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IJRIME Volume2, Issue5 (May-2012) ISSN: 2249-1619

International Journal of Research in IT, Management and Engineering www.gjmr.org 139

THE FALCON THAT DID NOT TOOK THE FLIGHT; A CONCEPTUAL

RESEARCH PAPER ABOUT THE FALLOUT OF THE AIR INDIA AND

INDIAN AIRLINES MERGER FROM THE HR PERSPECTIVE.

Dr. Mrs. Naaz Ovais*

Ms. Durdana Sohail**

ABSTRACT

At the time when most of its competitors are performing low, new customers are flowing in, and

the recent kingfisher saga it’s the time when a strategy could be worked out to fully integrate the

two entities, Air India and Indian Airlines and capitalize upon the opportunity. The merger

aimed at forming a big corporation by merging the two companies. It would not be wrong to say

that the two companies or two big birds came together to form one bigger organization or a

falcon. But unfortunately this falcon reared to fly high in the skies could not take its flight. It is

usually seen that during the M&A the main focus is on getting the deal done, but the issues that

ensure that the deal works are quite often neglected. Without the wholehearted support of the

employee no merger or acquisition can be successful. The focus on the integration aspect is still

missing somehow. The financial and operational parts were well looked into but the deeper

issues of human resource were not handled properly. This research paper is an effort to bring

into light the HR issues concerned with the merger of the two airlines, Air India and Indian

Airlines.

Key Words: Air India, Indian Airlines, Merger, HR Issues.

*P.G Department of Economics, Safia Arts and Commerce College, Bhopal, MP

**Assistant professor, Allana Institute of Management Sciences, Pune, Maharashtra



INTRODUCTION

In these fast changing times the companies have found out a new way to grow inorganically

through Mergers and Acquisitions. With the growing competitive pressure organizations are

finding it difficult to solely grow from internal development and wait for the long gestation

period involved thereby. In such a scenario, the best option left with, is Mergers and Acquisitions

(M&A). But at times, the corporate rationale is unable to look at the critical success factor

behind these M&A. These are the factors that should be put in the forefront of consideration, for

the successful completion of the M&A story. These issues do not mainly relate to the financial or

the economic aspect of the new organization, but deal with the very basic issues of low morale,

insecurity, a sense of invasion, the general chaos, etc which ultimately results in disorientation

due to frustration, which in turn results in poor performance and low productivity. In short the

HR aspect is neglected. The executives involved in the M&A process often tend to overlook the

human aspect involved. This research paper deals with the human side of the merger of Air India

and Indian Airlines, which started in 2007 and was finally completed in 2011. And the issues

resulting in the fallout of the merger.

With the recent news on the CNN- IBN of the Civil Aviation minister calling it as a big mistake,

it becomes all the more important to look into the reason of its fallout.

Before the merger the two companies were big players in the air, one in the domestic sector and

another in the Indian international sector. The merger aimed at forming a big corporation by

merging the two companies. It would not be wrong to say that the two companies or two big

birds came together to form one bigger organization or a falcon. But unfortunately this falcon

reared to fly high in the skies could not take its flight. It is usually seen that during the M&A the

main focus is on getting the deal done, but the issues that ensure that the deal works are quite

often neglected. Without the wholehearted support of the employee no merger or acquisition can

be successful. The focus on the integration aspect is still missing somehow. The financial and

operational parts were well looked into but the deeper issues of human resource were not

handled properly.

