Term III

Assignment
HUMAN RESOURCE MANAGEMENT

AIR INDIA:
COMPENSATION, INCENTIVES AND
BENEFITS

Submitted to:
Prof. Madhavi Mehta
Prof. Satyendra Pandey

Submitted by:
Sagar Shroff X01027
Shabahat Kareem X01026
Priti Chaudhari X01021
In early twenties, Air India and Indian Airlines both company were facing following issues:
The Escalating costs of Aviation Turbine Fuel (ATF), Immense competition from private and low
cost airlines, Increased cost pressures due to acquisition of additional aircraft, Leadership crisis
due to frequent change of the chairman-cum-managing director, Air India could not fully use the
bilateral rights unlike foreign airlines which took maximum advantage, Declining passenger
traffic in the premium class.
Consequently in 2007, the Government of India announced (As per some recommendations of
Justice Dharmadhikari Report) that Indian airlines would be merged into Air India. Upon
completion of the merger on 26 February 2011 there is now one primary airline, Air India, with
two subsidiary (Alliance Air and Air India Express) carriers providing regional and low-cost
point-to-point services. Additional subsidiaries are Hotel Corporation of India Limited, Air India
Charters Limited, and Airline Allied Services Limited.
In 2013, it split its engineering and cargo businesses into two separate subsidiaries, Air India
Engineering Services Ltd (AIESL) and Air India Air Transport Services Limited (AIATSL).
Air India Air Transport Services Limited (“AIATSL”) was incorporated in June, 2003 as a wholly
owned subsidiary of AI for providing manpower to various departments of AI. On 6th September,
2012, the Cabinet granted its approval to operationalise AIATSL as an independent entity for
ground handling at all airports in India.

With effect from 1st February 2013, AI decided to formally transfer ground handling business of
AI and its client airlines as well as cargo warehousing business & cargo handling to AIATSL and
consequently novated all third party ground handling contracts to AIATSL. Further, in April
2014, AIATSL obtained IATA membership accreditation. This enabled AIATSL to commence
autonomous functioning effective Financial Year 2014-15.

With an experienced workforce of over four decades, sophisticated GSE, and Air India’s expertise
of over 75 years in Aviation business, Air India Airport Services has endeavoured to provide
excellent Ground Handling services at all times. While Ground Services Department of Air India
was the first Ground Service provider to obtain ISO 9002 certification, its subsidiary AIATSL has
further achieved IATA's ISAGO Certification.

VISION : To be the Leader in providing World Class Ground Handling services at all Indian
Airports and expand Globally.

MISSION:
Customer
 Provide safe, reliable and on-time services
 Deliver the highest quality of service at all Indian Airports
 Provide State-of-the-Art Ramp Equipment
 Be the epitome of Indian Hospitality
Processes
 Continuously improve standards of safety and effciency
 Continuous upgradation and modernisation of ramp equipment
People
 To Maintain an energetic, qualified and highly motivated professional team
 Maintain high degree of work ethic.
AIATSL has been awarded 2 times, the Best Ground Handling Services Company- All India by
Air Passenger Association of India (APAI) for 2016 and 2018.
As on 1st January 2019, AIATSL’s authorized capital is INR 10,00,00,00,000 divided into
1,00,00,00,000 equity shares of INR 10 each and its paid up share capital is 14 INR 138,42,42,000
divided into 13,84,24,200 equity shares held by AIAHL. The shares of AIATSL are not listed on
any stock exchange.
Expertise and Services offered:
1. Passenger and Terminal handling.
2. Traffic Operations.
3. Ramp Handling.
4. Cargo Handling.
5. Cabin cleaning and Cabin Dressing.
6. Station Management

Already the strategy of merger have created lot of nuisance due to different internal factors;
Organisation Structure, Culture, HR Practices and Policies, Business Strategy, Financial
Accounting System, Incomplete integration of official positions, IT systems, infrastructure and
inability of employee unions to accept merger, unnecessary and costly acquisition of aircraft fleet,
Leadership crisis due to frequent change of CEOs and external factors; Increased competition
from domestic airlines as well as international airlines due to unfavourable government policies.
Further, the decision of splitting engineering and cargo services into AIATSL and AIESL makes
situation more complex in terms of employee welfare. Although AIATSL is continuously in
profit, however, in context of employees welfare condition seemed to be turning for the worse
even sometime for permanent employees too.
Parent company and all the subsidiaries have different HR Practices and policies.

