The wage bill of India?s third largest passenger carrier by market share SpiceJet is set to rise by anywhere between R100 crore and R150 crore a year as it will need to hire between 20 and 25 foreign pilots in fiscal 2013 to fly five new 80-seater Bombardier planes, two people familiar with recruitments said.
Last year, the airline, owned by media baron Kalanithi Maran, purchased 10 Bombardier planes and hired 43 foreign pilots. Until March 31, the airline had 88 foreign pilots against 45 in the previous year. Its employee cost for the 2012 fiscal rose by 65% to R402 crore. Its rival Jet Airways, with a larger fleet, paid R1,774 crore, a rise of 17% y-o-y. Both airlines spend around 10% of their annual revenues on staff costs.
?This year, the airline will need to hire more expat pilots,? said one of the two persons with direct knowledge of the development. ?Five more deliveries of Bombardier Q400s will be taken this fiscal, which will need anywhere between 20 and 25 more pilots.? An airline spokesperson declined to comment.
SpiceJet is the first and only Indian carrier to fly the Canadian company Bombardier?s aircraft. Until now, there are no Indian commanders qualified to fly the Bomardier Q400. In 2010, the low-cost airline paid $450 million for purchase of 15 Bombardier aircraft to expand to smaller cities and towns. The airline has an option to purchase 15 more aircraft.
Expat pilots are paid in foreign currency, double that of an Indian pilot and this pinches the airline even more as the rupee?s weakness continues.
?My estimates are that the wage bill will go up by another R100-150 crore because of the new inductions,? said another person in the know of the development. ?Along with the expat pilots, the airline is also training the Indian pilots on its rolls as they would soon need to replace the expats and, hence, their remuneration will go up.?
?However, an increase in employee cost could be offset if the fuel import plans take off,? the person added.
The government has given time until calendar 2013 to replace all expat pilots. Most airlines are training their Indian staff to replace expat pilots.
The only profitable airline in the country, IndiGo, has tied up with New Zealand?s CTC Aviation to train its pilots. ?In line with this expansion, the company will be upgrading carefully selected first officers to command positions,? the Delhi-based low-cost carrier said.
Analysts are, however, still bullish on SpiceJet. ?Focus on operational efficiency and growth with new management will help SpiceJet to further grow going ahead,? said Vikram Suryavanshi, an analyst with Antique Stock Broking. ?It managed to outperform the industry with 24% growth in number of passengers as compared with industry growth of 16% during the 2012 fiscal?s fourth quarter.?