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Mumbai, Oct 17: On Friday afternoon, Jet Airways chairman Naresh Goyal, who last night made an emotional U-turn reinstating all the 800 staff sacked a day before, addressed these employees personally, and assured them there would be no salary cuts as reported in a section of the media. Apologising to them for the trouble caused to them, Goyal said new measures of cost cutting, other than lay-offs, would be implemented. All the 800 staff will resume work on Monday.
On Wednesday, the company had said it was slashing 1,900 jobs from its 13,000-strong workforce, to prevent the airline’s collapse from the current “exceptional” pressures, like soaring fuel prices and low passenger load factors. The retrenchment was to save the airline about Rs 60 crore a year and was to be followed by other cost-cutting measures such has returning leased aircraft and curtailing flights. Recently, aviation minister Praful Patel had also said that the airline sector was facing a severe crisis owing to heavy taxes on the aviation turbine fuel.
Jet’s decision to reverse its lay-off plans comes at a time when experts believe the aviation sector in India will post losses of Rs 4,000 crore this financial year. Air travel has been dipping by 30% of late as fares rose on higher fuel prices. Added to this has been the global financial crisis, which has cut down business travel. According to estimates, the sector is likely to post collective losses of around Rs 500 crore for the July-September financial quarter because of softening yields per passenger and record fuel prices in the initial days of the quarter. The decision to reinstate the staff will add to the airline’s woes, industry watchers say.
Goyal, while addressing shareholders at Jet Airways’ annual general meeting recently, had said that fuel is the most expensive component for Indian carriers as it is priced nearly 60% higher than the global market. “Once there is a correction in the crude oil price, and provided there is a uniform tax structure on importing ATF in India, the sector’s financial health will improve,” he had said. Competitors like state-owned Air India has chalked out a 30-point strategy to contain their costs after having reported losses of over Rs 2,000 crore for 2007-08. This week, Jet and Kingfisher Airlines had announced a wide working alliance to help them battle the slowing growth and high fuel costs.
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