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).

Air India's Organizational Structure and Functions

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.

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)

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.

References

Air India. (2019). Board of Directors. Retrieved from

Aquinas, P. G. (2008). Organization structure and design. Excel Books India.

Burns, T., & Stalker, G. M. (2005). Mechanistic and organic systems. Organizational Behavior, 2, 214–225.

Choo, S., & Bowley, C. (2007). Using training and development to affect job satisfaction. Journal of Small Business and Enterprise Development, 14(2), 339–352.

Cichocki, P., & Irwin, C. (2014). Organization design: A guide to building effective organizations. Kogan Page Publishers.

Civil Aviation. (2019). About Us: Organizational Setup. Retrieved from

Cunliffe, A. L. (2008). Organization theory. Sage.

Cunliffe, A. L., & Luhman, J. T. (2012). Key concepts in organization theory. Sage.

Daft, R. L. (2015). Organization theory and design. Cengage Learning.

Fried, Y., Shirom, A., Gilboa, S., & Cooper, C. L. (2008). The mediating effects of job satisfaction and propensity to leave on role stress–job performance relationships: Combining meta-analysis and structural equation modeling. International Journal of Stress Management, 15(4), 305–328.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Guerra, T. (2017). Airline organization structure. Biz Fluent. Retrieved from https://bizfluent.com/about-7219171-airline-organization-structure.html

Harris, O. J., & Hartman, S. J. (2002). Organizational behaviors. Sage.

Hatch, M. J. (1997). Organizational social structure. In Organization theory (pp. 161–199). Oxford University Press.

Jones, G. R. (2013). Organizational theory, design, and change. Pearson.

Karanam, S. (2012). Case study: Air India. Scribd. Retrieved from https://www.scribd.com/doc/104015916/Case-Study-Air-India

Kaul, V. K. (2015). Principles and practices of management. Vikas Publishing House.

Koontz, H. (2010). Essentials of management. Tata McGraw-Hill Education.

Mukaila, A. (2015). Nature, scope and purpose of business. ResearchGate.

Polzer, J. T. (2003). Leading teams. Harvard Business School.

Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2014). Foundations of business. Cengage Learning.

Rani, P. (2013). Organizational structure of Air India. Scribd. Retrieved from https://www.scribd.com/doc/123514531/Organizational-Structure-of-Air-India

Robbins, S. P. (1990). Organization theory: Structure, design and applications (3rd ed.). Prentice Hall.

Sharma, M. K., & Singh, M. K. (2015). Impact of changing socio-economic environment on business in India. International Journal, 21.

Sherman, F., & Thompson, J. (2019). What is the relationship between organizational functions and organizational structure? Chron. Retrieved from https://smallbusiness.chron.com/relationship-between-organizational-functions-organizational-structure-18571.html

Shellar, M. (2018). Air India Limited: Project report. International Journal of Engineering Research and Management, 5(6), 2349–2058.

Stokes, A. (2005). A study in the relationships between organizational structures and public relations practitioner roles. Scholar Commons.

Vitez, O., & Baligh, H. H. (2011). Organization structures: Theory and design, analysis and prescription. Springer.