EXECUTIVE SUMMARY

The Indian Aviation Industry has been going through a turbulent phase over the past several years facing multiple headwinds high oil prices and limited pricing power contributed by industry wide over capacity and periods of subdued demand growth. Over the near term the challenges facing the airline operators are related to high debt burden and liquidity constraints most operators need significant equity infusion to effect a meaningful improvement in balance sheet. Improved financial profile would also allow these players to focus on steps to improve long term viability and brand building through differentiated customer service. Over the long term the operators need to focus on improving cost structure, through rationalization at all levels including mix of fleet and routes, aimed at cost efficiency. At the industry level, long term viability also requires return of pricing power through better alignment of capacity to the underlying demand growth. While in the beginning of 2008-09, the sector was impacted by sharp rise in crude oil prices, it was the decline in passenger traffic growth which led to severe underperformance during H2, 2008-09 to H1 2009-10. The operating environment improved for a brief period in 2010-11 on back of recovery in passenger traffic, industry-wide capacity discipline and relatively stable fuel prices. However, elevated fuel prices over the last three quarters coupled with intense competition and unfavorable foreign exchange environment has again deteriorated the financial performance of airlines. During this period, while the passenger traffic growth has been steady (averaging 14% in 9m 2011-12), intense competition has impacted yields and forced airlines back into losses in an inflated cost base scenario. To address the concerns surrounding the operating viability of Indian carriers, the Government on its part has recently initiated a series of measures including (a) proposal to allow foreign carriers to make strategic investments (up to 49% stake) in Indian Carriers (b) proposal to allow airlines to directly import ATF (c) lifting the freeze on international expansions of private airlines and (d) financial assistance to the national carrier. However, these steps alone may not be adequate to address the fundamental problems affecting the industry. While the domestic airlines have not been able to attract foreign investors (up to 49% FDI is allowed, though foreign airlines are currently not allowed any stake), foreign airlines may be interested in taking strategic stakes due to their deeper business understanding, longer investment horizons and overall longer term commitment towards the global aviation industry. Healthy passenger traffic growth on account of favorable demographics, rising disposable incomes and low air travel penetration could attract long-term strategic investments in the sector. However, in our opinion, there are two key challenges: i) aviation economics is currently not favorable in India resulting in weak financial performance of airlines and ii) Internationally, too airlines are going through period of stress which could possibly dissuade their investment plans in newer markets. Besides, foreign carriers already enjoy significant market share of profitable international routes and have wide access to Indian market through code-sharing arrangements with domestic players. 1

Given these considerations, we believe, foreign airlines are likely to be more cautious in their investment decisions and strategies are likely to be long drawn rather than focused on short-term valuations. On the proposal to allow import of ATF, we feel that the duty differential between sales tax (averaging around 22-26% for domestic fuel uplifts) being currently paid by airlines on domestic routes and import duty (8.5%-10.0%) is an attractive proposition for airlines. However the challenges in importing, storing and transporting jet fuel will be a considerable roadblock for airlines due to OMCs monopoly on infrastructure at most Indian airports. From the working capital standpoint too, airlines will need to deploy significant amount of resources in sourcing fuel which may not be easy given the stretched balance sheets and tight liquidity profile of most airlines. Trade Union came into being for a variety of purposes. Individual workers found it more advantageous to band together and seek to establish their terms and conditions of employments. They realized that if they bargained as individuals, the employer would have a better leverage, for an individual would not matter as much as a group in terms of the running of the enterprise. A groups contribution is much larger than an individuals so are the effects of its withdrawal. An individual may not be able to organize and defend his interests as well as a group can. Therefore workers saw the advantages of organizing themselves into groups to improve their terms and conditions of employment. Employers also found it advantageous to deal with a group or a representative of a group rather than go through the process of dealing with each individual over a length of time. With the changed political, social and educational environment in terms of awareness of rights the right to organize, the right to bargain and settle terms and conditions of employment labour or worker unions sprang up in order to protect and further worker in acquiring a foot hold in the labour movement also provided the impetus for the formation of labour unions.

