The CEO of IndiGo, Ronojoy Dutta, has told his airline employees that they will be facing pay cuts and unpaid leaves in the next two months. The largest Indian airline is facing the brunt of this ongoing coronavirus pandemic. All commercial passenger flights across India were suspended on the 25th of March, and as of now, it is very uncertain when regular services will resume. IndiGo operates an all narrowbody fleet and holds a 47.5% domestic market share in India.
During March, the airline had already announced a plan to cut salaries of all the employees in April. IndiGo had initially said that it would cut 15% of wages of employees in non-leadership roles, while senior-vice presidents and above will face a 20% pay cut. However, IndiGo reversed its decision and paid full salaries to all its employees in April.
Pay cuts are imperative to survival
Before the start of a nationwide ban on flights, IndiGo had ruled the Indian airline industry for more than five years. The airline is not only the largest in India but also the largest low-cost carrier (LCC) in Asia in terms of fleet size and passengers carried. Since the demise of Jet Airways last year, IndiGo has moved to increase its dominance in the airline market further.
IndiGo operates an Airbus-dominant fleet, with 234 A320-family jets and 25 ATR 72s. It follows a typical leasing model, which helps it in obtaining sales on bulk orders and reduced maintenance costs. It still has more than 600 aircraft on order, which were to be delivered in the next few years.
However, the current situation is such that every airline is making changes with hopes of survival. Almost every airline in India has initiated pay cuts for its employees until flights resume.
GoAir has delayed April’s salaries and sent 60% of its employees on unpaid leaves. Meanwhile, Spicejet implemented pay cuts in March and will not pay most of its pilots for April and May. Air India staff saw a reduction in allowances, while Vistara also sent senior management on compulsory leave for up to four days.
In the Fiscal Year of 2020, the Indian aviation industry is expected to incur a loss of Rs 25,000 crore ($3.3 bn). Airlines will be worst affected with almost 70% of loss in revenue.
Ronojoy Dutta has said that pay cuts are significant as far as the survival of IndiGo is concerned. Moreover, the unpaid leave period won’t be long and will be between 1.5 to 5 days, depending on the position of the employee. This will make sure that IndiGo will retain a major part of its workforce, and employees won’t lose their jobs.
Dutta added that the pay cuts were imperative as the airline will grow with a “much lower capacity initially and gradually build up capacity in succeeding months.” As of now, there is no firm date as to when operations will resume.
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