh 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 andhigh living. And somewhere along the line his creators gave him a distinctive personality:his outsized moustache, the striped turban and his aquiline nose.


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VARIOUS SCHEMES FOR TICKETS

Special Schemes:

Air-India keeps launching special schemes to attract tourists to India. Of these, twosuccessfulschemes are as follows:

i) Stopovers

The Air-India stopovers, specially designed for the convenience of touristsand businesstravellers who would normally overfly India, provide them anexcellent opportunity to enjoy acomplete holiday at budget rates.

The stopover scheme also applies to select cities overseas. In Indiastopover packages are offered at the four metro cities of Delhi, Bombay,Calcutta andMadras.

.ii) India Super Summer Saver Scheme

To make India a year-round destination by increasing traffic, in the lean summermonthsperiod of April through September, Air-India introduced SuperSummer Savers in 1992. Thisspecial scheme is on with the collaboration ofthe Department of Tourism, Indian Airlines,and leading hotel chains, and

helps use the summer months underutilized hotel capacity.

Forthis scheme Air-India. Indian Airlines, and the participating hotels, offerspecial concessionalfares, and all tariffs remain frozen for the duration of thescheme which is April-September,These packages have proved to bepopular, and in 1992 generated some 10,000 additionaltourists.

Other schemes:

) Air India American Express Gold Card

Enjoy 10% discount on Business Class tickets and 15% on EconomyClass tickets. Pay 10% less on full fare Business Class tickets and15% less on full fare Economy Class tickets - every time, on anydomestic or International sector on Air India.

The discounts mentioned above are not available when you bookthrough Air India Call Centers, Air India's website or any other onlineportal.

) Complimentary upgrades to Business Class


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Get a complimentary upgrade voucher to Business Class the momentyou become an Air India American Express Gold Cardmember. Thesevouchers can be used on any of Air India destinations.

) Complimentary Tickets when you fly anywhere on Air India*

The Air India American Express Gold Card offers you amazing valueand 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 Indiaonline 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 ServiceFee (PSF) and any other govt taxes are applicable for all internationalcomplimentary tickets.

Any two offers / schemes cannot be clubbed together. Complimentarytickets for domestic sectors are only applicable for AI flights. The portof origin for all complimentary tickets must be India.

) Enjoy Global Acceptance with No Preset Spending Limits

With no pre-set spending limit you can now charge virtually all yourexpenses to the Card, without being constrained by a credit limit,anywhere in the world. Your charges are approved based on yourfinancial particulars and spending and payment patterns. What'smore, you can pay conveniently in Indian Rupees.


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) Accident Insurance up to 75 lakhs

You are automatically insured against loss of life in an air accident forup to Rs. 75 Lakhs when you purchase your Air India ticket on theCard (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 insurancecover of Rs. 4 Lakhs is available to your supplementary Cardmembersas well.

Benefits on Air India Silver Card Holders

10% discount on Normal Full Fare Business Class sector travelon domestic and on IATA fare on international Air India sectorTravel.

15% discount on Normal Full Fare Economy Class sector travelon domestic and on IATA fare on international Air India sectorTravel.

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)

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-infacilities 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 MembershipReward points on all your Card spending. These points are freely

transferable to the Air India (IC)/Air India Flying Returns programas add on mileage points. (facility available by paying a fee of Rs.400 per annum).


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PROMOTION & OFFERS

Air India is proud to announce UNICONNECT as its telecom partner, to allmembers of "FLYING RETURNS". It reduce theirr mobile expenditure by morethan 70% on roaming charges

UNICONNECT specializes in providing the most cost effective global roamingsolutions across the globe through its wide portfolio of country specific SIMS &Global SIMS. With coverage across 200 countries and totally FREE Incomingcalls in over 60 countries, rest assured of dramatic savings on your overseasmobile bills.

Exclusive offer for all Air India Domestic Passengers, Buy or Redeem amazing deals.
https://www.flyingreturns.co.in/html/pn_airbazaar.phphttps://www.flyingreturns.co.in/html/pn_uniconnect.phphttps://www.flyingreturns.co.in/html/pn_airbazaar.phphttps://www.flyingreturns.co.in/html/pn_uniconnect.php


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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 channelnetwork. The programmefocussed on Calcutta. Calcutta being the gateway to

Eastern India, this promotion generated good publicity for this key metropolis andenhanced 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 wasorganised 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 wasorganised jointly by Air-India. ICCR, the Crafts Museum, and the Departmentof Tourism.

