India's biggest airline IndiGo announced on Friday that it will cut pay for the month of May and implement leave without pay policy for three months till July. The decision will impact a large number of the airline's employees.
IndiGo CEO Ronojoy Dutta told the employees that they are left with no option but to implement pay-cuts. "While we had paid employee salaries in full for the months of March and April, I am afraid that we are left with no option but to implement the originally announced pay-cuts from the month of May 2020," said Dutta as mentioned in a report in The Economic Times. He added that they will also implement the "additional painful step" of a limited and graded leave without pay programme for the months of May, June and July.
On March 19, IndiGo had announced pay cuts of up to 25 per cent for April but rescinded it after the government repeatedly urged companies to not cut salary or fire employees.
In his mail, Dutta said that the leave without pay program would not impact Level A or the bottom level of employees. Level A employees account for 40 per cent of the airline's workforce. He also added that the leaves would range from 1.5 to 5 days.
IndiGo's decision comes after competitor Vistara also rolled out a similar measure. Vistara CEO Leslie Thng announced that senior employees will have to go on compulsory leave without pay for up to four days per month in May and June. It had initially sent the same set of senior employees on compulsory LWP for up to six days in April. The compulsory no-pay leave will affect around 1,200 employees in senior grades.
Pay cuts and leave without pay policies have been implemented by airlines as the aviation sector is reeling under the impact of coronavirus.
Domestic aviation industry would face revenue loss of Rs 24,000-25,000 crore due to the extension of lockdown, according to a CRISIL report. "Airlines will be the worst-affected, contributing more than 70 per cent of the losses, or nearly Rs 17,000 crore, followed by airport operators with Rs 5,000-5,500 crore, and airport retailers (including retail, food and beverages and duty-free) with Rs 1,700-1,800 crore," said CRISIL.
Moreover, aviation company SITA CEO Barbara Daliabrd said in a webinar that corona has had a dramatic impact on the air transport industry. She said that global flight activity has come down 80 per cent year-on-year. In April 2019, it was up by 9.8 per cent.
INDIA CORONAVIRUS TRACKER: BusinessToday.In brings you a daily tracker as coronavirus cases continue to spread. Here is the state-wise data on total cases, fatalities and recoveries in one comprehensive graphic.