Air India Organizational Structure: Functions and Design

Organizational Functions and Structural Types

The functions of an organization encompass the different activities undertaken by a business, including production or manufacturing, marketing, sales, accounting, and research and development. According to Sherman and Thompson (2019), the organizational structure delineates the relationships and interrelations between the functions of a business and determines how the chain of command operates across various levels. The interrelationship between organizational functions and organizational structure is akin to a flow chart: an entity can build its business structure around its organizational functions, and even if it does not, the two will still exert influence on each other (Sherman and Thompson, 2019).

A functional organizational structure creates distinct, separate departments. Many businesses adopt a functional organizational structure that includes a clear chain of command. Various functions are placed into distinct departments or divisions that report to department heads, who subsequently report to individuals positioned higher in the hierarchy (Aquinas, 2008). One key advantage of a functional structure is well-defined lines of authority, with fundamental decision-makers in every department responsible for setting the general mission and tasks. This structure also permits every employee to focus on his or her specific role. However, it has shortcomings: it can give rise to departments that fail to communicate or collaborate effectively. As a result, a customer may be moved from one department to another when an issue does not clearly belong to a single function (Vitez and Baligh, 2011).

The interrelationship between functions means that a divisional structure has numerous branches. A divisional organizational structure extends functions across various branches: if an organization has distinct lines of production, each line has its own functional groups, such as accounting, research and development, and marketing (Jones, 2013). The advantage is that every division has the staff needed to undertake all essential functions and can operate relatively independently. The disadvantage is that having personnel in every division performing similar functions can result in significant redundancy or inefficiency. For instance, managing six separate human resources or accounting operations, rather than a single centralized operation, results in duplication of functions, management systems, policy development, and more (Daft, 2015).

The matrix organizational structure facilitates flexibility. An organization using a matrix structure can achieve greater flexibility in business functions compared to a more strictly hierarchical entity (Cunliffe, 2008). Within a matrix structure, each employee operates within a function-oriented department — such as finance or sales and marketing — but can be assigned to projects under various supervisors and placed into teams with employees who have different functions. An additional advantage is that the structure adapts organizational functions to the changing needs of the organization. The shortcoming, however, is that lines of authority within the matrix can become unclear and contested (Cunliffe and Luhman, 2012).

As a statutory company, Air India submits an annual report of its activities to the Indian Parliament through the Ministry of Civil Aviation. The company maintains functional independence. Air India's headquarters in Mumbai comprises well-defined divisions and departments. All matters regarding organizational policy are decided at the headquarters level and carried out through field and branch offices. The field stations and branch offices are distributed across a significant number of cities both within India and overseas. The hierarchical structure of Air India includes a Managing Director who supervises the Deputy Managing Director and a group of Directors responsible for different functions and departments (Rani, 2013).

Air India's major functions are carried out by distinct departments. The operations department is responsible for flight operations and handles matters pertaining to navigation, training and development, and the licensing of air crew. The engineering department addresses maintenance, repair, and renovation of aircraft, as well as the manufacture of basic equipment required for the airplanes. The commercial department handles sales and revenues, business promotion and publicity, and matters related to public relations and advertising. The personnel department is responsible for recruitment, assessment, and hiring of employees, as well as training and maintaining staff records. The stores and procurement department manages all purchases and the maintenance of stores. There is also a separate tourism division, which is purposed to promote tourism (Rani, 2013).

Air India Limited employs a functional organizational structure in which staff are grouped on the basis of their specific skills and expertise. The company structures each of its departments with roles spanning sales, finance, and human resources. This structure is directly linked to the company's business objectives. For instance, businesses commonly pursue greater market share by winning customers from rivals in order to dominate the marketplace and generate greater revenue. At Air India, the sales function is responsible for this objective. Another business objective is maintaining employee satisfaction. Research has demonstrated a relationship between employee satisfaction and job performance (Fried et al., 2008), and there is also a direct correlation between job satisfaction and overall performance (Choo and Bowley, 2007). The human resources and personnel function of Air India is responsible for this objective. A further objective is growth and profitability — expanding the business through increased sales turnover, greater market share, more employment, increased investment, and similar indicators. This growth objective also benefits employees by providing job security (Boone and Kurtz, 2001). The finance department at Air India is responsible for this particular objective.

