There is more pain ahead for India’s aviation sector, which has borne the brunt of the Covid-19 pandemic. IndiGo, the country’s largest airline, has will lay off 10% of its staff as it sees no signs of an early revival of business.
The airline had 23,531 employees on its payroll at the end of March 2019. CEO Ronojoy Dutta said: “From where things stand currently, it is impossible for our company to fly through this economic storm without making some sacrifices, in order to sustain our business operations.”
He added that after reviewing all possible scenarios, the management had decided to “bid a painful adieu to 10% of our workforce.”
This was the first time IndiGo announced layoffs since it started 15 years ago. It comes after the Indian government decided to suspend flights for two months to curb the Covid-19 spread and then ordered a limited opening of domestic operations from May 25.
These curbs have crippled the civil aviation industry, with some of the smaller airlines facing an existential crisis.
Last month, the airline announced salary cuts of up to 40% and implemented 10 days of leave without pay over two months for its pilots. However, Dutta said these measures were not enough to offset the decline in revenue.
The company will be providing severance pay of at least three months of gross salary to the impacted employees and medical insurance cover up to December 2020. IndiGo will also provide an “outplacement allowance” to help employees seek professional help to explore career opportunities.
The Indian government permitted the resumption of domestic flights on May 25, after imposing a two-month countrywide lockdown to contain the spread of Covid-19, but the aviation industry is still not out of the woods.
Once flights resumed, the airlines were allowed to operate only one-third of their summer scheduled flights, but the government later raised the limit to 45%. However, airlines are still operating below 33% due to low patronage.
Passenger loads are still between 55% and 60%. In addition, the abrupt lockdown rule changes implemented by various state governments have impacted schedules, leading to flight cancellations.
The other domestic airlines have also cut salaries and perks. Tata-owned Vistara has initiated 5-20% pay cuts for 60% of its staff and reduced the flying allowance for pilots. AirAsia India has slashed pilot salaries by 40% for May and June and will extend that to July, said a senior executive.
GoAir has given leave without pay to 90% of its staff and no-frills carrier SpiceJet has also cut domestic and international layover allowances for its pilots. State-owned airline Air India has also decided to furlough nearly 600 employees for a period ranging from six months to five years.
Various rating agencies have forecasts widespread losses for airlines in India due to the pandemic. According to rating agency CRISIL, Indian airlines will face a revenue loss of 1.3 trillion rupees ($17.39 billion) between fiscal 2020 and 2022.
The International Air Transport Association said close to three million jobs in aviation and related industries could be lost in India this year because of the pandemic.