Meaning of TU
The trade union is an association, either of employees or employers or of independent workers. It is a relatively permanent combination of workers and is not temporary or casual. It is an association of workers engaged in securing economic benefits for its members.

Definition
According to Section 2(b) of the Trade Unions Act of 1926, a trade union is any combination of persons, whether temporary or permanent, primarily for the purpose of regulating the relations between workers and employers, or between workers and workers and for imposing restrictive conditions on the conduct on the conduct of any trade or business, and includes the federation of two or more trade unions. Sydney and Beatrice Web have defined Trade Union as a Continuous association of wage earners for the purpose of maintaining or improving the conditions of their working lives. Lasted defines Trade Union as an association of employees designed primarily to maintain or improve the condition of employment of its members. According to Cunnison, Trade Union is a monopolistic combination of wage earners who stand to the employers in a relation of dependence for the sale of their labour and even for the production, and that the general purpose of the association in view of that dependence is to strengthen their power to bargain with the employers.

CHARACTERISTICS OF A TRADE UNION

Association of employees-A trade union is essentially an association of employees belonging to a particular class of employment, profession, trade or industry. For example, there are unions for teachers, doctors, film, artistes, weavers, mine workers and so on. Voluntary Association-An employee joins the trade union out of his free will. A person cannot be compelled to join a union. Permanent Body-a trade union is usually a permanent body. Members may come and go but the trade union remains. Common Interest-The member of a trade union have certain matters of common interest-job security, better pay and working conditions and so on, which bring them together. Collective Action: Even when an individual employee has any grievance over certain management decisions, the matter is sorted out by the intervention of the trade union Employees are able to initiate collective action to solve any problem concerning any particular employee or all the employees. Rapport with the Management: The trade union seeks to improve relations between the employees and employers. The officials of the trade union hold talks with the members of the management concerning the problems of the employees in order to find an amicable solution. It is thus possible for the employees to have better rapport with the management.

Need for Trade Union

Workers join trade unions to achieve certain objectives that they may not be able to achieve in their personal capacity. Trade unions are necessary. 1. To ensure job security and right pay for the members One of the basic needs of any employee is security of service. The main reason why an employee joins a union is to get him secured. A part from job security and employees need to get pay commensurate with their qualifications and skills. Trade unions strive to get both job security and correct pay for all employees. 2. To ventilate the grievances of employees to the management: When the employees in general or some in particular have any grievance, they may not be able to convey the same to the management in their personal capacity. Such grievances may be brought to the knowledge of the management through the trade union. The members of the management may be indifferent to the demands of the individual employees but they cannot be so when it comes to union demands.

Nature and Scope of a Trade Union

The employers association or professional bodies were not included in any of the above definitions. The employees unions are different from that of the employers or professional bodies. The employees unions are primarily concerned with the terms and conditions of employment of their members. The employers associations on the other hand are concerned among other things with influencing the terms of purchase of services in favor of their members. Hence, the two should not be placed in one category. The associations of professional members also differ fundamentally from employees unions. Professional associations include self employed as well as the employees where as trade unions consist only of the people who are employed by others. In India the term Trade Union refers besides employees organizations to employers association also. Similarly in Britain, even the associations of professional people such as Artists Federation or Musicians Unions are also recognized as Trade Unions. Thus trade unions are a major component of the modern industrial relation system. A trade union of workers is an organization formed by workers to protect their interests. i.e. improve their working conditions etc. All trade unions have objectives or goals to achieve, which are contained in their constitution and each has its own strategy to reach those goals. Trade Unions are now considered a sub-system which seeks to serve the specific sub-groups interest and also considers itself a part of the organization, in terms of the latters viability and contribution to the growth of the community of which it is a part.