Food &Culture Festivals

Following the popularity of the Goan Food and Cultural Festivals organised inSingapore 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 beorganised 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 Indiapromotion by Magasin du Nord, the largest department stores chain in thosecountries. The promotion to be held in 1994, will feature Indian handicrafts in theStore's catalogues. Before the promotion, a team of photographers will visit India tofilm 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 withsubshtial ethnic market.

Theme Campaign

A theme campaign in colour "Fly With Your Very Own" won the awards of theAdveqisingClub and also AdveRising & Marketing magazine. Besldes, theadvertisement given by AirIndia not only mention the qualities of the airline but talkof India as a destination.


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AI Environment policy


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Oldest man flies AI to Delhi

A very special passenger, AdigalarAsiriyar, was among the group of Tamil scholarsand dignitaries who flew to Delhi on May 4, 2011 by flight AI 439.

AmbedkarJayanti celebrated

Employees of Air India proudly celebrated the birth anniversary of Dr BR Ambedkar on April 14, 2011 by paying rich tributes and holding various functionsin his honour in different offices all over the country.


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Air India introduces mobile check-in

The mobile check-in facility is available to all domestic passengers from the sixmajor metro cities viz. Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bengalurufrom April 7, and will be subsequently extended to other stations

and international flights.

Health camp

Northern Region Medical Department had organised a Diabetes Awareness Weekfrom May 9 toMay 13, 2011, at Terminal I. The camp was held for two hours dailyto screen, educate and guide employees on the health problems triggered byincrease in blood glucose (sugar).


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International Womens Day International Womens Day

Celebrations started a day earlier in Western Region in Mumbai.A greenerydrive was organised at the New Engineering Complex Sahar, Mumbai, on March7, 2011. Saplings were planted by women employees near the security

department. The team, led by GM Finance WR, MrsSarit Sharma, turned updressed in green, to spread a message about nurturing the environmentthrough greenery.

Savings in electricity bills

The Civil Engineering unit at New Engineering Complex, Mumbai, has effected anaverage savings of Rs 5 lakh per month by changing the electricity power supplyprovider from Reliance Energy to Tata Power from February 11.


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Blood donation camp

As part of its third anniversary celebrations, Air India SATS (Singapore AirportTransport Services) Limited organized a blood donation camp in associationwith 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 tothe Lions Club.

AI participates in Lavasa Womens Drive Car Rally

The Lavasa Womens Drive is a popular event in Mumbai that seeks to spreadawareness about cancer. This year, the drive was held on February 27 andManager Personnel, Ms Mohana Kumar, took part in it representing Air India.Having been selected out of 352 entries to take part in the rally,


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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 wholeidea 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 Activitiesii) 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), andEIBTM (Switzerland). At the meets, promotional literature is distributed,audio-visuals are screened, press briefings held, and information is gatheredrelating to contemporary world tourism trends.

Sponsoring visits to India of travel agents and writers (FAM trips), therebyincreasing awareness of the country's various attractions for the foreigntourists.

Arranging Indian cultural events and food festivals and departmentstores promotions overseas, thus providing foreign countries a taste ofIndia's rich cultural heritage and culinary range. Goan food and culturalfestivals held in Singapore and Malaysia were very popular and severalsimilar events are planned in the coming months.

Creating awareness and interest overseas of the range of Special Interestactivities available in India, like fishing, wildlife and golf etc. Also organisingbuyer-seller marts involving foreign agents and local tour operators. aInvolvement with the International Congress and ConventionsAssociation(ICCA), to tap the extensive and growing market of conventionsand congresses. Assisting state governments to promote their touristfacilities overseas, specifically high-lighting salient features of interest to theforeign tourist.

ii) Ancillary Activities:


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These include:

Providing mandatory order passages to the Department of Tourism forinviting travel agents, travel writers and media representations,Organizing 'Know India' seminars' overseas to update the traveltrade about India and the country's tourism product,

Producing and screening of audio-visuals highlighting select aspects ofIndia. These films are sent to various Air-India offices overseas for screeningto help in their tourism promotion efforts. The films cover various subjectssuch as golf, wildlife, trekking, convexitions etc.

Publishing a bi-monthly newsletter to bring about effective communicationwithin Air India offices worldwide. This publication highlights tourism and

travel events of interest and concentrates on imparting information which isof interest and use to our overseas offices in promoting inbound traffic intoIndia.

Organising orientation seminars for Air-India officers being postedoverseas to familiarise them with the latest news and trends regarding theIndian tourism product and its infrastructure. These activities help in creatingfavourable conditions of tourist attraction. Apart from these

some special measures with specific target groups are also undertaken..


