Abstract

The case ‘Air India’s New Compensation Plan: Can It Help Revive Employee Morale?’ describes Air India’s new compensation plan for it’s pilots and cabin crew as part of Vihaan.AI, Air India’s five-year transformation plan put in place after the Tata Group acquired the airline in January 2022. The case first touches upon the company’s business revival plan. The long-term objective of Vihaan.AI was to increase Air India’s market share to about 30 percent in the domestic market and increase the operations on international routes. The case then discusses the new compensation plan and allowances for flying crew, trainee pilots, first officers, captains, senior first officers, commanders and senior commanders. The company also made changes to the compensation structure for its cabin crew including trainee cabin crew, senior cabin crew, executive cabin crew and permanent cabin executives. Through the new compensation plan, Air India aimed to retain existing staff and hire new talent. The case also focuses on the dissatisfaction over the allowances component of the revised structure. Air India employees alleged that the new pay structure would not lead to any effective change in their pay. The case then focuses on Air India’s response to the representation made by the Indian Commercial Pilots Association (ICPA) and the Indian Pilots Guild (IPG). The case ends with Air India’s announcement of Vihaan.AI second phase of the transformation plan. At this stage, it was important for Air India to remove the discontent among the existing employees since their loyalty and trust was critical for the success of the Vihaan.AI transformation plan. This issue could also snowball to the ground staff of the airline.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the need to align HR policies with strategic objectives
• Examine the role of trade unions in an organization
• Identify the challenges that arise when implementing a new compensation plan
• Recognize the relation between compensation and motivation
• Describe effective handling of employee grievances

Keywords

Compensation; Employee Benefits and Services; Employee Rights & Grievance Handling; Employee motivation; Collective Bargaining; Trade unions; Fair labor practices; Industrial-relations