Eye on costs, Air India to opt for contract hiring

Written by Rhik Kundu | Mumbai | Updated: Apr 22 2014, 07:15am hrs
Contractual hirings will be the new norm at Air India. The carrier has put a freeze on hirings since it merged with Indian Airlines in 2007. Barring certain roles that require statutory compliance, policy-making decisions, managerial positions, tendering roles and other senior jobs, recruitment for most front-line staff, including pilots, cabin crew and non-skilled workers, will be based on contracts, sources said.

The decision to hire employees on contract was taken during the company's board meeting in May 2012. However, so far, no hiring has been done on that basis.

Air India, which expects deliveries of five Dreamliners between May and November, will need to induct cabin crew. Therefore, contractual appointments could be looked at. However, the tenure of the contracts hasn't been decided yet. We can have contracts for five years, extendable by another five years at a time, a source said. The airline is formulating a policy for this.

As of now, we are comfortable with the existing number of pilots and cabin crew, especially for Dreamliners. But we could hire cabin crew in the near future though it's highly unlikely that we will hire more pilots, an official added.

At the end of March, Air India had 23,400 employees compared to 25,000 a year ago. The number of pilots, cabin crew and security staff was 6,000, with pilots alone totalling 1,480. The airline had 3, 844 unskilled workers during this period.

Air India's wage bill, which was R3,100 crore during FY14, is expected to fall to around R2,900 crore in FY15, the official said.

Out of the airline's annual salary bill of R3,100 crore in FY14, R1,750 crore was spent on wages and allowances for licensed category employees such as pilots, cabin crew and engineers. With new cabin crew and pilot recruits slated to be on contract, the airline hopes to curtail unnecessary expenditure to bolster its bottomline.

We expect our staff strength to fall further by 1,500-1,700 by the end of FY15. Of these, 1,500 would retire. On an average, about 200 people resign or opt for VRS every year, he said. We expect this to continue till FY17.

Air India has over R39,000-crore debt, according to another official. While its long-term working loans are R17,000 crore, short-term working loans are about R4,000 crore. Aircraft-related debt is R18,000 crore.

It estimates a 44 % fall in its operating losses in 2013-14 to R3,900 crore on the back of several measures, staff streamlining being one of them.

Air India had about 15,000 employees and Indian Airlines 19,000 before they were merged in 2007. The employee strength has fallen by 26% to 25,000 during the past six years and is expected to touch 13,000 in the next decade. At present, 55% of the airline's staff is over 45 years and will retire in the next 10-15 years. This is slated to further bring down the wage bill.

The airline's recent proposal to slash allowances for pilots and other employees could be implemented by the end of this month if approved.