The sector might be one of the fastest growing in the world but most airlines have wafer-thin margins as deeply discounted fares and rise in aviation fuel prices along with staff costs take a toll on their overall profitability.
Jul 23, 2017 06:24 PM IST | Source: PTI
Slashing salaries is a "lesser evil" than pink slips in the domestic aviation sector, feel HR experts against the backdrop of a leading airline asking junior pilots to take ten days off every month as part of cost balancing effort.
While the domestic aviation sector has been registering double-digit growth continuously for over two years, Jet Airways' move to reduce junior pilots' pay and disinvestment proposal of Air India have thrown the spot light on the prevailing tough business conditions amid stiff competition. The sector might be one of the fastest growing in the world but most airlines have wafer-thin margins as deeply discounted fares and rise in aviation fuel prices along with staff costs take a toll on their overall profitability. Against the backdrop of Jet Airways' decision, HR experts opined that the move seems to be a case of "organisational stress" even though cost optimisation is a major concern for most of the sectors. Staffing firm TeamLease Services co-founder and executive vice president Rituparna Chakraborty said it is a specific situation of "organisational stress". "... between letting go off employees and salary cut of employees, any day, salary cut is a lesser evil," she told PTI, adding that it is important to take any such decision in a complete transparency and openness with the employees. Recently, Jet Airways asked many of its junior pilots to take 10 days off every month, a move that would result in up to 30 per cent pay cut, saying the move is aimed at "balancing our cost structure".
"As an interim measure, we shall be offering you a Lifestyle Work Pattern which entails 10 days block off per month with the appropriate remuneration... This will be effective from August 1, 2017," the airline said in a letter to many junior pilots. Executive search organisation GlobalHunt's Managing Director Sunil Goel said the number of jobs may not get impacted much in the aviation sector as it is constantly growing but "compensation and benefits will (see) an impact". "Since government is also talking about privatising the government control in Air India that will also bring a lot of job opportunities and realignment of work force," he added. Professional services firm Judge Group's Senior Vice President (Global Delivery) Abhishek Agarwal said slowdown in the industry is due to various macroeconomic factors. It is not the choice of employers because "they know that reduction in salaries may affect the performance of both employees and the business", he added. HR experts also believe that job scenario in the aviation sector would be good but there might not too many jobs at high premium. In June, domestic air traffic grew 20 per cent as carriers ferried 95.86 lakh passengers.
Many local carriers have also prepared ambitious expansion plans, as reflected in aircraft orders. Last month, aviation think tank CAPA said the order book of Indian carriers is expected to touch 1,123 aircraft in the coming weeks. Dominated by narrow-body planes, the order book would be the third largest for any country after the US and China, it had said in a report.