Business Standard
New Delhi, Jun 18 : After rationalising flights and routes, major domestic airlines like Kingfisher, Jet Airways and SpiceJet are introducing sharp cutbacks in staff and salaries to cope with slower passenger growth and rising aviation turbine fuel (ATF) costs.
Manpower typically accounts for 10-15 per cent of an airline's total costs.
Full-service carrier Kingfisher Airlines has decided not to renew the contracts of the 50 expatriate engineers employed by Air Deccan, the low-cost carrier with which it merged last year. The merged entity has over 800 engineers.
"Thirty of these engineers have been sent back and the other 20 will follow," a Kingfisher executive confirmed.
Expatriate engineers earn a monthly salary of Rs 2.5 lakh against around Rs 1.5 lakh for an Indian counterpart. Engineers account for around 15 per cent of manpower strength.
Meanwhile, JetLite, formerly Air Sahara, Jet Airways' fully-owned subsidiary acquired last year, has halved manpower strength from 4,500 to 2,200, closed 37 offices and cut salaries 15 per cent over the past one year.
"As a result, we have saved $70 million," said Rajeev Gupta, JetLite's chief operating officer.
Low-cost carrier SpiceJet, which has 2,400 employees, has shelved plans to employ 200 more people following its decision to cut domestic flights from 117 to 100 a day.
"We have decided to deploy our airport staff more efficiently," a SpiceJet executive explained.
The carrier also plans to give three of its 18 aircraft out on "wet lease," a deal that includes pilots and cabin crew.
"We have not worked out the lease agreements yet, but we could either pay the pilots and crew who are leased out ourselves and demand a rental from the airlines, or the lessee airlines might bear the salary cost in lieu of rental. Either way, we will be saving costs," said a SpiceJet executive.
SpiceJet is expected to lease out 18 pilots and 60 cabin crew `members to other carriers.
However, savings under these heads may not be enough for a bailout, say airline executives. For instance, JetLite executives said its break-even has been pushed back indefinitely from an earlier deadline of March 2008, since the $70 billion savings have been offset by a steep rise in fuel costs.
Airlines also said cutback options for those that are expanding operations are limited.
"Since we are in expansion mode, we cannot cut the number of pilots we employ. And since there is so much competition, cutting pilot salaries is out of the question," said a Kingfisher executive.
Pilot salaries form the largest chunk of an airline's manpower costs.