PURPOSE OF TRADE UNION

Trade Union came into being for a variety of purposes. Individual workers found it more advantageous to band together and seek to establish their terms and conditions of employments. They realized that if they bargained as individuals, the employer would have a better leverage, for an individual would not matter as much as a group in terms of the running of the enterprise. A groups contribution is much larger than an individuals so are the effects of its withdrawal. An individual may not be able to organize and defend his interests as well as a group can. Therefore workers saw the advantages of organizing themselves into groups to improve their terms and conditions of employment. Employers also found it advantageous to deal with a group or a representative of a group rather than go through the process of dealing with each individual over a length of time. With the changed political, social and educational environment in terms of awareness of rights the right to organize, the right to bargain and settle terms and conditions of employment labour or worker unions sprang up in order to protect and further worker in acquiring a foot hold in the labour movement also provided the impetus for the formation of labour unions. Precisely, the major objectives of trade union are the following: 1. Better wages 2. Better working conditions 3. Protection against exploitation 4. Protection against victimization 5. Provide welfare measures 6. Promote industrial peace 7. Take up Collective Bargaining 8. Look after the interest of trade

Functions of Trade Unions in the India

As per the Indian Trade Union Act, 1926, the primary function of a trade union is to protect and promote the interests of the workers and the conditions of their employment. They can also have other objectives, which are not inconsistent with this primary purpose or opposed to any law. In India, trade unions generally undertake the following functions: (i) To achieve higher wages and better working and living conditions for the members. (ii) To acquire control over running of the industry by workers. (iii) To minimize the helplessness of the individual workers by making them stand-up unitedly and increasing their resistance power through collective bargaining; protecting the members against victimization and injustice by employers. (iv) To raise the status of the workers as partners in industry and citizens of society by demanding an increasing share for them in the management of industrial enterprises. (v) To generate self-confidence among the workers. (vi) To encourage sincerity and discipline among workers. (vii) To take up welfare measures for improving the morale of the workers.

The National Commission on Labour has underscored certain basic functions to which trade unions have to pay greater attentions such as: (i) To secure fair wages for workers. (ii) To safeguard the security of tenure and improve conditions of service. (iii) To enlarge opportunities for promotion and training. (iv) To improve working and living conditions. (v) To provide for educational, cultural and recreational facilities. (vi) To cooperate and facilitate technological advancement by broadening the understand. (vii) To promote identity of interests of the workers with their industry. (viii) To offer responsive cooperation in improving levels of production and productivity, discipline and high standards of quality. (ix) To promote individual and collective welfare. Besides these basic functions of trade unions, the Commission enjoined the following responsibilities upon the unions: (i) Promotion of national integration. (ii) Generally, influencing the socio-economic policies of the community through the active participation in their formulation at various levels. (iii) Instilling in their members a sense of responsibility to industry and the community. 7

INDIAN AVIATION INDUSTRY SCENARIO

India is the ninth largest aviation market in the world, according to RNCOS research report, titled "Indian Aerospace Industry Analysis". It is anticipated that the civil aviation market will register more than 16 per cent compound annual growth rate (CAGR) during 2010-2013 on back of strong market fundamentals. The rapidly expanding aviation sector in India handles about 2.5 billion passengers across the world in a year; moves 45 million tonnes (MT) of cargo through 920 airlines, using 4,200 airports and deploying 27,000 aircraft. Currently, 87 foreign airlines fly to and from India and five Indian carriers fly to and fro from 40 countries. India is expected to be amongst the top five nations in the world in the next 10 years. An efficient civil aviation sector is important for India as it is inter-linked with other sectors in the economy and generates income and employment through global commerce and tourism, as per a National Council of Applied Economic Research (NCAER) study titled 'Emirates in India - Assessment of Economic Impact and Regional Benefits'. Airport infrastructure in India is witnessing improvisation and expansion on a massive scale, with the Government avidly supporting private participants. The need for airport infrastructure in India has increased considerably. In order to ramp up airport infrastructure, the Government has unveiled reforms to facilitate investment in this segment. The investment in Indian airport infrastructure market, especially in the green field projects is expected to increase. Market Size The domestic airlines carried 438.4 million passengers during January -September 2012 (first three quarters of calendar year), according to data released by the Directorate General Civil Aviation (DGCA). The air transport (including air freight) in India has attracted foreign direct investment (FDI) worth US$ 446 million from April 2000 to September 2012, as per data released by Department of Industrial Policy and Promotion (DIPP). 8

