The case 'Indian Airlines' HR problems', examines the causes of the HR problems faced by Indian Airlines. The case reveals how poor management and stubborn work force can drive a monopoly into losses. The case also throws light on other lapses such as poor canteen management and payment of excessive allowances.
The case is so structured as to enable students to understand why and how Indian Airlines was constantly plagued by HR problems. The students should be able to see how the pilots and other workers used arm-twisting tactics to get IA to agree to all their demands. The case also provides insights into how IA's lackadaisical handling of its HR problems contributed to the overall mess that the airline found itself in.
» Human Resource Management
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.
IA's eight unions were notorious for their defiant attitude and their use of unscrupulous methods to force the management to agree to all their demands. Strikes, go-slow agitations and wage negotiations were common. For each strike there was a different reason, but every strike it was about pressurizing IA for more money. From November 1989 to June 1992, there were 13 agitations by different unions. During December 1992-January 1993, there was a 46-day strike by the pilots and yet another one in November 1994.
The cavalier attitude of the IA pilots was particularly evident in the agitation in April 1995. The pilots began the agitation demanding higher allowances for flying in international sectors. This demand was turned down. They then refused to fly with people re-employed on a contract basis. Thereafter they went on a strike, saying that the cabin crew earned higher wages than them and that they would not fly until this issue was addressed. Due to adamant behaviour of pilots many of the cabin crew and the airhostesses had to be off-loaded at the last moment from aircrafts.
In 1996, there was another agitation, with many pilots reporting sick at the same time. Medical examiners, who were sent to check these pilots, found that most of these were false claims. Some of the pilots were completely fit; others somehow managed to produce medical certificates to corroborate their claims. In January 1997, there was another strike by the pilots, this time asking for increased foreign allowances, fixed flying hours, free meals and wage parity with Alliance Air. Though the strike was called off within a week, it again raised questions regarding IA's vulnerability. April 2000 saw another go-slow agitation by IA's aircraft engineers who were demanding pay revision and a change in the career progression pattern.
Frequent agitations was not the only problem that IA faced in the area of human resources. There were issues that had been either neglected or mismanaged. For instance, the rates of highly subsidized canteen items were not revised even once in three decades and there was no policy on fixing rates.