Air India's Organizational Structure and Functions

The management of Air India is headed by a Chairman and Managing Director (CMD), whose role is to oversee the day-to-day operations of the company. The CMD works under a Board of Directors, whose key role is to provide oversight of the CMD's activities and those of subordinates. The Board of Directors is reconstituted every two years by the Indian Government and is the highest governing body of Air India. The CMD functions as the chief executive of the company. The Board of Directors includes the following members:

1. Shri Satyendra Kumar Mishra — Joint Secretary
2. Mr. Vinod Hejmadi — Director, Finance
3. Shri Arun Kumar — Additional Secretary and Financial Advisor, MoCA
4. Dr. Ravindra Kumar Tyagi — Independent Director
5. Shri Syed Zafar Islam — Independent Director
6. Smt Daggubati Purandeswari — Independent Director
7. Shri Kumar Mangalam Birla — Independent Director (Air India, 2019)

Organizational structure is defined as the totality of the methods by which an organization divides its labor into distinct tasks and subtasks and then coordinates them (Koontz, 2010). Organizational design is the process of evaluating the strategic objectives and environmental demands of the organization and thereafter ascertaining the suitable organizational structure (Cichocki and Irwin, 2014). A diagrammatic representation of structure — such as an organizational chart — illustrates the interrelationships among units and lines of authority through categorized boxes and connecting lines. There ought to be a suitable match between an organization's structure and its overall strategy. When the strategy or objective of an organization is not linked to the most suitable structure and controls, a decline in performance results (Harris and Hartman, 2002). The organizational structure defines the official reporting relationships of the firm, as well as its procedures, controls, and decision-making processes. It also impacts how managers work and specifies the work to be done and how it should be carried out, thereby providing the stability an organization needs to implement its strategies and sustain its competitive advantages (Kaul, 2015).

According to Guerra (2017), the organizational structure of an airline depends on the size of the airline and on whether it is privately or publicly owned. Major airlines typically distribute workload responsibilities and accountability across different departments — commonly referred to as flight operations and maintenance, among others. An airline's management is frequently overseen using a board of directors and a chief executive officer. Most commercial airlines have a CEO responsible for administering the corporation's operations, and a board of directors headed by a chairman that regularly meets with the CEO and senior management (Guerra, 2017).

The success or failure of global organizations is significantly shaped by how effectively groups and teams work together. While individuals may be exceptionally capable, it is the team that ultimately delivers results. Experienced managers understand that individual and organizational success depends on how effectively they build well-functioning teams. Key factors include team composition and structure: after establishing the team's agenda and the type of teamwork required, managers must select members with the knowledge and competencies needed to fulfill that agenda. If the wrong members are selected, the team will struggle to succeed. Diversity is an important consideration in composition. More homogeneous teams may find it easier to build relationships, foster trust, and simplify communication, as well as to integrate efforts and work productively together. The design of the team's tasks should be inherently motivating to all members, enabling them to be accountable and receive timely feedback (Polzer, 2003). At Air India, teams are structured according to expertise and placed into relevant departments.

Organizations are customarily classified as small, medium, or large. Small businesses may be one-person enterprises or micro-businesses with fewer than five people. Small and medium enterprises (SMEs) constitute more than 90 percent of businesses in many countries, including India, yet employ less than 10 percent of all workers. Large businesses, at the other end of the scale, are national and multinational corporations that employ thousands of individuals and operate domestically or across multiple nations. The size of a business is commonly measured by number of employees and annual turnover — that is, the total value of sales generated over a year (Pride, Hughes, and Kapoor, 2014).

Air India is categorized as a large company and is India's premier airline as well as one of the country's most wide-ranging air service providers. The history of the company dates to 1932, when J.R.D. Tata — considered the pioneer of civil aviation in India and the founder of Air India — flew from Drigh Road Airport in Karachi in a small, single-engine de Havilland Puss Moth, traveling to Mumbai via Ahmedabad. The airline was initially known as Tata Airlines (Air India, 2019). At its inception, Tata Airlines was considerably small, comprising one Puss Moth, one Leopard Moth, one palm-thatched shed, one full-time pilot, one part-time engineer, and two apprentice mechanics. In 1946, Tata Airlines was transformed into a public company, giving rise to Air India (Air India, 2019). Two years later, Air India International Limited was established with the objective of facilitating international business operations. The airline began conducting international flights from Mumbai to London via Cairo and Geneva using a Lockheed Constellation aircraft on a weekly basis (Air India, 2019).

Conclusion

Air India's mechanistic and centralized organizational structure reflects the complexities inherent in a large, government-owned airline operating across domestic and international markets. The functional structure adopted by the airline links directly to its core business objectives — market share, employee satisfaction, and growth — while the centralized chain of command, extending from the Board of Directors through the CMD to individual departments, ensures formal control throughout the organization. However, this centralization also introduces challenges, particularly in managing cultural diversity and local responsiveness in international operations. Understanding the interrelationship between organizational functions and structure is therefore essential to evaluating both the strengths and the limitations of Air India's overall business performance.