Market Players

SpiceJet Ltd has announced the launch of two new international flights from Kochi, Kerala to Male and Dubai. The airline has deployed the Bombardier Q400 aircraft, with a capacity of 78 passengers, in the Kochi-Male route

IBS Software has entered into a contract with Lufthansa Cargo AG for the implementation of its air cargo solution - iCargo. The deal worth Rs 700 crore (US$ 127.50 million) has three segments and IBS Software has major share of the contract

Aerospace on a High

India and New Zealand have signed the "Arrangement for Cooperation on Civil Aviation". Under the arrangement, the two countries will promote and support the development of training and technical cooperation in the field of civil aviation

GVK Power and Infrastructure Ltd has signed an operations and management contract with the Airports Authority of Indonesia (AngkasaPura Airports). The scope of the contract includes managing non-aeronautical commercial operations at both the existing terminals and the new international terminal of Indonesia's second busiest Bali (Denpasar) international airport

Maldivian Airlines has expanded its flight network by connecting Chennai, Mumbai and Dhaka with Male, the capital city of Maldives. "India is our focus market, as it has a great potential," said MrBandhu Ibrahim Saleem, Chairman, Maldivian Airlines

India will be the fourth biggest market in terms of value for all new aircraft deliveries after China, the US and the UAE during the next 20 years, according to aircraft maker Airbus

Recent Developments

India released its first ever detailed Aviation Carbon Footprint Report for 2011, on October 9, 2012, which states that carbon dioxide (CO2) emissions from Indian scheduled airline operations as well as from foreign airlines to international destinations represent less than one per cent of the country's total CO2 emissions, which is significantly lower than the global average contribution of airlines

A 10-member delegation led by Mr S R Rao, Commerce Secretary, Ministry of Commerce and Industry, the Government of India, will visit Pakistan for two days. The visit aims at boosting trade relations, increasing air connectivity and starting trade in petroleum products. Two-way trade between India and Pakistan is estimated to increase to US$ 6 billion by 2013-14.

Government Initiatives
In a major step aimed to boost the Indian civil aviation sector, the Cabinet Committee of Economic Affairs (CCEA) has relaxed the FDI norms in aviation, which will allow foreign aviation companies to invest in Indian aviation companies. The foreign carriers can now pick up to 49 per cent stake in domestic Indian aviation firms. The 12th Five Year Plan (2012-17) estimates the domestic and international cargo to grow at the rate of 12 per cent and 10 per cent, respectively, with the total traffic projected to touch 5.9 million tonnes (MT) by 2020. The Government has planned to invest US$ 30 billion in next 10 years," according to Mr S N A Zaidi, Secretary, Civil Aviation. The Government's open sky policy has attracted many foreign players to enter the market and the industry is growing in terms of number of players and the aircrafts. Given the strong market fundamentals, the civil aviation market in India is expected to register a CAGR of more than 16 per cent during 2010-2013, as per a RNCOS report. 10

The Government has taken various steps towards structural policy reforms and has come out with new policies which are liberal and will encourage public-private partnerships (PPP).

The Government of India allows 100 per cent foreign direct investment (FDI) for green field airports, via the automatic route. Moreover, foreign investment up to 74 per cent is permissible through direct approvals while special permissions are required for 100 per cent investment

Private investors are allowed to set up general airports and captive airstrips while maintaining a distance of 150 kilometres (kms) from the existing ones. Complete tax exemption is also granted for 10 years

About 49 per cent FDI is allowed for investment in domestic scheduled passenger airlines and investment up to 100 per cent by non-resident Indians (NRI) via the automatic route. FDI up to 74 per cent is allowed for non-scheduled and cargo airlines.

