Jet Airways to sack 72 expats to take locals on board - The Economic Times
MUMBAI: In an attempt to prune costs and navigate itself out of the turbulence in the Indian
aviation sector, the nation's largest private airline, Jet Airways, has decided to terminate contracts of 72 of its high-cost expatriate pilots.
The Naresh Goyal-promoted airline sent notices to a section of its expat pilots last week. Nikos Kardassis, CEO, Jet Airways, confirmed the development to ETand said this was necessitated by a curtailed monsoon schedule and also the availability of pilots to tap from the local pool.
"We are reducing the level of operations for the monsoon season (as we do every year) and speeding up the process of training qualified Indian pilots from co-pilots to captains. We are also looking to recruit qualified Indian pilots available in the market at the moment," Kardassis said in a response to a query from ET.
The sacking of expat pilots, who till recently were a coveted resource for domestic airlines, is said to be the first and the biggest in Indian aviation. However, the firing exercise is unlikely to create a political storm as it involves only expats.
There are about 500 foreign pilots employed by Indian airlines, Civil Aviation Minister
Ajit Singh said in a recent statement based on government data. He said
Jet Airways employed the highest number of expats, with 183 pilots working for it. The number of expats hired by domestic airlines has gone up considerably from 384 in 2010. Jet topped the list even then with 111 expat pilots.
The government had allowed airlines to hire foreign air crew to meet the shortage of pilots, especially commanders. But due to agitation by Indian pilots for higher emoluments, it asked domestic airlines to phase out expats by July 31, 2011. It later extended the deadline to December 31, 2013.
Budget carrier
SpiceJet relies heavily on expat pilots, who are said to enjoy a much higher compensation compared with Indian pilots for flying its Bombardier Q400 aircraft. There are hardly any Indian commanders available for flying these aircraft
Jet Airways' move to do away with such a large number of expat pilots stems from the surplus of pilots in the market, courtesy its one-time rival
Kingfisher Airlines.
Huge No. of KF Pilots Available
The Vijay Mallya-promoted airline has drastically curtailed operations since November last year and is down to a fleet of 20 aircraft compared with 64 around nine months ago.
As a result, more than 50% of its pilot force has been rendered redundant. Kingfisher has lost almost 300 pilots to competing domestic as well as international airlines in a span of six to eight weeks.
According to sources in the airline, of the 72 expat pilots Jet has asked to leave, 17 are on the ATR fleet. In a communication to its pilots, Jet said a turboprop pilot would no longer get an extra allowance of over Rs 1 lakh per month being offered till now and there would be pay parity for pilots of its Boeing fleet as well as ATRs.
Industry experts see Jet's move necessitated not only by market dynamics and route rationalisation, but, more importantly, the pressing urgency to curtail costs. The airline has seen losses mounting due to volatile oil prices and the depreciating rupee.
"It is a fact that financially Jet is not doing too well and is looking to cut costs. There is a perception that expat pilots are more expensive than Indian pilots, and when an airline is looking to bring down expenses, it would surely look at doing away with a resource that is costing higher," an industry person related to pilot recruitment said on condition of anonymity.
According to a Jet pilot, a senior expat pilot takes home a salary of Rs 6-7 lakh per month compared with an Indian senior pilot who gets a gross salary of Rs 4 lakh per month. Such exorbitant pay packets and better facilities (accommodation, leave and taxes paid by the airline) offered to expat pilots have always been a source of discontent for its Indian pilots, who had gone on strike in 2009 over the same issue.
Jet Airways surprised the Street by posting a first-ever third-quarter loss of Rs 101.22 crore this financial year while it also recorded its highest-ever loss of more than Rs 700 crore in the second quarter.
"There is a mail from the management every now and then warning of tough costcutting measures and of bad times staring at the industry and the airline. Most of these communications also refer to how despite good loads, the yields are not holding up," said a Jet employee not wanting to be identified.
The Naresh Goyal-promoted airline has stated in the past that selling below cost by some Indian carriers, particularly Air India earlier and Kingfisher more recently, has bled the airline heavily. It also said the rupee's free fall hurt the airline more than fuel costs, and more than Rs 250 crore of its losses in the second quarter was on account of the depreciating rupee.