Airline Pay Cuts in India Factual Report
Airline Pay Cuts in India Factual Report
by Utsa Mukherjee [MBA HR] Manager HR AirCrews Aviation Pvt Ltd
Domestic Airlines have sought urgent funding from govt to pay 50% staff salaries for next three months. Global Airlines body IATA has said that airlines would face $252 billion-loss of passenger revenue in 2020, which would be 44% lower than 2019 figures.
IndiGo had announced a pay cut of up to 25 per cent for its senior employees. CEO Ronojoy Dutta,Indigo will himself take a pay cut of 25 per cent.
Air India, has stated that it is cutting allowances of all employees by 10 per cent due to the "insurmountable dip" in revenues. Air India, on the other hand has imposed a 30-40% cut in cabin crew members’ allowance, payable to them when they have a layover between flights.
Aviation advisory firm CAPA India on Wednesday said consolidated losses are estimated to be in the range of $500-600 million for the quarter, excluding Air India.
Shares of SpiceJet crashed 55 per cent to Rs 37.85 during the past one month till March 18. SpiceJet Ltd would cut employee salaries by 10% to 30% in March as a nationwide lockdown to contain the spread of the coronavirus crimps travel demand. Chairman and Managing Director Ajay Singh, Spicejet had opted to take a 30% pay cut.
Senior management executives at low fare carrier GoAir are taking 50% pay cuts to control costs as the Coronavirus crisis cripples travel businesses in India and the world.GoAir has asked its staff to go on temporary rotational leave without pay and is terminating contracts of its Expat Pilots. Vistara Airlines cuts pay by about 10%.
To sustain businesses and save jobs, employers should consider the following – in order of priority:
First, reduce non-wage costs, and consider various measures to utilize and manage excess manpower.
Second, tap on government support to offset business and wage costs, and press on with business and workforce transformation.
Third, trim wage costs.
Fourth, if it is necessary to retrench workers as a last resort, ensure it is done in a responsible manner.
To ensure fair wage practices, the council offered the following guidelines:
1. Management should lead by example before giving staff a pay cut.
As pay cuts, especially those over an extended period, will affect employees’ livelihoods, employers should seek the consent of unions and engage employees before implementing such measures.
2. Consider all aspects of pay packages
When deciding on a fair pay cut, employers should take into account other factors of their regular packages like commission and overtime pay.
3. Consider a ‘flexible wage’ system
Tap on the monthly variable component (MVC) to adjust wages immediately depending on business performance. If you haven’t included the MVC in employees’ basic pay, consider treating any cuts of up to 10% as an MVC cut.
4. Employers should be clear about returning the amount cut during the recession through future pay rises or when the business recovers. Similarly, the MVC system needs to be discussed with existing employee unions.
5. Aim to pay the 13th month bonus or AWS(annual wage supplement).As far as possible, employers should aim to offer employees the annual wage supplement at the end of the year. This may support retention efforts and inspire loyalty through a difficult period, helping the business recover further.
6. Apply all pay cuts fairly
Local and foreign employees should receive the same treatment.
7. Soften impact on low-wage workers
Any wage adjustments may hit low-wage employees harder. Therefore the NWC strongly urged employers to give ‘special consideration’ to them – especially if they’re frontline workers.
One way to soften the blow is to use a ‘graduated’ approach: implement deeper cuts for leaders and higher-wage staff first to save on total wage costs.
If you are an employee dealing with situation following should be kept in mind:
· Optimistic thinking and staying positive always. It’s just a phase, soon the economic situation will revive.
· Focus on learning new technologies during this time.
· Try to increase your productivity which is very much possible working from home
· Try to stay in touch with your manager and colleagues.
Utsa Mukherjee [MBA HR]
AirCrews Aviation Pvt Ltd
Follow Utsa @Social Media