Mumbai: India’s airlines, under pressure from some political parties against adopting large-scale retrenchment as a means to reduce operating costs, are preparing for a reduction in salaries among staff of at least around 10%.
Salary costs typically form about 15% of total operating costs of an Indian airline.
As part of the cost-cutting exerise, carriers are also initiating dialogue with co-pilots to reduce salaries and not renew contract of some foreign pilots and engineers.
Top managers at Jet Airways (India) Ltd and Kingfisher Airlines Ltd, two airlines that last week said they were entering an operational alliance, are considering a pay cut or deferment of certain components of their salaries for at least a year.
The country’s largest private airline, Jet Airways, plans to finalize salary revisions late next week, according a company executive. “While Jet’s top brass including senior management and vice presidents will take a pay cut or deferrment of pay for a year, the other staff may have to lose up to 15% of their salary for a year,” he said.
State-run National Aviation Co. of India Ltd or Nacil, that runs Air India, is also examining salary revision but that would be “a last option”, a senior executive said asking not to be named. Right now, “we are trying to cut cost by outsourcing, eliminating temporary posting, cutting perks and rationalizing hotel stays by crew,” he said.
Nacil last week said it was finalizing a voluntary leave-without-pay scheme for its 15,000 employees for between two and five years.
“We are reducing capacity but cannot cut on headcount. This will create excess staff in the company. To retain them, we have to look into revision of salary, increment and recruitment freeze,” said a Kingfisher executive. Low fare carrier SpiceJet Ltd has decided not to induct fresh cadet pilots for now.