SpiceJet has announced that it will not pay its pilots for April and May due to the current circumstances. Pilots flying cargo flights will be paid per ‘block hours flown’, but will not receive their regular salary. SpiceJet is the first airline to not pay its pilots entirely, as competitors opt for pay cuts and voluntary leave instead.
Drastic measures to survive
SpiceJet’s drastic steps come as it struggles to survive. The airline, in March, instituted a pay cut of up to 30% for its senior and middle-management, as well as mandatory leave for cabin crew. The decision to not pay pilots for April and May is by far the most aggressive move made by any airline to preserve cash and could point to further cuts in the coming months. SpiceJet has recently made the news due to its financial troubles, with lessors even considering repossessing planes.
However, SpiceJet will still partially compensate pilots. While regular salaries have been axed, the airline plans to offer all of its pilots flight hours in the coming weeks. The airline plans to have 50% of its fleet in the air soon, paying pilots for any time spent flying. It is yet to be seen when this plan will go into effect and what percentage of salaries pilots will receive.
Aviation continues to struggle
India has banned all commercial flights until at least May 3rd as the number of coronavirus cases continues to grow. However, airlines are preparing for a resumption of domestic flights in early June. The complete flight ban, coupled with no bailout from the government, has forced airlines into survival mode.
Measures taken by airlines are quite representative of their financial state. IndiGo, the country’s largest airline, has paid full salaries for its entire staff for April, with only senior executives taking pay cuts. GoAir and SpiceJet have put their staff on unpaid leave and had to cancel or defer staff salaries. Meanwhile, Air India and Vistara have also cut salaries but will likely survive thanks to strong financial backing.
While SpiceJet’s measures are surprising, the coming weeks could see more such moves as airlines continue to burn cash with few revenue sources. Airlines have also refrained from laying off staff, opting for salary reduction and unpaid leave instead. This could be based on a belief that the aviation market will rebound soon, with airlines hoping for a v-shaped recovery.
There is no accurate way to predict when, or how, the market will recover. However, data from China, the country first to recover, suggests a strong rebound of flight capacity, but with passenger loads remaining low. If India does follow a similar track, we could see airlines reverse these extreme measures soon.
What do you think of SpiceJet’s decision to not pay regular salaries? How will Indian aviation look after the coronavirus? Let us know in the comments below.