People are important, in fact they are the most critical assets and more so in the service sector

where they can become the core competency for any organization. In such a scenario how can an

organization keep its HR issues at bay and think it can still make profit. A news paper recently



quoted the civil aviation minister saying that the financial and operational integration is complete

now only the HR integration is left. The merger of air India and Indian Airlines took place in

2007 but till date they were working as two separate entities. Following the merger of the two

companies, it was decided that a combined identity should evolve. Since Air India was a globally

and nationally recognized brand name, the operational brand name of the company remained Air

India and the Maharaja continued to reign as the mascot of the new airline. The logo of the new

airline was a flying swan with the Konark Chakra placed inside it.( Tayagi ,E.. 2011 )

On 22 March 2006 a Performance Audit Report on Civil Aviation in India by Ministry of Civil

Aviation was put before the Prime Minister on the issue of the proposed merger of AIL and IAL;

a copy of this presentation could not be retrieved from MoCA’s records. As per the file notings:

In the presentation, it was highlighted that in the light of the global trend towards consolidation

in the airlines industry, it had become incumbent for the two national carriers to work towards

merger, as the merged entity would not only be able to compete effectively in the market but

would also find greater acceptability amongst the global alliances. It was emphasized that given

the overall developments in the civil aviation sector internationally as well as in the domestic

sector, nothing short of merger would be an effective way to compete effectively in the market.

(Performance Audit Report on Civil Aviation in India – Ministry of Civil Aviation 2011-12)

Thought the government and the management had set time line to integrate the people and

operation of the two entities within the next three year, their plans could not materialize. The

culture in which these two operated was entirely different and so were their HR policies

regarding Pay scales, promotion policies and area of operation.

When the problems started emerging the management started looking at other big mergers in the

aviation industry which were a success like Delta and British Airways, British Airways and

Iberia , Lufthansa and Swiss ,US: United and Continental. Air France and KLM, Air France and

British Airways are the result of past mergers. One of the biggest challenges is that Air India and

Indian Airlines are working as separate entities since their merger in 2007. The merger, in fact, is

only on paper — this is the bone of contention. The expectations from the committee run very

high. But we do not have a magic wand. (Aggarwal Smita 2011)

In 2007, in its report on the national carriers, Accenture had highlighted two factors as being

responsible for their sub-optimal performance: an ageing fleet and the fact that the two existed

individually. The report had gone on to say that merger of the two entities and replacement of the



ageing fleet would result in a profit of Rs 1,000 crore in the first year itself. Instead, in the three

years following the merger in 2007 saw losses escalate from Rs 1,200 crore in the first to Rs

2,600 crore in the second to Rs 5,500 crore in the third year. Each time, the management of the

airline blamed the losses either on high fuel prices or intense competition or some other factor.

The inescapable fact is that the airline today has accumulated losses of Rs 16,000 crore.( Mitra

2012).

LITERATURE REVIEW

Strategic alliances are voluntary arrangements between firms involving exchange, sharing, or co

development of products, technologies, or services. They can occur as a result of a wide range of

motives and goals, take a variety of forms, and occur across vertical and horizontal boundaries

(Gulati, 1998).Alliances have proven to be one of the driving factors of air transport

development in the past decade ( Holtz, M 2007). Alliances are a toll for extending or reinforcing

competitive advantage, but rarely a sustainable means for creating it (Porter, 1990). Jürgen

Weber, the former CEO and one of the founders of Star Alliance judges alliances

enthusiastically: “If there were not already alliances, then they should be invented.” (Kewes,

2007). By alliances carriers can increase the loyalty of their passengers. Higher switching costs

allow airline alliances to earn a premium on their flights and be more effective in their response

to competitors (Doganis, 2006, 87).

Airline alliances have been seen as the most important change of aviation in terms of

competition (Knorr, 2001).Integration of networks offers substantial marketing advantages to the

alliance partners. Most alliances integrate their frequent flyer programmes and computer

reservation programmes and run common advertisements. From the point of the traveller the

airline is offering a superior good by seamless travel to all points of the network (Schäfer, 2003).

