Air India is drawing up plans to send some of its staff on unpaid leave as a result of the current crisis. The leave can range from six months to two years, but bizarrely could even go on for 5 years! The plans come as Air India continues to conduct long-haul Vande Bharat flights and a limited domestic network.
New leave without pay plans
Air India’s decision to send employees home without any pay marks a shift in the airline’s original strategy. Until now, the airline had only cut salaries for its entire staff and rescinded a handful of job offers. However, as the crisis drags, it seems the airline has little choice but to begin sending staff home for a considerable amount of time.
Air India’s board recently approved measures to send staff on leave without pay (LWP), clearing the way for managers to identify employees for compulsory leave. According to sources, employees will be evaluated on the basis of efficiency, suitability, competence, performance quality, health, non-availability for duty due to health or other reasons, and redundancy.
The mandatory leave can be for either 6 months and 2 years for employees, already a long period. However, shockingly, Air India has also said the LWP could be extended for up to 5 years. If true, this would be the longest declared compulsory leave any airline has issued and is akin to a layoff.
‘Precarious’ financial situation
In April, Air India’s Chairman and Managing Director, Rajiv Bansal, said the airline is staying afloat but with ‘precarious’ finances. However, he also mentioned how crippled the airline was before the pandemic, with over $9bn in losses over the last decade.
Considering Air India’s situation, it is not surprising that it is looking for drastic measures to cut costs. While the leave without pay plan is new, staff have been complaining about unpaid salaries for months, requesting government help.
It is unlikely that the government will offer any assistance to Air India. It has already spent billions propping up the airline and preparing it for privatization, which is now up in the air. Without a bailout, we can expect to see deep cuts to the airline in order for it to survive.
Limited revenue
India moved quickly to ban international and domestic flights in March, leaving airlines with no revenue for two months. In May, India announced its massive repatriation effort, known as the Vande Bharat Mission, with Air India at the center. For the first two months, Air India had a monopoly over international flights in and out of India.
However, it seems VBM flights have failed to prop up the struggling airline, as seen by this new LWP plan. Even though it had conducted hundreds of long-haul flights, at exorbitant ticket prices, it seems the airline continues to struggle. This does contravene the arguments of many who say that VBM flights are being used as a way to boost Air India’s finances.
The new LWP plan is not groundbreaking, other Indian airlines such as SpiceJet and IndiGo have done the same. However, the sheer time of the leave has taken many aback, with possibly thousands at the risk of being out of work for years. In the coming weeks, we will find out more about how many, and which, employees will be affected as Air India makes drastic cuts.
What do you think about Air India’s plans? Is it justified? Let us know in the comments below.
