Govt may defer Air India pay cuts till after Commonwealth Games

The government is thinking of deferring any decision on wage cuts in Air India until after the Commonwealth Games.

In its attempt to streamline the ailing carrier’s finances, it had suggested steep wage cuts for senior employees last year.

But this resulted in pilots striking work, crippling operations and prompting the Prime Minister to step in.

Now, despite the airline management suggesting many stiff cost savings measures, there is a general consensus that any “turbulent” decisions such as wage cuts be deferred until after the Commonwealth Games in October.

“It is true that AI’s financial situation is precarious and we are implementing many tough measures to get the balance sheet back to black. But any turbulent decisions such as wage cuts will now be deferred until after the Games. This is the general thinking now,” highly placed official sources said.

Already, some AI employee unions have threatened to strike over alleged delayed payment of May salaries amid concerns over the “image” of the carrier. Though passenger load factors have been improving, officials in the Ministry of Civil Aviation feel the airline’s image  has not improved.

Sources pointed out that maximum savings from any wage cuts at various percentages would work out to be “just about Rs 600 crore. This is not significant enough to take up such a contentious issue at this stage. It is better to defer this matter.”

In the earlier attempt, the airline’s management had proposed steep reduction in performance linked incentives (PLIs) of employees - PLI payout accounts for almost half of the airline’s total salary bill of Rs 3,100 crore per annum.

The government has deferred deliberations on wage cuts after criticism by the parliamentary committee on public sector enterprises (Copu) which tabled its report in Parliament recently.

Copu had said manpower-related costs accounted for only 16.2% of AI’s cost structure.

“More than extra emphasis has been given to rationalising manpower cost. The structure shows that around 34% of cost is from fuel, and manpower cost has, in fact, gone down over the previous year to 16.2%. So, by rationalising on manpower cost, how much can you optimise when in an operational company like Nacil, manpower is a crucial element in keeping your planes flying?”