The aviation industry in India is one of the sectors that has witnessed a constant pace of growth over the past several years. The open sky policy of the government has facilitated the entry of overseas players in the aviation sector in India following which there has been steady growth both in terms of number of players and aircraft. This is reflected in a CAGR of 16%. According to the Investment Commission of India, potential investment requirements in new aircrafts till the year 2020 could touch US$80 billion At present, private airlines account for over two-thirds of the domestic aviation market. The growth of the aviation sector and capacity expansion by carriers h given rise to the following challenges: 1. Shortage of trained pilots and other technical personnel 2. Inadequacy of infrastructure, despite the recent investments this regard and 3. Declining returns due to stiff competition and rising fuel costs.

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Challenges For Aviation Industry

The growth in the aviation sector and capacity expansion by carriers have posed challenges to aviation industry on several fronts. These include shortage of workers and professionals, safety concerns, declining returns and the lack of accompanying capacity and infrastructure. Moreover, stiff competition and rising fuel costs are also negatively impacting the industry.

1. Employee shortage: There is clearly a shortage of trained and skilled manpower in the aviation sector as a consequence of which there is cut-throat competition for employees which, in turn, is driving wages to unsustainable levels. Moreover, the industry is unable to retain talented employees. 2. Regional connectivity: One of the biggest challenges facing the aviation sector in India is to be able to provide regional connectivity. What is hampering the growth of regional connectivity is the lack of airports. 3.Rising fuel prices: As fuel prices have climbed, the inverse relationship between fuel prices and airline stock prices has been demonstrated. Moreover, the rising fuel prices have led to increase in the air fares.

4.Declining yields: LCCs and other entrants together now command a market share of around 46%. Legacy carriers are being forced to match LCC fares, during a time of escalating costs. Increasing growth prospects have attracted & are likely to attract more players, which will lead to more competition. All this has resulted in lower returns for all operators.

5. Gaps in infrastructure: Airport and air traffic control (ATC) infrastructure is inadequate to support growth. While a start has been made to upgrade the infrastructure, the results will be visible only after 2 - 3 years.

6. Trunk routes: It is also a matter of concern that the trunk routes, at present, are not fully exploited. One of the reasons for inability to realize the full potential of the trunk routes is the lack of genuine competition. The entry of new players would ensure that air fares are brought to realistic levels, as it will lead to better cost and revenue management, increased productivity and

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better services. This in turn would stimulate demand and lead to growth.

7. High input costs: Apart from the above-mentioned factors, the input costs are also high. Some of the reasons for high input costs are:Withholding tax on interest repayments on foreign currency loans for aircraft acquisition. Increasing manpower costs due to shortage of technical personnel.

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Examples:Airline employees plan nationwide trade union

Fresh from the success of two strikes by pilots of Jet Airways and Air India, the country's 50,000 airline employees plan to form a nationwide trade union that will represent pilots, engineers, maintenance staff, cabin crew and ground handling staff. The proposal, put forward by the trade unions of Air India and Jet Airways, is expected to elicit good response from the airline staff, which faces job losses and salary cuts, with the domestic airline industry troubled by losses looking to cut employee costs. Frequent cuts in fares due to cut-throat competition and high fuel prices have seen the industry's accumulated losses amounting to around Rs 10,000 crore at the end of the last financial year.

Jet or Air India Trade Union problems regarding employee:Jet Airways firing of 3 pilots for starting a trade Union has catapulted into a huge storm for whole of Indian Aviation Industry. Airlines are going to suffer and suffer badly due to this problem. The events in last couple of months seem to have bought aviation employees together. According to the report in ET 50,000 airline employees in India are coming together to form a nation-wide trade union that will represent pilots, engineers, maintenance staff, cabin crew and ground handling staff. Jet Airways Pilot strikes as well as Air-India strike were successful to say the least. Jet Airways lost at least Rs 400 crore due to the five-day strike in the first week of September, while Air India lost Rs 100 crore from the four-day strike later in the month. Not only did it put the airlines on the back foot, but with this new development the aviation companies seem to have attracted a persistence long term problem. Aviation Industry is already reeling under heavy losses, which have accumulated to more than 10,000 crores. Cut Throat competition amongst all the airlines have seen air-fares drop drastically over last 3 years. Adding to it is the global downturn, which has reduced the passenger volume. Aviation fuel prices are not getting any cheaper as well.

