Air India cuts employees’ allowances by up to half, in another cost cutting steps in just a week

Air India today announced to cut employee allowances by up to 50 per cent.

Air India has cut employee allowances by up to 50 per cent, extending the cost-cutting measures in less than a week, CNBC-TV18 reported. The airline will also pay the flying allowances to pilots as per the actual flying hours in a month, the report said. The revised allowances will come into effect from April 1, 2020. Air India’s decision to cut the allowances have come after it announced to send many employees on leave without pay for as long as five years. The airline is burdened with heavy debt, on which the grounding of planes due to travel restrictions has hammered another nail. 

The aviation sector is one of the areas which has felt the maximum impact of the nationwide lockdown. With all planes grounded for nearly two months, the airlines struggled to pay even the maintenance cost and salaries of employees. Earlier this week, airline company Indigo had announced to lay off 10 per cent of its employees in order to maintain its operating expenses. 

Also Read: ‘Indigo’s decision to lay off employees just a beginning, one or more airline failures inevitable’

Aviation consulting firm CAPA India had said that Indigo’s move to lay off 10 per cent of its employees is the beginning of a painful process for Indian aviation as things start to unravel from the impact of coronavirus. CAPA India had added that it will be impossible to survive this crisis without a strong balance sheet. The consulting firm had also warned that industry conditions are such that one or more airline failures appear inevitable. 

Decisions related to cost-cutting have become regular in the last week and today’s decision is the fourth such decision in a row. Air India is already scrutinising its employees upon factors like suitability, efficiency, competence, quality of performance, the health of the employee, redundancy, etc, to send them on unpaid leave. With the airlines industry already facing a strong headwind emerging from their balance sheets, the permission for limited operations is set to restrict the industry from taking off for some more time.