The spreading of common costs for marketing over a larger number reduces the average costs of

marketing (Hanlon, 2003)

A well known limiting factor for increasing the size of the firm is the management factor

(Church and Ware, 2000). While alliances might be a way to increase the scarce factor of

effective management alliances can also create major diseconomies of size through management

problems. Kleymann and Seristo (2004, 26) explain the failure of alliances such as Swissair-

Qualiflyer, KLM-Alitalia, KLM-British Airways by factors such as overextension of financial



resources, unwillingness of managers to cooperate, and strategic overlap so that no partner is

willing to play the specific role (for e.g. feeder role) in the alliance. Goel (2003) and Meyer

(2004) add further factors such as ill-defined common goals, asymmetric size of carrier,

divergent expectations on profitability. Another significant contributing factor to problems

associated with alliances is cultural differences, which are a major factor in the complexity of the

management of international firms. Oum et al. (2000) analyzed the effects of alliances on

productivity, air fares and profits. Overall they have found positive effects for what they call

major alliances like KLM/NWA and insignificant effects for minor alliances. Major alliances

increase total factor productivity by 4.9 %, lower revenues (due to lower fares) per output by 1.5

% and increase profitability by 1.5 %. In addition they benefit passengers directly by better

connecting times as for e.g. the alliances of Lufthansa/UA and KLM/NWA have reduced

average waiting times Oum et al (2000).

THE AVIATION INDUSTRY

The history of civil aviation of India may be traced back to the year 1933, when Tata Airlines

was formed by Mr. JRD Tata. At the time of Independence nine airlines were operational in the

Indian Territory. The number was then reduced to eight when Orient Airways shifted its base to

Pakistan. The then operational airlines were the Tata Airlines, Indian National Airways, Air

service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. The

era of private airlines came to an end on 28th May 1953 - with the enactment of the Air

Corporations Act, 1953 - Government of India nationalised the airline industry. In accordance

with this Act, two air corporations, viz. Indian Airlines Corporation and Air India International,

were established and the assets of all the then existing nine air companies were transferred to the

two new Corporations. The operation of scheduled air transport services was made a monopoly

of these two Corporations and the Act prohibited any other person or their associates from

operating any scheduled air transport services from/to/ or across India.

In the year 1990, open-sky policy was adopted by the government and it allowed air taxi-

operators to decide their own flight schedules, cargo and passenger fares. (Tayagi 2011)

With the roads becoming congested day by day and the land transportation difficult, there is an

increasing scope in the air especially for India. The air space is still less exploited and its huge

potential is yet to be tapped. India has got the ninth largest aviation market in the world. But the



industry is still in the initial stages of growth with very low air passenger per capita at 0.09 that is

lower than China and Australia. The 9th largest aviation market in the world is India with a

compound annual growth rate (CAGR) of 18 per cent. However, the Indian Aviation Industry is

still in a very nascent stage. India’s air passenger per capita at 0.09 is still abysmally low as

compared to 0.30 in China, 5.63 in Australia and 4.69 in US.( Tayagi ,E.. 2011)

In the last few years the scenario is being changing and researcher forecast a brighter tomorrow

for the aviation industry of India. The sector has seen aggressive policies, increase in the quality

of services and some big mergers and acquisitions which is intensifying the competition. The

industry is growing fast and with the liberalization of the sector it is presently dominated by the

private players. With the open sky policy adopted by the government of India opportunities were

opened not only for the overseas players but also for the Indian customers, for before

liberalization travelling by air was an opportunity only a few could enjoy.

Figure 1

Aviation Industry in India

Snapshot

Indian Aviation sector

Public players

Air India, Indian Airlines and

Alliance Air

Private players

Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan, Go Air lines, Paramount

Airways

Start up players

Omega Air, Magic Air,

Premier Star Air & MDLR Airlines.

Regulatory Authorities

Ministry of Civil Aviation Directorate General of Civil Aviation (DGCA) Airports Authority of India (AAI) Bureau of Civil Aviation Security (BCAS) Federation of Indian Airlines (FIA)

Legal Framework

The Aircraft Act, 1934

The Carriage by Air Act, 1972.

The Air Corporations Act, 1994.

