Airlines go for cuts again as grounding may extend

Companies across the sector are restructuring payrolls of crew, cutting allowances, and extending leave without pay duration as they realise they will have more aircraft and employees compared to customers.

The aviation sector is going for a second round of cuts during the nationwide lockdown.

Domestic airlines such as GoAir and SpiceJet are doing away with allowances and reducing work hours as they plan to minimise operations.

With indications of a longer period of air transport grounding, many airlines are looking at further cuts in employee salary.

Companies across the sector are restructuring payrolls of crew, cutting allowances, and extending leave without pay duration as they realise they will have more aircraft and employees compared to customers.

Airlines have been grounded since March 23 as India announced a lockdown in order to fight the spread of coronavirus.

Airlines are planning to start with a limited number of flights once the lockdown is lifted, while working on steps to meet the expenses.

Passenger demand will be uncertain and revenue growth will be a challenge in the near future, forcing stressed airlines to negotiate with vendors and prune their pay roll expenses, company executives said.

For instance, low-cost airline SpiceJet has cut salary of its cabin crew by 30 per cent and has also made it harder to get promotion.

According to the new pay structure announced on Sunday and reviewed by Business Standard, the fixed salary will be paid for 25 hours of flying.

A source said earlier the fixed salary was paid for up to 50 hours of flying.

“The basic salary, which used to be around Rs 36,000 for a fixed 50 hours for the lowest slab, has come down to Rs 29,000.

"Additionally, the company will not pay layover allowance and airport standby allowance,” a person said.

Allowances for layover, airport standby and performance bonus form a large portion of the crew salary.

SpiceJet has also asked more than 250 crew members to go on leave without pay from June as it will operate only a fraction of the 110 aircraft in its fleet.

“As it would be limited operation to begin with, the requirement of pilots, crew and staff would be less.

"Even the requirement of flying cabin crew would be less in the next few months and thus the new pay structure would help save costs," an executive explained.

Sources said the Wadia Group-owned GoAir employees may be paid only 50 per cent salary from June to October and that will be increased to 75 per cent from November.

The airlines’ employees are already on leave without pay and the scheme could be extended beyond May 3.

The airline is looking to resume operations with 8-10 aircraft upon relaxation of lockdown.

Pre-lockdown, it operated over 300 flights daily with 45 aircraft and could start with only around 50 flights to begin with.

A GoAir spokesperson didn’t respond to a query from Business Standard.