Acquisition of Air-India by Tata Group may proved to be a game changer only if critical HR challenges are handled innovatively, yet deftly ! 

Most Indians are excited for Air-India going back to Tata Group trusting that the Group being a serious Business entity and reputed Industrial house will surely revive the Airline and write a new history in India Aviation saga.

Its easy saying than done ! as Tata Group not only has Air-Asia & Air Vistara but also now mammoth Air India in its fold. With the large size of inventory and human resource of different back ground & work culture would certainly need big basket of Innovative and creative interventions to deal with the challenge.

Tata Group would not have placed bid if they were not already in this business as promoters of Air-Asia and Air Vistara as reviving Air-India alone would have been a big challenge in terms of financial viability to start with, keeping other challenges aside of recurring very high fixed operating cost, over staffing and PSU cultural issues.

Tata Group hold 100% stake in Air India, 83.67 % in Air Asia and 51% in Air Vistara, thereby controls 26.7% of Indian Aviation Market share. With passenger traffic growth at 10-12% CAGR, even after COVID restriction resulted fall, is a very motivating scenario for Tata Group and this acquisition may come as game changer not only for Tata Group but also for Indian Aviation sector.

With Air India going to Tata Group will bring revolutionary changes in the India Aviation sector :

  1. More focus on full services model than low cost
  2. More focus on Flight safety
  3. More focus on Passenger safety
  4. More focus on Passenger lounge and inflight services
  5. High employee satisfaction score
  6. More focus on optimizing operating cost by controlling maintenance cost using in house maintenance & repair facilities, saving on Forex reserves & elimination of middlemen.
  7. Reduced bureaucratic control over the Aviation sector.
  8. No unhealthy business tricks e.g fare war etc leading to NPAs of Airlines.
  9. Better representation of Aviation sector in Aviation Policy making by Govt of India

& Union Budget etc.

While Air-India take over look glamours on one side, on the flip side it has big laundry list of critical Human Resource challenges as except management executives (approx. 1000), all the categories of employees including Pilots, Engineers, Commercial staff, Ground staff etc are Unionized by law.

The key challenges which can be seen as tip of the iceberg are :

  1. Settlement of pending dues of ex and existing employees

Being ex PSU, salaries of all the employees are very high along with various facilities e.g free /subsidized family tickets even to ex employees, this would make settlement of pending dues of existing and ex employees an uphill task.

  • Salaries and welfare schemes

With the completion of take over approx. 12,000 employees also have come on board. Being erstwhile PSU, the salary of employees are substantially high compared to industry standards. Apart from the salaries alone, there are number of facilities e.g. Free /Subsidized tickets to family, free accommodation, free transportation, employee loan facilities of huge sums etc also kept Air-India always under severe financial pressure.

  • Productivity Bonus : This is one payout which goes to majority of employees including management executives. This is another kind of fixed cost, which kept persistent financial pressure on Air- India.
  • Pooling of Assets & Resources

As Pooling of assets among 3 Airlines is unavoidable, this would bring its own baggage of Human Resource and its related fixed costs, which would be recurring additional fixed cost on the new venture.

  • Lavish offices & residential spaces globally

Air-India has been well known for lavish offices & residential spaces across world for its employees especially top management executives. Keeping these infrastructure operational and maintained will continue pressurizing the new venture’s finances.

  • Work culture & Performance concern

Being ex PSU, employees of all cadre are accustomed to work without pressure, aligning them with corporate work culture will be a big challenge & time consuming task.

  • People Policy

Air-India has most employee friendly people’s policy as cost was never a concern being PSU as all expenses were on Public funding.

Having listed out minimum possible pointers of HR challenges, following actions may be most suggestive to make Air-India remain afloat and financially viable as private entity :

  1. Taking employee’s Union on board

Air India has very strong and politically patronized employees Union which need to be taken on board strategically. This is will be herculean and time & efforts consuming task but will streamline most of the challenges. As per labour law frame work, Pilots and Aircraft Maintenance Engineers too have been categorized as Workman.

  • Man Power Planning and Rationalisation

Considering joint operations of all 3 Airlines as one entity, pooling of resources is unavoidable which will require Rationalisation of Man Power to ensure employee cost optimization resulting in substantial cut in operating cost and its recurrent impacts.

  • Restructuring of Organisation & Talent re-allocation

Considering resource pooling leading to common Talent pool will need restructuring of Organisation and competency based Talent re-allocation for most of the roles.

  • Recast Compensation & Benefit Strategy & Policy

There will be urgent need for redesigning Compensation & Benefit Policy for across employee grades. This is very crucial opportunity when salaries of Pilots and Engineers can be rationalized to make this fixed cost viable not only for Tata Group of Airlines but this will certainly have, triggering effect across Airlines in India helping all to make their operations better cost effective.

  • Upcoming Labour Code

As Tata Group will be consolidating their Inventories and human resources for making operations cost optimized, this would be right time to recast Standing Orders, Employment Policies etc keeping the proposed Provisions of Labour Codes as guiding factor. This will help further optimization of employee cost for long term.

  • Work culture and Employee engagement

Human resource from different background and culture coming together spread across from PSU to efficient profit making Private International Airlines will pose big challenge in building synergy which will not only need creative approach to realign the work culture but also innovative schemes for engaging employees.

  • Change Management

The key initiative that would contribute highest in meeting the objective of smooth integration of all kinds of resources and mitigating all kinds of risks will be a well planned, well initiated, well executed Change Management strategy & execution program across board.

This write up with list of challenges & suggestions may run through pages if taken to the level of underlying risks & sub surface challenges. But at the end of the day what would matter the most will be the HR Leader, the driver of change who would sit on this hot & thorny saddle.

To identify & execute quick fix solutions to keep Air India afloat as financially viable and also initiate Change Management, Tata Group would essentially need a dynamic HR Leader who not only has good hands on experience of bringing Change through innovative HR initiatives than conventional methodologies and one who also understands key functions of Aviation Business e.g Flying Operations, Inflight passenger services & safety and Maintenance Management & safety management etc and desired Competencies for playing key roles of these functions, play role of a true HR business partner.

Recent fiasco in hiring of Turkish CEO who finally had to be dropped makes it more prudent need to have a seasoned HR Leader to avoid such embarrassment and future business risks to the Airlines & hard earned reputation of TATA Group.

About the Author

Dr Vipul Saxena is Executive Vice President- Group HR for Sutlej Textiles and Industries Ltd (KK Birla Group) located at Mumbai.

He has vast HR leadership experience at global level and is known for innovative HR initiatives aligned with Organisational goals.

Sharing his Learnings from his over 22 yrs Corporate experience he has Authored 2 very popular books on “Employee Engagement” and “Decoding Personality” respectively.

He is ex Defence Pilot, Aeronautical Engineer, LLB and PhD in Organisation Behavior.


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