The Civil Aviation Policy.

The Civil Aviation Requirements.



HISTORY OF MERGER OF AIR INDIA AND INDIAN AIRLINES

The merger of Air India and Indian Airlines was an ambitious project by the government to

create one national carrier. The airlines were legally merged in August 2007 and together formed

National Aviation Company of India Limited (NACIL), earlier incorporated under the

Company’s Act 1956 on 30th March 2007. Shri V. Thulasidas took over as the Chairman and

Managing Director and Shri Vishwapati Trivedi as the Joint Managing Director of the merged

company (Aviation Center of excellence2007). It was estimated that with the combined fleet

and services the new airlines will be comparable to the best airlines in the Asian region and will

rank among the top 30 airlines in the world. The newspaper on 24th August 2007 Friday came

with headlines as Merger of Air India and Indian Airlines completed, reportedly ‘Air India’

launched its inaugural daily, non-stop Mumbai – New York flight with the first Boeing 777 200

LR aircraft. This was the first non-stop India – US flight by a domestic carrier. The new Boeing

777 aircraft was the first of the series to sport the new branding. In its latest report tabled in

Parliament in September, the public audit body also called the merger of two erstwhile state-run

carriers--Air India and Indian Airlines-- "ill-timed" and said that "the financial case for the

merger was not adequately validated prior to the merger". (PTI 2012)

Table 1

Chronology of events relating to the merger of AIL and IAL



Source : Performance Audit Report on Civil Aviation in India (Ministry of Civil Aviation

2011-12)

(Directors Report 2008). The organization structure of the company consisted of the corporate

set up and 6 Strategic Business Unit in the following areas:

Passengers

Cargo

Maintenance Repair and Overhaul(MRO)

Ground handling

Low cost operations

Related Business

Ambition behind the merger

In an earnest attempt to pave way for the emergence of a single entity as India's National Flag

carrier, Indian Airlines and Air India, India's premier airlines were merged to form Air India to

provide an integrated international and domestic footprint, for the advantage of travelers. This

Indian Airlines and Air India merger has brought seamless integration of domestic and



international flights, allowing passengers to check in for their international flight from any

domestic point in India.

Indian Airlines, in its new avtar of Air India can be identified with its key color as orange and a

contemporary graphic representation of a flying swan with the Konark Chakra placed inside it,

the imagery depicting traditional Indian hospitality and service. (Indian Airlines, Make my trip

.com )

Air India officials told the PAC that it was their idea to merge the two carriers as the 'open sky'

policy had increased competition in the aviation sector. The officials were grilled on their plan to

acquire 50 aircraft which quickly got the government's nod recently while their earlier plan to

buy 18 additional planes could not materialize even after six years. (PTI 2012)

In its latest report tabled in Parliament in September, the public audit body also called the merger

of two erstwhile state-run carriers--Air India and Indian Airlines-- "ill-timed" and said that "the

financial case for the merger was not adequately validated prior to the merger".(PTI 2012)

According to the consultant (Accenture), the merger was intended to (Performance Audit

Report on Civil Aviation in India)

Provide an integrated international/ domestic footprint, which would significantly

enhance customer proposition and allow easy entry into one of the three global airline

alliances;

Enable optimal utilization of existing resources through improvement in load factors and

yields on commonly serviced routes, as well as deploy ‘freed up’ aircraft capacity on

alternate routes;

Provide an opportunity to fully leverage strong assets, capabilities and infrastructure:

Parking bays and landing slots in an ‘infrastructure constrained’ environment;

Potential to launch high growth & profitability businesses {Ground Handling

Services(GHS); Maintenance, Repair & Overhaul (MRO) etc.};Potentially enable the

merged entity to command better valuation;

Operate a combined fleet strength (~112), which would be the largest in India and

comparable to other airlines in Asia/Region {Emirates (93), Singapore (118),

Malaysian(110);



Provide maximum flexibility to achieve financial and capital restructuring through

revaluation of assets and cleaning up of financial books;

Besides the above, a merged airline would be in a better position to serve and promote the airport

hubs now being developed at the metro cities, pursuant to the airport restructuring and

modernization programme approved by the GoI, by providing seamless connectivity over

domestic and international networks.

