Stating that measures such as salary cuts and cost-cutting policies were not enough to face the economic headwinds, India's biggest carrier IndiGo decided to reduce the workforce by at least 10 percent on Monday.
The airline further laid out a plan to help employees "tide over the uncertainties". This included keeping notice pay in lieu, giving severance pay and payment of an annual bonus, as well as medical insurance extension.
Mentioning the operation of a small percentage of its total 262 aircraft in the current situation, Ronojoy Dutta, CEO, IndiGo, emphasised that “cost savings are clearly not enough to offset the decline in revenues”, and therefore the airline has to for the first time in its history bid a painful adieu to 10 percent of its workforce.
Airlines in India have been facing tough times due to a decline in revenues even after the resumption of domestic services from 25 May, following two months of lockdown. Passenger traffic in the month of June this year was 83.5 percent lower than the corresponding month last year, monthly data published by the Director General of Civil Aviation reads.
All major airlines in the country are operating at only 50-60 percent of the passenger load at the moment. IndiGo's decision comes after the state-owned carrier Air India decided to send 50 percent of its employees on leave without pay (LWP) for up to five years and proposed a 60 percent salary cut for pilots.
The Centre for Asia Pacific Aviation, an industry research firm, warned in March that most of the airlines in the world would go bankrupt in view of the pandemic and that "coordinated government and industry action" is needed in order to prevent that.
Similarly, the International Air Transport Association, an aviation firm, predicted last week that the Indian aviation sector may lose nearly 3,060,000 jobs and those dependent on them. The number was the highest in the Asia-Pacific region.
Airlines in India have approached the Indian government to ask for short-term relief, including the payment of salaries for staff after the fleet was grounded in view of the lockdown. Due to the pandemic, experts have predicted that the sector may face losses worth $3-$3.6 billion in the June quarter.
