The current financial crunch being faced by Air India needs to be viewed in the global context as the aviation industry worldwide has been passing through turbulent times. All airlines in India and abroad have been experiencing low fares, poor load factors, drop in premium travel, decline in cargo loads and low yields due to market conditions created by global recession. To tide over the situation, all airlines have been forced to take harsh and unpleasant decisions like curtailment of capacity, withdrawal of flights from certain routes, retrenching staff, reducing emoluments, etc.. This has been stated by Mr Arvind Jadhav, Chairman & Managing Director, Air India, in a communication to employees today.
Mr Jadhav said that Air India employees have thus far not felt the impact of problems confronting the aviation industry because employees have been receiving their wages/salary and PLI month after month even when people in the industry in India and abroad have lost jobs or seen their emoluments take a dip. We should therefore consider ourselves fortunate that we have been insulated from the adverse impact of the economic meltdown so far, Mr Arvind Jadhav, Chairman, Air India, added in his message to the employees.
He has also drawn their attention to steps taken by other airlines worldwide to lessen the impact of the current crisis and how their employees have been affected:
Singapore Airlines : Pilots have agreed to one day’s compulsory unpaid leave per month; Similarly Managers and Administrative Officers are taking one day a month either as unpaid leave or from their annual leave. Two Unions – SIA Staff Union and the airlines Executive Staff Union have accepted the Shorter Work Month Scheme. 50 Cargo Pilots are on unpaid leave;
British Airways: The airline has frozen pay and cut around 2,500 jobs since last year. BA has also axed 500 senior managers in December 2008. The airline is seeking 4000 voluntary redundancies, besides asking the employees to work for free for one month.
Cathay Pacific : The airline has asked all its 17,000 employees to take up to 4 weeks of unpaid leave in the coming 12 months while simultaneously reducing passenger and cargo capacity by 8 and 11 per cent respectively;
Japan Airlines has announced plans to cut 1,200 jobs by March 2010. The airline is also minimizing refilling of posts by improving productivity.
American Airlines will cut up to 1,600 positions by August 2009 and reduce capacity by 7.5 per cent;
Delta Airlines is planning to eliminate jobs besides cutting capacity due to recession, decreased demand and rising oil prices. Delta has already cut its workforce by 6.5 per cent since February 2008
AF – KLM are planning to cut between 2,500-3,000 jobs in the next two financial years. The airlines have cut 2,400 jobs in the financial year ending March 31,
Qantas will cut five per cent of its workforce including 500 additional Management positions and up to 1250 full time operational position in Australia;
In India, Jet Airways has put a freeze on recruitment and reduced benefit of Executive and Management salaries. The airline has terminated 50 employees on contract and 60 probationary cabin crew. Salaries have been reduced for other employees;
Mr Jadhav has further stated that as loans from financial institutions at high rates of interest cannot be availed of endlessly to meet working capital expenditure, the time has come for us to face the moment of truth in Air India as well. Air India has not resorted to retrenchment or layoff of staff till date. Air India has only decided to defer the salary and PLI for the month of June 2009 by 15 days. Executives at the level of General Manager and above have been requested to voluntarily forego their salary/allowances/PLI for the month of July 2009.
Air India has approached the Government of India, as the owners of our airline, for infusion of funds both by way of equity and soft loans. We are hopeful that the Government of India will extend a helping hand soon. However, as we have seen in the United States, financial help from the Government comes with conditions attached. Two major newspapers, The Times of India and Business Standard have editorially counselled the Government of India to go for disinvestment/privatisation of Air India instead of offering a bail-out package. We need to be conscious of the impact that disinvestment/privatization can have on our lives, should this materialize.
This is an hour of crisis for all of us. It is a fight for survival. The survival of our own Airline. I am looking for every single employee of our airline to rise to the challenge and demonstrate that we not only have more experience in running an airline as compared to others but also have the ability to overcome the crisis and emerge with flying colours. The experience and commitment to the Company will be of no gain, if we cannot demonstrate this. We have to show our critics that all of us can make Air India fly high again!
Meanwhile, Air India’s Human Resources Department has initiated a dialogue with the Unions to apprise them of the difficult financial situation confronting the airline industry in general and Air India in particular. While a meeting with some unions was held yesterday, another meeting with unions was held in Delhi today.
(c) Centre for Asia Pacific Aviation. Date posted: 22-Jun-09
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Rise to the challenge and make Air India fly high again 