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Achievements

Tourism has a direct bearing on air transport. 90% of the tourists arriving intoIndia come byair. However, India's share in the world tourist traffic is lessthan 1%. Further India's shareof total world international air passengers

traffic has been quite low at 3%.

Out of total trafficof 4218 thousand passengers (1984) travelling to and frobetween India and various foreigncountries, Air India carried 1473 thousand(35%).

In 1992-93 Air India carried 2201 thousandpassengers. However, Air India'sshare in the home market has declined to 26% from 35% inthe earlyeighties.Various studies have projected an average annual growth of 5.2%for international passengertraffic to and fro India.

This growth has shown stagnation decline due to economic recessionandpolitical instability in the sub-continent as a whole. The Open Sky Policypursued by theGovernment-of India under the economicliberalizationprogram has also shown negativeimpact on Air India since 1990.

Inspite the setbacks and negative trends Air India's foreignexchangeearnings and Savings improved to 750 crores in 1993.


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INTERNAL CONTROL SYSTEMS

The Company continues to ensure proper and adequate internal control systems andprocedures commensurate with its size and nature of business. These control systemsensure 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 authorizationand approval procedures.

The Company has an extensive system of internal controls which ensures optimalutilization and protection of resources, IT security, accurate reporting of financialtransactions and compliance with applicable laws and regulations as also internalpolicies and procedures.

The internal control system is supplemented by extensive internal audits, regularreviews by management and well documented policies and guidelines to ensurereliability of financial and other records to prepare financial statements and other data.

The Company has a well defined manual on delegation of authority and administrativepowers, based on which, the authorities exercise their powers. This manual is reviewedperiodically to cope with the changes necessitated by the needs of the organization.The said manual, along with the Companys key functional process manuals, furtherstrengthens the internal control system of the organization.

The Company has independent internal audit systems to monitor the entire operationsand services spanning over all locations, business and functions on a regular basis. TheCompany has also employed outside consultants in its various areas of functioning inorder to reduce/monitor its cost platform.


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FINANCIAL MANAGEMENT

Balance sheet(Rs crore)

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Sources of funds

Owner's fund

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

Loan funds

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

Uses of funds

Fixed assets

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

Net current assets

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


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Capital structure

From

Year

To

Year

Class Of

Share

Authorized

Capital

Issued

Capital

Paid Up Shares

(Nos)

Paid Up

Face Value

Paid Up

Capital

2005 2006

Equity

Share 425.64 153.84 153836427 10 153.84


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FINANCIAL PERFORMANCE:

The financial performance of the Company during the year 2010-11 was as under :

(Rupees in Million)

OTHER FINANCIAL INFORMATION

Share Capital :

Authorized Share Capital

The Authorized Share Capital of the Company is Rs. 50,00,05,00,000/- (dividedinto 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, isRs.2,145,00,00,000/- divided into 214,50,00,000 fully paid up equity shares ofRs.10/- each. During the year 2011-12, Government of India infused Rs.12,000million towards equity capital.

Aircraft Project Loans :

As on 31 March 2011, the position of aircraft loans, including future leaseobligations 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 201122,939

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

Balance as on 31 March 2011 2,06,881

Particulars 2010-11 2009-10

Profit / (Loss) Before Depreciation (51735.7) (41621.4)*

Less : Depreciation 16901.0 13887.6*

Profit / (Loss) Before Tax (68636.7) (55509.0)*

Less : Provision for Tax 15.0 15.4*

Add : Deferred Tax Benefit - - -

Net Profit / (Loss) (68651.7) (55524.4)


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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 thisoutlay, the actual expenditure for the year was Rs.34,189.6 million (includingRs.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 includingRs.12,000.0 million for equity infusion from Government. The Company has spentRs.14,595.5 million upto September 2011.

Twelfth Five Year Plan2012-13 to 2016-17 :

Air India has submitted an outlay of Rs.329,637.0 million for the Twelfth Plan periodas detailed below:

(Rupees in Million)

Aircraft Projects 111,8Non-Aircraft Projects 18,6Budgetary support from Government 199,1

Aircraft Financing

During the year 2010-11, Air India availed a Bridge loan amounting to US$473 million forfinancing 3 B777-300ER aircraft and 1 GE spare engine. Subsequently, this Bridge loanwas re-financed through US Exim financing in August 2011 at a highly competitiveinterest 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 bya Consortium of Banks led by IDBI was refinanced in September 2011 with the ICICIBond issue maturing in 15-20 years at a lower rate of interest which resulted in a savingof approximately Rs.1800 million p.a.

