Air India - The Virgin Airways Saga

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Case Details:

Case Code : BSTR019
Case Length : 8 Pages
Period : 1999 to 2001
Organization : Air India, Virgin Airways
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Aviation& Aviation

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The End of the Honeymoon?

By October 2000, VA was to start its third code share flight as per the agreement with A-I. In addition to the Rs 100 million per flight per annum that A-I got from VA, the third flight would fetch A-I Rs 300 million per annum.

However, till late 2001, VA was flying only two flights a week. Also, there was no progress on the remaining three flights that VA was entitled to fly from 2001. This seemed to the bone of contention between VA and A-I. VA officials were particularly unhappy that BA was granted rights to fly three additional flights per week from Kolkata to London against the prevailing norms. What seemed particularly strange was that there was no commercial agreement or code share for any of these additional frequencies. Commenting on the GoI's interest in BA, a leading business magazine in India wrote, "The needle of suspicion automatically points to vested interests in the ministry and their sudden penchant for BA..."

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Exhibit I: A-I's Network

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