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More job losses in the air as domestic carriers cut capacity

More job losses in the air as domestic carriers cut capacity
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First Published: Sun, May 03 2009. 06 23 PM IST
Updated: Mon, May 04 2009. 09 30 AM IST
Mumbai: At least 2,500 airline employees are expected to lose their jobs in next four-six months from domestic carriers that are set to post a combined loss of $2 billion in 2008-09, according to airline executives and analysts. This is about 8% of the total workforce employed by private carriers.
Wiser with the Jet Airways (India) Ltd’s experience, domestic carriers are not going for large-scale retrenchments at one go. Instead, they are taking employees off payrolls in phases and small lots.
Jet Airways had planned to sack as many as 1,900 cabin crew in 2008 but had to abandon the plan in the face of stiff political resistance.
Retrenchment is only one leg of the cost-cutting exercise that domestic carriers are undertaking. They are also paring pay packets of existing employees, yet again.
The trigger for the retrenchment is a fresh round of capacity reduction of up to 20%, starting June. This is on top of the 15% cut in flights that domestic carriers had effected in mid-2008 in the wake of rising cost of aviation turbine fuel and mounting losses.
To add to their woes, India’s airlines posted an at least 10% decline in passenger traffic during the fiscal ended March, hit by a slowing economy and high fares.
Jet Airways has handed over pink slips to about three dozens executives who are at least 60 years old. It has also terminated some of the cabin crew on probation and other management staff and shut its offices in Singapore, Kuala Lumpur and Bangkok.
“The airline will have to take more of these kind of measures. We have already implemented salary cuts for graded staff and management cadre of around 5-25%. Some of the employees, especially the pilots, are not agreeing to this,” said a Jet executive who did not want to be named. Jet Airways management is still negotiating with its pilots on this.
A Jet Airways spokeswoman said the carrier is constantly undertaking measures to streamline costs to improve the financial health of the firm in the wake of the challenging global economic environment.
“The airline has issued notices of termination to identified employees on contract who have superannuated,” she said, without divulging details.
Jet’s rival Kingfisher Airlines Ltd recently rationalized salaries of pilots by migrating to a remuneration structure linked to flying hours. It has also retrenched 300 employees, including foreign nationals who were drawing huge salaries. This has translated into a Rs10 crore annual saving for Kingfisher.
“We will review the need of further trimming the workforce based on the proposed capacity reduction,” said a senior executive with Kingfisher Airlines. He did not want to be identified, considering the sensitivity of the issue.
At least a dozen Kingfisher Airlines pilots are slated to leave the airline, following the change in their salary structure. Directorate General of Civil Aviation, or DGCA, the aviation regulator, had given the go-ahead to these pilots’ plan to resign and relaxed the condition of six-month notice to employer. Under normal circumstances, a pilot who wants to resign is required to give a six-month notice to the employer, under DGCA norms.
“You will see more technical staff quitting Indian carriers because of reduction in the remuneration structure. Since airlines are cutting number of flights, there is no scope for increase in salaries for engineers and pilots,” said another Kingfisher Airlines executive.
State-owned National Aviation Co. of India Ltd, or Nacil, that runs Air India, has also put recruitments on freeze.
Since it is a government-run company, Nacil is not in a position to retrench employees but one of its executives said extending retired officers’ tenure will be restricted only in the operational areas with stringent terms and conditions. Traditionally, Nacil extends service of retired employees in key operational areas to capitalize on their experience.
Low-fare carriers such as SpiceJet Ltd and InterGlobe Aviation Pvt. Ltd are, on the other hand, hiring selectively even as GoAirlines (India) Pvt. Ltd and Paramount Airways Ltd have frozen recruitments. GoAirlines, too, is a low-fare carrier while Paramount is a full-service airline.
“If all airlines cut capacity, they will have to trim their workforce by 2,000-2,500. In the current situation, full-service carriers will have to take 15-20 planes out of operations and should implement strict cost-cutting measures,” said Kapil Kaul, chief executive (Indian subcontinent and Middle East) at Centre for Asia Pacific Aviation, an international aviation consulting company.
According to him, one way of tackling this crisis could be offering long leave to the employees since the airlines had invested heavily in training them. “The excess staff can be absorbed during the upturn and the airlines would not need to reinvest in training.”
Incidentally, Nacil is doing this.
West Asian carriers such as Qatar Airways, Oman Air (SAOC), Emirates Airlines, Etihad Airways and Air Arabia PJSC are hiring Indian pilots and engineers as they are expanding despite the global economic slowdown.
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First Published: Sun, May 03 2009. 06 23 PM IST