According to the consultant, the following benefits were envisaged:

Net synergy benefits of Rs. 820 crore (against the integration cost of Rs. 200 crore) was

envisaged; potential recurring synergies were expected to enhance profitability by Rs.

600 crore at the end of the 3rd year of merger.

The merger would make the combined airline the largest in the country, improve

combined market share, result in a combined balance sheet (which would be important

for an IPO), and revaluation of assets of both airlines (which would be possible only after

a merger) and improve net worth.

Benefits

The key benefits according to Tayagi , 2011 that accrued to Indian Airlines and Air India on

account of this merger were as under:

· The merger had created a mega company with combined revenue of Rs. 15000 crores.

· The new entity had seen a number of changes in its operating model. It was much less restricted

by government control and is therefore much more agile and could churn better returns than the

two different entities.

· Since the two companies had come together, they had also been able to bring together their best

practices and reduced the overall operational cost as well as administrative cost by a considerable

margin.

· Air-India would have a combined fleet of 112 aircraft and would be among the top 10 airlines

in Asia and among the leading 30 airlines globally. (Tayagi 2011)

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Figure 2

Centre for Asia Pacific Aviation report 2009

Figure 3

Centre for Asia Pacific Aviation report 2009



Figure 4

Indian Domestic passenger Load factor in Jan-09

Source : Centre for Asia Pacific Aviation report 2009

Table 3

Airlines Market Share

(in lakhs) Percentage share

Seat factor

(in %)

Air India (Domestic) 7.62 18.2 72.9

Jet Airways 7.66 18.3 74.2

Jet Lite 3.18 7.6 78.1

Kingfisher 8.98 21.4 75.8

Spice Jet 5.27 12.6 81.0

Paramount 0.13 0.3 85.0

Go Air 2.46 5.9 78.0

IndiGo 6.58 15.7 82.4

Source: Directorate General of Civil Aviation (DGCA)



Figure 5

Progressive integration of networks and operations is expected to yield significant synergies

Source : Performance Audit Report on Civil Aviation in India (Ministry of Civil Aviation

2011-12)

Figure 6

Expected build- up of synergy benefits and integration costs



Source: Performance Audit Report on Civil Aviation in India (Ministry of Civil Aviation

2011-12)

(Directors Report 2008).The company suffered a net loss of Rs.22,262 million vis -a -vis a

projected loss of Rs. 21,440 million in 2007-08. Total revenue achieved by the company was Rs.

152,575 million and total expenditure Rs. 185,555 million. After adjusting for deferred Tax

assets of Rs. 10,845 million the net loss registered was rs.22, 262 Million. This being the first

year of accounts there were no previous year’s figure represented. However comparison was

made based on projected figures of 2007-08. The loss was mainly due to the following factors.

i. Decline in passenger load factor

ii. Decline in Protected yield

iii. Increase in financing cost due to aircraft acquisition and working capital

iv. Increase in Depreciation expenditure and aircraft maintenance cost

v. Increase in Wage bill and other Staff cost

vi. Increase in Aviation Turbine Fuel Cost

Directors Report2008



Directors Report2008

After merger issues

1. Fleet acquisition

2. Poor passenger services

3. Difference in pay structure and promotion policies

4. Integration of reservation system into air India took three year rather than estimated Nine

months.

