Mumbai: In a bid to cut costs and stay in the skies, beleaguered domestic airlines are finally paring the salaries of pilots and engineers, who were highly prized because there weren’t enough of them when many new private carriers started operations a few years ago. The private airlines are negotiating with pilots and engineers to lower their wages by 20-25%.
Surplus commodity? Pilots’ salaries are under the scanner as airlines seek to cut costs. Hemant Mishra / Mint
Leading West Asian carriers are sensing this as an opportunity to tap Indian pilots and engineers.
National Aviation Co. of India Ltd, or Nacil, that runs Air India, however, has no plans to lower pilots’ salaries. In fact, they have got a marginal raise following the revision of public sector salary following the Sixth Pay Commission recommendations.
The domestic private carriers are trying to cut costs as they are expected to post a combined loss of $2 billion (around Rs10,000 crore) in this fiscal due to overcapacity and high jet fuel charges. Besides, pilots, especially the first officers or co-pilots, are increasingly a becoming surplus commodity as the carriers are cancelling or deferring the delivery of new aircraft and pulling out existing flights. A plane is steered by a commander and a co-pilot.
“The private airlines are renegotiating with pilots for cutting their salaries by 25%. They have, in fact, already started slashing allowances and other benefits,” said a senior pilot, who did not want to be identified considering the sensitivity of the issue. This pilot works with a leading private airline and is involved in the wage negotiations with his management.
Executives from three different airlines confirmed the development on condition of anonymity. “We are talking to them (the pilots and engineers) for a cut. If not a direct wage cut, we are trying to abolish some allowances,” one executive said.
Salaries of senior captains were in the range of Rs7-7.5 lakh a month in 2007-08 while the not-so-experienced captains used to draw Rs4.25-4.50 lakh. Salaries of co-pilots, or first officers, used to be Rs1.9-2 lakh a month.
India’s second largest private carrier Kingfisher Airlines Ltd was the first to cut pilots’ salaries in January, following which pilots of this carrier plan to form a union, a movement which no management endorses. The reduction in salary is around 15-20%.
A Kingfisher Airlines spokesperson said the carrier did not cut the pilots’ salary but brought it under a uniform structure of productivity-linked compensation, which is the international norm. “We cannot have two sets of pay scales. Deccan Aviation Ltd’s pilots were paid under a productivity-linked compensation structure. In fact, pilots would be able to get more money through this scheme,” he said. Kingfisher acquired Deccan Aviation, India’s first low-fare carrier, two years ago and subsequently merged it with itself.
Kingfisher Airlines is also in the process of phasing out expatriate pilots and engineers to cut down costs. The expatriate pilots on an average earn 40% more than the local ones.
None of the domestic carriers is keen on renewing the contract of foreign pilots as per the mandate by the ministry of civil aviation to phase them out by 2010. The ministry has laid down this norm to create more job opportunities for Indian pilots.
There are around 3,500 Indian pilots and 550 foreign pilots.
“Airlines are trying to cut allowances to Indian pilots, not foreign pilots. The phase out of foreign pilots will take longer than estimated,” said a senior pilot with Jet Airways (India) Ltd, the country’s largest private carrier.
Jet Airways had earlier suggested that pilots and engineers should take a pay cut to pare costs but the proposal was withdrawn in the face of stiff resistance from pilots. “The airline management is still in talks to renegotiate salaries,” the same Jet pilot said.
In mid-February, Sanjay Aggarwal, chief executive officer, SpiceJet Ltd, a low-fare carrier based out of Delhi, told Mint that he was not negotiating the salary structure with pilots but “if other carriers are doing that, certainly SpiceJet will not be left alone.”
A senior executive with a another low-fare carrier, also based out of Delhi, said though pilots are sensitive commodities to touch, “salaries are coming down from the astronomical heights”.
“With industry phasing out foreign pilots, there is not much surplus of commanders or captains. But some of the fresh co-pilots will turn surplus as airlines are deferring or delaying the delivery of airplanes,” he said.
Kingfisher Airlines has recently sold its three widebodied A340 planes to a foreign carrier and is looking to sell the remaining two. Jet Airways has leased out nine wide-bodied planes, including A330s and B777s.
Qatar Airways, Oman Air SAOC, Emirate Airlines, Etihad Airways and Air Arabia PJSC are some of the airlines that are aggressively hiring pilots and engineers in India.
Qatar Airways had two road shows in New Delhi and Mumbai for fresh recruitment. “Over 250 pilots have applied to Qatar and at least 100 of them have been shortlisted. The second round of interviews is progressing in Doha. But the six-month notice period is going to be an issue for Indian pilots,” said a pilot with Nacil who did not want to be identified. Under the norms, an Indian pilot is required to give a six-month notice to his employer if he wants to quit.
“Korea and China are also hiring. But Middle East is the best option for Indian pilots, considering the geographical proximity though Korea and China offer good money,” said another pilot with a leading private carrier.