Policy

Pilots' strike: Another view

Debabrata Das | Updated on May 01, 2011 Published on May 01, 2011

Deserted Air India reservation & ticketing counter at the Mumbai domestic airport on Saturday. PTI Photo   -  PTI

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The total spend on pilots forms just a fraction of the total wage bill, the bulk of which is spent on non-operations employees. Thus, it is illogical to further trim expenditure on the pilots.

Air India employs 1,600 pilots. Its total number of employees is 41,000. The total wage bill is around Rs 3,700 crore. Of this, the pilots get Rs 800 crore. Who gets the rest? And why? How essential are they to the airline?

These questions are crucial to understand the ongoing Air India pilots' strike and the functioning of India's national carrier. However, these questions have not been answered yet.

The cash-strapped airline has an outstanding working capital debt of up to Rs 18,000 crore while its total debt stands at Rs 40,000 crore.

Bloated wage bill

Trimming the wage bill is certainly one suggestion that has popped up quite often in proposals to ‘restructure' the airline. A comparison of Air India's cost structure with those of other private airlines does suggest that its employee costs are on the high side.

In 2009-10, employee costs made up just 9 per cent of low-cost airline SpiceJet's total expenses.

Jet Airways, which operates both low-cost and full-service flights, spent 13 per cent of its costs on employees. Kingfisher's employee costs are also of the same order. Compared with this, Air India's wage bill certainly look a bit bloated.

According to sources, employee costs takes up nearly 35 per cent of the airline's total costs. Going by international standards this might not look like much, as British Airways' employee costs account for close to 25 per cent.

However, cabin crew and pilots make up 32 per cent of the total staff at British Airways, unlike Air India, where the total number of pilots, cabin crew and flight engineers make up 28 per cent of the workforce.

But cutting back on the wage bill doesn't necessarily mean slashing salaries of critical employees such as pilots. Accounting for just 5 per cent of costs, at Rs 800 crore, pilot salaries are certainly not a make-or-break component in the airline's cost structure.

It seems to be the non-critical staff that cost it an arm and a leg.

Disproportionate spend?

The total spend on pilots, who are responsible for the lives of the passengers, forms just a fraction of the total wage bill. In such a scenario, it becomes illogical to further trim the expenditure on pilots.

If an airline invests $300 million in an aircraft, how much should it spend on using this it to earn revenue? Since a plane can't fly without pilots, how much should it pay them as a proportion of what it pays others who are not essential to flying the plane?

Air India has never answered this question. But the time has perhaps come for it to consider them seriously.

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Published on May 01, 2011
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