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In view of this, pressured Airline companies had to cut losses, by reducing staff, bringing down employee perks as well as their salaries. However, with this new development, they are now further restricted in taking any severe actions to bring down their costs, related to their employees, as they will be looking at Industry-wide shutdown which would be disastrous (in case of a complete strike by this potential all Indian trade Union). It means they would be looking at air-fare hike, without which Airliners cannot survive. Although, there is a mixed opinion about who was wrong and who was right in case of Jet Airways strike, the company stands to lose a lot than it bargained for.

But what exactly is the issue? Why did Pilots go on strike? Why did Jet remove those Pilots? Simply put, Jet Airways was against Pilots creating a trade Union (probably the outcome of what had happened few months back sacking of few hundred employees). To show their dissent, Jet Airways, sacked nearly 10 pilots who were instrumental in creating this Union. This did not go down well with other Pilots and till now 432 pilots have gone on sick leave, with 360 not reporting for work on the first day. Jet Airways has close to 760 pilots on its rolls. With more than half of Pilots absent, the flights had to be cancelled and passengers were left stranded! Jet Airways hasnt taken this lightly and have threatened to take stern action against these Pilots. Mr. Narendra Goyal, head of Jet Airways, has even gone ahead and named these pilots terrorists. Comment of Mr. Narender goyal against pilots They are behaving like terrorists. They cannot hold the country, passengers and the airline hostage. We wont tolerate such blackmail. The livelihood of more than 30,000 employees of Jet Airways is at stake, I am open to meeting and talking to the pilots. I will be more than happy to meet them. But they cannot harass the passengers Jet Airways Pilots have not done anything illegal in forming a trade Union. They did not make any demands nor were they blaming Jet Airways for anything. They were simply forming a Union, which is probably within their Legal and Constitutional rights. He does not think it was right on Jet Airways part to take such a stern action against these Pilots.

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OBJECTIVE OF STUDY
1) The project helps to understand the aviation industry working profile. 2) To understand trade union scenario in Indian industry. 3) To understand industrial dispute factor and to resolve dispute settlement machinery. 4) To understand the trade unions how work effectively in aviation sector. 5) To identify the trade union problem how affect the internal and external customer and services.

LIMITATION OF STUDY
1) The whole project is based on secondary data. 2) The whole study is based on Indian aviation sector. 3) The whole project is completed on small details.

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Conclusion
After that a long discussion I find that we use trade union in a positive manner to improve Indian as well as other country aviation industry growth and employee and employer welfare. Following are certain challenges of aviation industry or slowdown of Indian aviation sector:1) Jet Airways was against Pilots creating a trade Union 2) Use wrong message by Mr. goyal (Head of Jet airways) 3) Maintain unethical climate in industry. 4) Employee shortage 5) Regional connectivity 6) Rising fuel prices 7) Declining yields 8) Gaps in infrastructure 9) Trunk routes 10) High input costs

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SUGESSATION
Any industry performs better if the all company workers work like a tree parts. It means communicate and coordinate in a systematic and effective manner for achieving a common goal. For a growing aviation industry we use following tips to increase profit of the company and customer heart wining:-

1) Low cost high quality services. 2) Increase productivity by tournament and events. 3) Provide healthy working environment. 4) Use industrial dispute settlement machinery. 5) Better grievance handling procedure developed. 6) Remove cultural dissimilarities. 7) Learn new technology services. 8) Provide a unique plan for pilots and his families. 9) Provide maximum claim and wage policy. 10) Provide training programs. 11) Use right to communicate and coordinate tools. 12) Use performance appraisal tools for rewards and promotion policy.

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