5. Flying network not yet integrated

6. Opening of the sector by the government before Air India Could prepare for competition

7. Poor management by Arvind Jhadav

8. Poor negotiation process and tactics adopted by the management

9. Ego clashes between management and employees and between unions

10. Interference from ministry.

HR ISSUES

1. Lack of trained commanders. There is a severe shortage of trained commanders across

Indian carriers and this has been forcing airlines to hire expatriates – often those with less

than the best skills. If Air India sacks the striking pilots they can easily get jobs in other



airlines within three months. But the pilots wanted to work for Air India and more so they

wanted recover their dues. (Mitra 2012)

2. Discrimination between pilots of Air India and Indian Airlines, with regards to pay

structure. "As we are aware, the AI is not only posting losses, it has also been unable to

pay salaries on time. Despite all of this, the management granted a salary raise to pilots of

the erstwhile IA," IPG said. (IANS 2012)

3. Discrimination between pilots of Air India and Indian Airlines, with regards to promotion

policy. The co-pilots of erstwhile IA are being promoted to captain's grade in five to six

years time, whereas the co-pilots of the AI take around 9-10 years for the same

promotion. (IANS 2012)

4. Discrimination between pilots of Air India and Indian Airlines with regards to training.

IPG said the management gave $2,000 per month hikes to all Indian Airlines pilots and

even decided to train them on the Boeing 787 Dreamliner without waiting for the report

of the Justice Dharmadhikari Committee. (IANS 2012)

The IPG pilots, who belong to the pre-merger Air India, are protesting the management’s

decision to train their colleagues from the erstwhile Indian Airlines on flying the long-

haul Dreamliner plane, the first of which is expected to arrive later this month. (PTI 2012

May 5)

The ICPA pilots, numbering about 650, have been demanding for long parity in service

conditions post the merger of Air India and Indian Airlines and also a clear path of career

progression after the merger.

Flying the Dreamliner has become a matter of prestige between the two sparring unions

— the IPG and the ICPA — as this would lay the ground rules for further climbing up the

organizational ladder, apart from skill and experience enhancement for the pilots.( PTI

May 5, 2012)

5. Poor management by Arvind Jhadav. , when Arvind Jadhav took over as managing

director of Air India he quashed the recruitment of additional cabin crew after the process

for it had been nearly completed. As a result, another eight months were spent hiring

cabin crew. During this period hundreds of flights had to be either cancelled or were

delayed, not because of a lack of pilots or planes but because of a lack of crew.( Mitra K

2012 .Maharaja in chains)



6. Poor negotiation process and tactics adopted by the management. Instead of looking for

ways to resolve differences with the pilots who are on strike, the Air India management

and particularly Jadhav has decided to "teach the pilots a lesson". Matters have worsened

to such an extent that even the executive pilots of the airline, who are management cadre

pilots, have gone on strike in support of their colleagues. When Jet Airways pilots went

on strike a few years ago, Naresh Goyal, the airline's chairman, talking to pilots and

pleading with them to go back to work. But Jadhav has decided that he will not even talk

to the pilots. Even the Delhi High Court has noted this fact. It appears that the

management wants to make the pilots scapegoats for its successive failures. It was

looking for an alibi and feels that the pilots have provided it one.( Mitra K 2012

.Maharaja in chains)

7. Ego clashes between management and employees and between unions

8. Inter union rivalry. According to the management there were two aircraft at the centre of

the controversy - Boeing 787 Dreamliner and Boeing 777 - and who should be trained on

them. The unions were not in agreement whether pilots from Air India or Indian Airlines

should be trained on the two aircraft.( IBN Live.com 2012.)

9. Incomplete integration. One of the biggest challenges is that Air India and Indian Airlines

are working as separate entities since their merger in 2007. The merger, in fact, is only on

paper — this is the bone of contention. The expectations from the committee run very

high. But we do not have a magic wand. (Indian Express 2011)

OPTIONS

1. Privatization

BJP, have always argued in favor of privatization of Air India. If not full privatization, at

least a partial one can be carried out through disinvestment. This will bring in funds to

run the airline instead of the government constantly raiding taxpayers' money to feed it. (

Mitra 2012) One way forward is to privatize Air India, as was done earlier to British

Airways, Lufthansa and other “national carriers.” If this proves politically impossible,

then Air India should be allowed to lose market share and slide gently into insignificance.

