Mumbai: Jet Airways pilots union, the National Aviator’s Guild, has asked its members not to accept the management’s decision for a salary cut of up to 25% for its staff, a move earlier decided by the airline to curb rising costs, a senior member of the union told Mint on Wednesday.
“We have decided to not to accept the management’s decision of salary cut," said the union member who didn’t want to be named.
“The management doesn’t seem to be in the favour of negotiating with the union on this issue," the person said, adding that pilots may resign en-masse if the salary cuts are forced on them.
Jet Airways management had earlier this week told its employees to take an up to 25% cut in their salaries as cost of operations for airlines has been increasing on the back of rising crude and a falling rupee.
Jet Airways has over 2,000 pilots in its rolls. About 80% of the pilots are affiliated with the union, the National Aviator’s Guild, the senior union member said.
“This move could backfire on the airline as senior pilots and captains are in demand in the industry and many may leave the airline if the management decides to stick with its salary cut plans," said a senior pilot with Jet Airways, who didn’t want to be named.
Key members of management of Jet Airways, including chairman Naresh Goyal, chief executive Vinay Dube, deputy chief executive Amit Aggarwal, and chief people officer Rahul Taneja had earlier this week meet senior employees including pilots to convey their decision on salary cuts.
According to sources with the knowledge of the matter, Jet Airways management conveyed its staff that it is forced to take the extreme step (of salary cut) as the airline is in bad financial shape and it has revenue to run for 60 days only.
The management, according to sources, asked the pilots to take a salary cut for the next 24 months. The airline has however waived off seven-year bond for first officers that they were required to sign before joining the airline.
The management also told its staff that the airline’s subsidiary JetLite will continue to run as a separate entity, running its operations with five aircraft.
The airline management blamed unexpected fuel prices increase, eroding market share and lack of expansion done by the airline in the last six years as the cause of its current debacle, said sources.
In all likelihood, several ground staff and cabin crew could lose their jobs in the coming days, said a source, who didn’t want to be named.
A Jet Airways spokesperson said in a message that Jet Airways has been implementing several measures to help it reduce cost as well as realise higher revenues, for desired business efficiencies, in line with its stated focus of creating a healthier and a more resilient business.
“Some of these include sales and distribution, payroll, and maintenance, among many others. As part of this approach, the airline management is in dialogue with key stakeholders to enlist their full support and cooperation for realising necessary savings across all parts of the business," the spokesperson said.
“The airline is committed to create a growth-oriented, sustainable future, and a revitalized guest experience armed with the addition of 225 B737 MAX fuel-efficient aircraft which will be inducted in its fleet over the next decade, and of which, 11 are slated to join within this financial year," the spokesperson said.
“The airline refutes and strongly condemns the speculative comments of/from certain vested interests, who are making deliberate attempts to undermine Jet Airways’ transformation efforts," the spokesperson added.
Indian airlines have been suffering from rising crude oil price and a depreciating rupee especially against the dollar, as a large number of payments of airlines are dollar denominated.
The airline’s plan to cut salaries is currently limited to leadership roles in a company of 16,000 employees, said a Jet Airways official under condition of anonymity
More steps and plans are underway to cut costs and make the airline more productive will be rolled out in the course of coming months, the person added.
“Payroll is an important cost item for any business and may form part of a larger strategy to streamline expenditure. The industry may be growing but the market is extremely price sensitive and any increase in fare could backfire in the form of market share loss," said the person adding that about two dozen of cost cut measures being implemented spans across operations.
Jet fuel price has surged 44% to ₹ 69,090 a kilolitre in Delhi on 1 August from ₹ 48,110 same time a year ago.