Budget carrier IndiGo on Thursday said it has reversed its earlier decision of salary cuts for employees. “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,” IndiGo’s CEO, Ronojoy Dutta, informed employees on Thursday. He added, however, that the airline’s executive committee members and senior vice-presidents “have volunteered to take pay cuts this month".
For everyone else, he said, “you can expect your April salaries to be paid without the pay cuts. Stay strong, stay healthy. And I look forward to having celebratory parties with you, on the other side of this crisis.”
“It is during extreme adversity that one gets to see the true character of an organisation and its management. Paying staff the entire wage for a month when not a single passenger boarded a flight shows how much @IndiGo6E [IndiGo] cares and where their priorities lie,” tweeted Vinamra Longani, head of operations for Sarin & Co., an Indian law firm specialising in aircraft leasing and finance.
On the other hand, IndiGo’s smaller rival GoAir, which is owned by the Wadia Group, has asked an overwhelming majority of its workforce to go on leave without pay. An April 19 report by Bloomberg read: “Go Airlines India has asked as many as 90% of its 5,500 employees to go on indefinite leave without pay, as a government ban on flights amid a Coronavirus lockdown dries up cash flow for the budget airline, people with knowledge of the matter said.”
While airlines struggle to remain afloat, IndiGo can take comfort from its free cash reserves of over ₹9,000 crore.
On March 19, days before India announced a nationwide-wide lockdown, Dutta had informed employees of a pay cut, as the airline needed to keep its costs in line with falling passenger ticket revenues. That revenue stream is now nil. Currently, the airline has only one source of revenue generation, which is from its cargo operations.
Barring employees in bands A and B, all other IndiGo employees were to get a pay cut ranging from 20% to 5%. Dutta had said that senior vice presidents and above would get a 20% pay cut; vice presidents and cockpit crew (pilots) 15%; band D employees along with cabin crew 10%; and band C employees 5%. “I am personally taking a 25% pay cut,” he had said then. This time around, he hasn’t mentioned the extent of pay cuts—while being voluntary—that the senior management are taking.
Globally, airlines are bleeding and some have even filed for bankruptcy given that passenger air travel has come to an abrupt halt. In India, the recovery from complete suspension in air travel will in all probability be slow. A recent report by aviation consultancy firm CAPA India said that “Demand will be suppressed due to economic dislocation; slow or even negative GDP growth; broken supply chains; low consumer confidence; and concerns about lingering outbreaks of Covid-19, especially if travel insurance companies refuse to provide cover for associated medical expenses or travel disruption costs.”
“When will the lockdown be lifted? What will be the nature of flying after that? How strongly will traffic rebound? In situations such as these, it is best not to spend too much time thinking about things that we have no control over; it is more effective to focus all our energies on the forces on which we exercise a great deal of control,” Dutta told IndiGo employees on Thursday. And the most critical area “on which we exercise a great deal of control is on our personal health".