For the B787-8 financing, the airline is exploring a number of options including Sale andLease Back. The US Exim Bank hasalready issued a Commitment Letter to supportdelivery 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 andthe response is awaited.


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FINANCIAL CRSIS AND RESTUCTURING

Around 20062007, the airlines began showing signs of financial distress.The combined losses for Air India and Indian Airlines in 200607 were 770crore (US$140.14 million). After the merger of the airlines, this went up to7,200 crore (US$1.31 billion) by March 2009. This was followed byrestructuring plans which are still in progress.

In July 2009, SBI Capital Markets was appointed to prepare a road map forthe recovery of the airline. The carrier sold three Airbus A300 and oneBoeing 747300M in March 2009 for $18.75 million to survive the financialcrunch.

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), andis seeking 42,920 crore (US$7.81 billion) crore from the government.

For 3 months (JuneAugust 2011), the carrier missed salary payments andinterest payments and Moodys Investor Service warned that missingpayments by Air India to creditors, such as the State Bank of India, willnegatively impact the credit ratings of those banks.

A report by the Comptroller and Auditor General (CAG) blamed thedecision to buy 111 new planes as one of the major causes of the debttroubles 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 intoAir India since April 2009 and in March 2012 government bailed out AirIndia Ltd. with a 67.5 billion ($1.4 billion) which the amount almost doubleof 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 $ 800million 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 ofsome of the 111 planes ordered in 2006 to get narrow-body aircraft insteadof the wide-body aircraft.

On 4 May 2012, the airline was fined $80,000 by the U.S TransportationDepartment for failing to post customer service and tarmac delaycontingency plans on its website and adequately inform passengers aboutits optional fees.

On 15 May, the Union Civil Aviation Minister Ajit Singh stated that theGovernment was giving Air India one last chance and that it must perform


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in order to qualify for a bailout. The financial restructuring plans were hithard when Air India pilots decided to go on a strike on 8 May 2012 in orderto 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 continuedfor 58 days. The already reeling airline lost an additional 600 crore becauseof 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 hassubsequently led to multiple problems, such as enormous marketshare losses, declining profits, and escalating labour disputes.Historically, there have been numerous attempts to privatise AirIndia in hopes of a better future, but political interference has sinceprevented this goal from being achieved. Furthermore, it is alsobelieved that mismanagement and corruption have impacted AirIndia's financial performance.

Star Alliance

In December 2007, Star Alliance invited Air India in an effort toexpand its presence in the Indian subcontinent. However, issueswith technology and software upgrades and the aftermath of itsmerger with Indian Airlines have delayed its entry into the alliancefor roughly three and a half years.

When the final deadline for joining came in July 2011, Air India'sapplication was suspended, and was told it failed to meet the

minimum criteria to join. In response, many of Air India's officialscomplained to Star Alliance about the suspension of its application,claiming that they already met all of the requirements. [But inOctober 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 DirectorArvindJadhav gave a presentationon the companys turnaround plan to

Union Aviation Minister.

Plans to turnaround performance:

Several measures were undertaken to improve the performance of the Company :

Rationalization of certainloss 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 ofcontractual employment & outsourced agencies.

Critical analysis of Fuel consumption on all flights by setting up a Fuel Counciland 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 aggressivesales & marketing strategy including a separate Cell for attracting Governmenttraffic.

Leveraging the assets of the company to increase MRO revenue as well asrevenue from real estate properties.

Introduction of Common Code through a common Passenger Service System

(PSS) effective 27 February 2011 which would ensure seamless connectivity ondomestic & international flights.

Implementation of Quickwin IT Solutions including upgrade of RevenueManagement System, introduction of SAP-ERPthroughout 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 infusedthis 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, MrVayalarRavi, and Minister of Statefor Commerce and Industry,MrJyotiradityaScindia, flagged off the inauguralflight from Gwalior to MumbaIat the RajmataVijayaRajeScindia CivilTerminal in the presenceof CMD ArvindJadhav,MRO-SBU HeadVipinSharma, ExecutiveDirector (North)Vijay Paul and otherdignitaries.

With this flight, AirIndia has linked Gwaliorand Mumbai, therebyconnecting thecity withthe national capital aswell as the financialcapital of the country,facilitatingthe movementof business and leisuretravellers.

Alliance Air linksKanpur-Kolkata


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Air India continuedwith its expansion ofnetwork with Kanpurgetting linked toKolkata. The inauguralflight of Alliance Air at Chakeri Airport in KanpurforKolkata on May 24, 2011.

project report on air india

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