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Coronavirus impact: Pay-cuts, leave without pay, lower budgets -- airlines go all out to limit damage

While Singapore Airlines CEO has taken a pay cut, others have asked staff to go on leave

March 02, 2020 / 02:11 PM IST

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The top management taking a pay cut, staff having been asked to go on leave without pay and budgets being lowered...airlines around the world are looking at ways to lessen the blow from a dramatic slump in demand due to the coronavirus outbreak, with some terming it as the worst in 12 years.

Airlines have been hit by the speed with which the damage has come about. Many of them, including Singapore Airlines, Emirates and Lufthansa, have written to employees or made announcements on the adjustments needed.

"The aviation industry globally is facing an unprecedented impending crisis. Not since the 2008 recession has aviation seen such a downturn. Almost all international airlines are already operating at reduced and unsustainable capacities," says a flying officer who goes by the Twitter handle @FlyingMariner.

"Recovery now depends not just on a cure for the virus but also on the global economic situation, which is already in an uncontrollable tailspin. Indicative that the worst is yet to come," the officer added.


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While the International Air Transport Association, in February, estimated the loss for the aviation industry at $30 billion, this may further increase as the virus has now spread much beyond China. More than 3,000 people have died and 90,000 have been infected.

The infection is now spreading faster outside China, with South Korea reporting 400 more cases in a day.

The cuts

In India, Air India and IndiGo have cancelled flights to China. Others like Vistara and GoAir have been forced to curtail operations in countries that may be at risk of the virus.

But, overall, the disruption in China may not dent Indian carriers as much as their international peers, many of which have asked a section of their employees to go on leave without pay.

Vietnam Airlines, for instance, has asked all its expatriate pilots flying A321 planes to go on a leave of 15 days. The only solace for the pilots is the annual bonus that would come with the February salary.

Emirates, too, has offered voluntary unpaid leave to its employees. But, to lessen the blow, the Dubai-based airline has assured employees that they will keep accommodation and allowances that cover education and medical costs.

The top management at Singapore Airlines has set an example for the rest of the staff by taking a pay-cut. Announcing actions to reduce manpower costs, CEO Goh Choon Phong said that he will take a pay-cut of 15 percent. The whole board of the airline is also taking a similar cut.

"Tough decisions will be needed along the way. Management will take the lead, and all of us must be prepared to make sacrifices. Our priority is to save jobs," he said.

The slump has also pushed airlines to cancel training for new joinees and put a freeze on recruitment. German carrier Lufthansa said that not all planned flight attendant and station personnel training courses would be carried out.

"For the time being, the participants of the courses that are already in progress will not be hired," the airline said.

It added that it has lowered 'budget for material costs by 20 percent’.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Mar 2, 2020 01:06 pm

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