ORGANIZATION STUDY AT AIR INDIA LTD This project report has been prepared after one month period of in plant training at Air India Ltd a study of Air India Ltd as a whole and its various departments in detail. The main objective of this study is to understand how the organization really works and to get a practical knowledge. The study started with company profile and organization structure of Air India Ltd. Each and every functional department studied individually in detail they are: Finance department, Personnel department, Commercial department, Ground support department, Operations department, Engineering department and Materials management department. Each department plays a very important role in every organization and they are dependent on each other. The study of functional departments started with Finance department. In Finance department the manager was cooperative and friendly. He gave me last 5 years annual report to understand the growth of the company and explained various functions and designation in Finance department. In Personnel department the manager explained various functions and policies. She also explained about various sections under Personnel department. Commercial department provides various services to passengers and cargo. It also includes public relations. The various promotion tools adopted by Air India Ltd were studied. During one month studied all the departments in detail with the help and co-operation of the employees of the company. I interacted with the employees of Air India Ltd and a lot of relevant information was collected for preparing this report. Based on this information SWOT analysis is prepared. The study gave me an insight about the work environment and the operations involved in the organization. It gave me an opportunity to know the working style of the organization and understand the subject which I have studied in my academic in a better way. During the project work many employees and officers in Air India Ltd helped me to know the organization very well. Finally this study helped me in improving my knowledge. CANARA BANK SCHOOL OF MANAGEMENT STUDIES Page 1 ORGANIZATION STUDY AT AIR INDIA LTD INDUSTRY PROFILE Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries. In the past decade, air travel has grown by 7% per year. Travel for both business and leisure purposes grew strongly worldwide. Scheduled airlines carried 1.5 billion passengers last year. In the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destinations. Governments in developing countries realized the benefits of tourism to their national economies and spurred the development of resorts and infrastructure to lure tourists from the prosperous countries in Western Europe and North America. As the economies of developing countries grow, their own citizens are already becoming the new international tourists of the future. Business travel has also grown as companies become increasingly international in terms of their investments, their supply and production chains and their customers. The rapid growth of world trade in goods and services and international direct investment has also contributed to growth in business travel. Aviation plays an essential role in economic progress of a nation as it is viewed as a necessary link not only for international voyage and trade but also for providing connectivity to different parts of the country. It is a one of the vital part of the infrastructure of the country and has outcome for the development of tourism and trade, the opening up of inaccessible areas of the country and for providing stimulus to business activity and economic growth. With development of global aviation transportation, the international airline industry has been able to cover almost every country in the world since 1905s. Today the global airline industry consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700 airports. The growth of world air travel has averaged approximately 5% per year over the past 30 years, with substantial yearly variations due both to changing economic conditions and differences in economic growth in different regions of the world. CANARA BANK SCHOOL OF MANAGEMENT STUDIES Page 2 ORGANIZATION STUDY AT AIR INDIA LTD The airline industry has always been an integral part of the world economy as it is a major economic force for transportation, manufacture, technology and many other sectors in modern society, thus it contributes a huge profit to world economy growth. According to the data from The International Air Transport Association (IATA), the global airline industry profit decreased to $4 billion in 2011. This would be a 54% fall compared with the $8.6 billion profit forecast last year and a 78% drop compared with the $18 billion net profit (revised from $16 billion) recorded in 2010. On expected revenues of $598 billion, a $4 billion profit equates to a 0.7% margin. Figure 1: Global airline industry profit by Region 2011 Meanwhile the Global Airlines Industry Guide published by MarketLine also forecasts that the global airline industry will reach a value of $713.6 billion, which would be a 42.2% increase from 2010. And volume of the industry is forecast to top about 3 billion passengers in 2015, up by 28.4% from 2010. So far, domestic is the largest segment of the global airlines industry, accounting for 64% of the industry's total volume, and America‘s accounts for 44.4% of the global airlines industry value. CANARA BANK SCHOOL OF MANAGEMENT STUDIES Page 3 ORGANIZATION STUDY AT AIR INDIA LTD However, as IATA points out that the cost of fuel is the main cause of reduced profitability as each dollar increase in the average annual oil price; airlines face an additional $1.6 billion in costs. With estimates that 50% of the industry‘s fuel requirement is hedged at 2010 price levels, the industry 2011 fuel bill will rise by $10 billion to $176 billion. Fuel is now estimated to comprise 30% of airline costs—more than double the 13% of 2001. Figure 2: World economic growth and airline profit margins: 1970 to 2010 Source: IATA Financial Monitor for Jan/Feb-2012 released on 01-Mar-2012, sourcing IATA, ICAO & Haver CANARA BANK SCHOOL OF MANAGEMENT STUDIES Page 4 ORGANIZATION STUDY AT AIR INDIA LTD HISTORY OF AVIATION INDUSTRY Modern aerospace began way back with Sir George Cayley in 1799 when he proposed an aircraft with a fixed wing and a horizontal and vertical tail, defining characteristics of modern airplane. The 19th century saw the creation of the Aeronautical Society of Great Britain, the American Rocketry Society, and the Institute of Aeronautical Sciences, all of which made aeronautics a more serious scientific discipline. The Wright brothers brought about the first powered sustained flight at Kitty Hawk, North Carolina on December 17, 1903. The launch of Sputnik 1 in 1957 started the Space Age, and on July 20th, 1969 Apollo 11 achieved the first manned moon landing. In 1981, the space shuttle "Columbia" launched the start of regular manned access to orbital space. A sustained human presence in orbital space started with "Mir" in 1986 and is continued by the "International Space Station". Space commercialization and space tourism are more recent focuses in aerospace. Early Years: Aircraft remained experimental apparatus for five years even after the Wright brothers‘ first flight in December 1903. In 1908 the Wrights secured a contract to make a single aircraft from the U.S. Army, and also licensed their patents to allow the Astra Company to manufacture aircraft in France. Glenn Curtiss of New York began selling his own aircraft in 1909, prompting many American aircraft hobbyists to turn entrepreneurial. Manufacturing: Europeans took a clear early lead in aircraft manufacture. By the outbreak of the Great War in August 1914, French firms had built more than 2,000 aircraft; German firms had built about 1,000, and Britain slightly fewer. American firms had built less than a hundred, most of these one of a kind. Seven firms built more than 22,500 of the 400-horsepower Liberty engines, and their efforts laid the foundation for an efficient and well-concentrated aircraft engine industry -- led by Wright Aeronautical Company and Curtiss Aero plane and Motor. National Advisory Committee for Aeronautics established was in May 1915 in the United States that spread the scientific information for explicit use to industry. Universities began to offer CANARA BANK SCHOOL OF MANAGEMENT STUDIES Page 5 ORGANIZATION STUDY AT AIR INDIA LTD engineering degrees specific to aircraft. American aircraft designers formed a patent pool in July 1917, whereby all aircraft firms cross-licensed key patents and paid into the pool without fear of infringement suits. The post-war glut of light aircraft allowed anyone who dreamed of flying to become a pilot. During the 1920s, aircraft assumed their modern shape. By the mid-1930s, metal replaced wood as the material of choice in aircraft construction so new types of component suppliers fed the aircraft manufacturers. Customers of aircraft grew more sophisticated in matching designs to their needs and militaries formed air arms specifically to exploit this new technology. Air transport companies began flying passengers in the 1920s. European nations developed airmail routes around their colonies. Airmail Business: The United States was the only country with a large indigenous airmail system, and it drove the structure of the industry during the 1920s. The Kelly Air Mail Act of 1925 gave airmail business to hundreds of small pilot-owned firms that hopped from airport and airport. Gradually, these operations were consolidated into larger airlines.