Air India Strategy

Topics: Marketing, India, Brand Pages: 13 (3539 words) Published: September 19, 2010
1.0Executive Summary
Air India began its services in 1932 and has been operating in India for the last 78 years. It is the oldest passenger flight of India. The government of India holds 49% of Air India’s share with an option to acquire 2% more since 1946. This made Air India a public sector thus enabled it to operate flights internationally. In spite of being a public sector company Air India has been running in loss for the past 10 years. A SWOT analysis was conducted to analyze the strength of Air India that sets it apart from its competitors and its weakness were identified which would provide an insight as to why Air India were running a loss and the opportunities and threats provide information of the possible areas of improvement that can bring in more revenue and the threats that can affect its growth. The competitor analysis of Air India is a comparison Air India against its competitors. The analysis shows that Air India needs to put in more effort in improving its loyalty programmes, safety and security, advertising and its financial position is one of the poorest. Based on Air India’s market position a plan is prepared to improve Air India’s condition. The plan involves, reducing Air India’s human resource, expanding network routes to Asia Pacific region, moving into singles market and rebranding its image. The implementation of the plan would provide revenue of 1 billion and reduce human resource cost by 8 million. The total cost for implementing the plan would be 33.5 million.

Air India is the national carrier of India and offers flights to 96 destinations. Air India Express, a Low Cost Carrier (LCC, subsidy to Air India, commenced its services from 2004. Air India Express operates its services to Middle East and South East Asian. In 2007, Air India merged with Indian Airlines and a new company called the National Aviation Company of India Limited (NACIL) was approved by the government to facilitate the merger (Air India 2010). Air India’s merger with Indian Airlines in 2007 was initiated with the intention of boosting Air India sales but the market crash in 2008 and rise in fuel prices led to Air India’s international and domestic share dropping to 35% and it incurred a loss of 1.24 billion USD (Mansuri 2009). Air India’s debt increased with increase in Air India’s expenditure on flights. In 2009 Air India’s debt rose to 3.2 billion USD (Waldron 2009). Air India’s human resource management is very poor. They were overstaffed. With a total of 31,000 employees who work total of 2300 hours as compared to 3055 hours which employees of other airlines worked, 60% of Air India’s expenditure went to playing wages of the staff (Majumdar 2009). On 22 May 2010, Air India Express crashed in Mangalore killing 158 people and 6 crew members. According to Directorial General of Civil Aviation (DGCA) the cause of accident was due to engineering problems and negligence of the Air India’s engineering team this led to cancellation of many of Air India’s flights (The Hindu 2010). The report focuses on improving Air India’s financial condition by venturing into newer routes and targeting new market segments to increase sales and reducing expenditures by restructuring and training human resource.

3.0SWOT Analysis
SWOT analysis refers to the analysis of the organization’s internal environment (strength and weakness) and the external environment of the organization (opportunities and threats) (Lynch 2009). Strength

1)Strong brand name
2) Large Fleet Size of 111 aircrafts
3) Domination on international routes
4) 180 Bilateral Agreements and rights to fly to 96 destinations

1) Slacking human resource management
2) High expenditures
3) Deteriorating customer service
4) Drop in domestic and international market share
5) Poor aircraft maintenance
1) Increasing demand for Low Cost Carrier
2) Expansion of tourism industry
3) Unexplored markets-Asia...
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