The employees are given Casual leaves (07 days), Sick leave (07 days) and earn leave of 21 days
on pro rata basis, Paternity and maternity leave, compensation off in lieu of week off or public
holiday, leave encashment, however, the HR Practices and Policies, majorly in terms of
compensation and benefit, is completely different and worse for contractual employees in
AIATSL due to following reasons:

1. Specific challenge is no work life balance.

2. Employees’ often has to work for 12-15 hours a day.
3. Contractual Staffs were not recognised for what they accomplished.
4. High Pay disparity for exactly same work.
5. Disparity in other benefits, such as, Medical facility, Leave.
6. No Flight tickets.
7. No provision of LTC.
8. No accommodation facility when staff deputed to other station. (Only Rs 400/- for lodging and
fooding both).
9. No Sabbaticals.
10, No employee Assistance Programme, which is very much intended to help employees deals
with personal problems that might adversely impact their work performance. Even EAP becomes
very important during corporate restructuring, merger and acquisition.
11. Cannot spent quality time away from work with colleagues due shift duty and different week
off.
12. No holiday home facility.
13. No sick leave encashment Facility.
14. No contribution pension scheme.
15. No Retirement gift.

AIATSL still does not have the detail Policy / Standard Operating Procedure for HRD. Notes are
issued with the approvals of management as and when required for policies. It shows company
does not care for its employees and lags behind in implementing work life balance policies in
place. This has blurred the satisfaction relationship at work and home, rising health issues and
lower overall happiness and motivational levels. Such kind of arrangement could hamper
employee bonding, it could also lead to issues such as alienation and isolation.

Often incidence of strife found among employees. This is creating problem in retaining talented
employee. High commitment important for attraction, motivation, and retention of talented
employee. Hence finding a suitable balance between work and other needs in very much essential

Employee Strength The total manpower of the Company under various categories as on 1st
January 2019:
PERMANENT CONTRACTUAL PERMANENT
EMPLOYEES OF EMPLOYEES OF EMPLOYEES OF
AIATSL AIATSL AIR INDIA
WORKING IN
AIATSL
AIATSL 1372 11790 619

The split of Contract Employees of AIATSL is given below:

Company( where contract employees of No. of Contract Employees of AIATSl
AIATSL work)
Air India Ltd. 2,554
Hotel Corporation of India 14
Air India Engineering Services Ltd 68
Air India Express Ltd 8
Alliance Air 2
Sub-Total 2646
Air India Air Transport Services Ltd. 9144
Total 11790

Indicative Position-wise employee details as on 1st January 2019:

DESIGNATION PERMANENT CONTRACT EMPLOYESS
EMPLOYEES OF AIATSL OF AIATSL
Executive (AGM and above) 23 3
Officers (AM to Sr. Mgr ) 77 262
Non Managerial / 1272 11525
Employees
Total No. of Employees 1372 11790
working in AIATSL

List of select benefits provided to AIATSL employees:

BENEFITS PERMANENT CONTRACT
PASSENGER ENTITLEMENTS  -
PROVIDENT FUND  
GRATUITY  
MEDICAL FACILITY  
HOLIDAY  -
ENCASHMENT OF PRIVILEGE  
LEAVE

BENEFITS PERMANENT CONTRACT

Encashment of Sick Leave  -
Retirement Gift  -

Profit and Loss Statement:

FINANCIAL YEAR 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
TOTAL REVENUE 750 1018 6470 6369 6245 6680

TOTAL EXPENSES 740 992 5256 5166 5332 5209

EBITDA 10 26 1214 1203 913 1471

DEPRICIATION - 0 156 179 192 249
EBIT 10 26 1058 1024 721 1222
PBT 10 25 1038 1048 617 1222
TAXES 5 3 131 34 282 511
PAT 5 22 907 1014 334 711
PAT MARGIN 1% 2% 14% 16% 5% 11%
AIATSL is a debt free company and has been a profitable organisation since the first year of
its Autonomous operations i.e. 2014-15:
Financial Year Profit(Crores)
2014-15 103.8
2015-16 104.8
2016-17 61.7
2017-18 122.15
The HR strategy has to be in line with the business strategy. Compensation strategy conveys the
company's commitment to how it values employees. There should be a motivating factor along
with hygiene factor in compensation. Money is not the only motivator, employees wanted to be
valued and treated like human being.