Air India is expected to soon announce more steps to cut wage bill
It's a crunch time at Air India, even if one goes by the troubled past of the national carrier.
After it emerged that the airline's board has enabled its Chairman and Managing Director Rajiv Bansal to send employees on leave without pay for over five years, the company may now take the next step - a steep pay cut.
"Salaries are going to be reduced by 50 percent, or more. The letter may come in a few days," a senior executive said.
This will be the second salary cut, after the first trim of 10 percent in April. Pilots had voiced against the cut, saying that they were the most impacted already. Their grouse has been against the cut in their allowances, which make up for 70 percent of the pay.
The cut was valid for three months, and now it could be time for a fresh one. "While at that time the senior management was exempt, as allowances make up for a small part of their salary, this time too the buzz is that they will escape much of the brunt. Most impacted will be pilots," said the senior executive quoted above.
Salary cuts and leave without pay - five years is unprecedented in the aviation sector - are some of the few steps that Air India has taken over the last couple of months to reduce its wage bill. The airline had earlier given employees, excluding pilots, option to work less at 60 percent of their pay. There are also talks to reduce the guaranteed flying hours, according to which the flying allowances are paid.
Ironically, point out industry executives, Air India has been among the most aggressive to reduce its employee cost even though it may have been the least impacted due to the COVID-19 disruption, which had led to a suspension in domestic and international flights.
The national carrier had a monopoly over the initial phases of the Vande Bharat Mission, and it was only in later stages that private airlines were brought in.
The wage bill
The steps to reduce wage bills has brought the spotlight on Air India's workforce. Despite attempts to reduce the workforce, the carrier continues to have about 20,000 employees, half of them permanent.
On the other hand, IndiGo, the country's largest airline has a workforce of 25,000. But its employee per aircraft ratio is much lower at just above 100. The same for Air India is about 115 employees per aircraft.
While Air India has about 170 aircraft in its fleet, IndiGo has 245. The national carrier's annual wage bill amounts to about Rs 2,700 crore, and that of IndiGo is over Rs 3,000 crore.
Pilots in Air India fear that they may be forced to bear the brunt of the cost-cutting exercise. In a letter to Chairman Bansal on July 6, the pilot unions - ICPA and IPG - pointed out that the airline has excessive staff in some of its departments, including in HR and Finance.
Though the mail didn't give a name, it said that a 'leading airline' - pointing to IndiGo - has 250 employees in the finance department and 130 in HR. But Air India's HR and Finance departments have 1,600 people."It is prudent for Air India and MoCA (Ministry of Civil Aviation) to take this cognizance of this excess manpower to trim costs as our aircraft stand under-utilised."