That after all has been the fate of inefficient public sector corporation like Hindustan

Machine Tools, Indian Drugs and Pharmaceuticals Ltd, and Heavy Engineering



Corporation. Once called national champions, they have faded away, and India is the

better for it. Let Air India go the same way. (Swaminathan 2009)

2. Professionalisation

The management of Air India should also be professionalized. The airline should not be

allowed to become a training ground for officers of the Indian Administrative Service

who have no knowledge of the aviation. ( Mitra 2012)

3. Retrenchment

Air India lost Rs 5,000 crore last year, and is surviving on huge government handouts.

Opposition politicians are critical, but reject any cut in its bloated staff. Across the world,

airlines are reducing staff in the recession. But Air India staff—labor aristocrats paid

several times the average Indian wage–are unsackable. Instead Civil Aviation Minister

Praful Patel proposes to hive off surplus staff to some new corporations. Problem: the

new corporations, with the same faulty staff and culture, may suffer the same fate as Air

India. (Swaminathan S.2009)

SUMMARY AND AGENDA FOR FURTHER RESEARCH

Uncertainty is the biggest chaos creator. During the research it was found that the merger of air

India and Indian Airlines was done hastily. Also a professionalized method was not adopted to

deal with the integration; as such in the process hurried promises were made to the pilots, which

were not intended to be fulfilled. Secondly, it is professionally and ethically demanded from any

organization and management the promises made should be kept. During and after the merger

having clear lines of communication is very important. Bastien (1981) in his study finds that

quantity of communication; quality of communication (formal or collegial) and congruence of

communication are the three keys to manage uncertainty in mergers and acquisitions. Thus it

seems that the only way for management to deal with anxiety and uncertainty, that follows a

merger or acquisition announcement, is to communicate with employees as soon as possible

about all the anticipated effects of changes (Schweiger & Denisi, 1991). Massimilian (2001)

suggests that it is ideal for the acquirer to define structure and roles before choosing incumbents.

Without having, at least, a preliminary of reporting structure, it is extremely risky to announce a

merger, when the deal is closed one must tell people how the structure will look like and who

will report to whom. Until people know, the lion’s share of their energy and attention will be



devoted to speculation, instead of how to make 2+2 = 5.And this I consider as the greatest

mistake done by the management, passing on wrong information, not keeping on the words and

even bypassing government orders are all included in wrong communication styles. Thirdly

Management should also look out for transitional leadership strategy for dealing with the HR

issues. According to the findings of a survey conducted by Watson Wyatt (2000) on reasons for

success of mergers and acquisitions, the critical success factor was identified as leadership and

the role it played. Strong leadership is essential to acquisition success— perhaps a single most

important success factors (Schuler & Jackson, 2001). Fourthly, the management to go for a

successful HR integration should go for an internal brand makeover. Creating trust among the

employees is very important, and especially so in the service sector. Sineter’s (1981) study

reveals that initially workers experience shock, disbelief and grief. These emotions are followed

by resentment, anger and/or depression. As employees are stressed, they tend to show lesser

amount of organizational commitment (Marks & Mirvis” 1998). It is because, when an

organization ceases to exist or is fundamentally changed, the previous psychological contract is

either broken or becomes unclear (Cartwright & Cooper, 1990).

REFERENCES

1. Aggarwal Smita 2011 Air India-Indian airlines merger is only on paper’ Friday July

22,2011 Indian Express http://www.financialexpress.com/news/air-indiaindian-

airlines-merger-is-only-on-paper/820766/4

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ai-ia

Documents

adequately validated prior

public audit body

latest report tabled

performance audit report

poor negotiation process

critical success factor

air corporations act

indian airlines merger