Govt’s wish: IndiGo rolls back April pay cut for most staff

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Published: April 24, 2020 5:20 AM

One reason for it could be that IndiGo, with its free cash of over Rs 9,400 crore as on December 31, is in a better position than most peers to tide over the crisis.

On reason for it could be that IndiGo, with its free cash of over Rs 9,400 crore as on December 31, is in a better position than most peers to tide over the crisis.

Low-cost airline, IndiGo on Thursday rolled back the salary cuts for April that it had announced earlier in what it called in “deference to the government’s wishes”. However, IndiGo CEO Ronojoy Dutta, who informed the same to employees via an e-mail, said that since executive committee members and senior vice presidents have volunteered to take pay cut this month, the rollback won’t apply to them.

“For everyone else, you can expect your April salaries to be paid without the pay cuts,” Dutta said in the mail.

“In deference to our government’s wishes of not reducing pay during the lockdown, we have decided not to implement the previously announced pay cuts during the month of April,” he said.

The company had announced on March 19 that the airline was instituting pay cuts for senior employees and he would himself take the highest cut of 25% amid the Covid-19 pandemic that has hit the aviation industry hard.

“I am personally taking a 25% pay cut, SVPs (senior vice presidents) and above are taking 20%, VPs (vice presidents) and cockpit crew are taking a 15% pay cut, AVPs (assistant vice presidents), Bands D along with cabin crew will take 10% and Band Cs 5%,” Dutta had said on March 19.

On March 23, the government had asked the public and private sector companies to not cut salaries or lay off the employees amid the lockdown. The lockdown which started since March 25 has led to the suspension of all domestic and international commercial passenger flights, due to which revenues of the domestic aviation industry have been hit hard.

All domestic airlines have implemented pay cuts during the last few weeks. While IndiGo has now rolled it back, others are continuing with it. One reason for it could be that IndiGo, with its free cash of over Rs 9,400 crore as on December 31, is in a better position than most peers to tide over the crisis. Wage bill of private carriers are roughly around 10-11% of revenues.

Earlier this week, GoAir sent majority of its employees on leave without pay. Vistara has instituted a compulsory leave without pay for up to six days in April for senior employees. AirAsia India last week cut the salaries of senior employees by up to 20$%. State-owned Air India has cut the salaries of employees by 10%. SpiceJet has cut the salaries of mid and senior level employees by 10-30%.

As majority of aircraft with the airlines’ are on lease, they are currently seeking deferral of lease rentals by six months. Dutta said in the email on Thursday, “Managing revenues is the fun and exciting part of the airline business, managing costs in a severe downturn is the dull and painful part of the business. Right now, we have little control over our revenues and a lot of control over our costs and therefore that is where we are focusing all our energies.”
Another area, Dutta said, where IndiGo can exercise control is in shaping the nature of the customer experience once the airline is back in the sky again.

“We are working actively with the government, the airports, and our competitor airlines in defining the nature of this experience,” he said. “Customers will probably start flying tentatively at first and we need to make sure that we instill enough confidence in the early users so that the first trickle of customers turns into a torrent,” he said.

While no commercial passenger flights can fly during the lockdown period, cargo flights, medical evacuation flights and special flights permitted by the Directorate General of Civil Aviation (DGCA) are allowed to operate. “Our one source of revenue generation right now is in cargo operations and I want to thank all the people across the company who are working tirelessly to make an all-cargo operation work for us,” Dutta said.

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