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Jet In Crisis – Domestic Airlines in Doldrums

New Delhi. The civil aviation industry is in dire straits. The latest crisis created by the pilots of Jet Airways over the sacking of two of their comrades indicates that companies in the civil aviation sector need to review their human resource policies as management – employee battles are occurring time and again.

Last year, for instance, the decision to sack cabin crew – also by Jet – hit the headlines when the airlines had to cut jobs to face the recession in the airline industry. The fact is that this country is not used to corporates cutting jobs en masse even though these may be of white collar employees who are capable of finding fresh employment.

At the same time, there is growing realization that security of service, particularly for those who do not work and take shelter in unions, should simply not be there.

Nonetheless, the sympathy generated by the young cabin crew’s plight was highlighted in the media and forced Jet Airways chief Naresh Goyal to back down and rehire the retrenched staff. Simultaneously, however, Jet Airways was gradually retrenching staff of Air Sahara, the company taken over to supplement its fleet and provide more international routes for the company. This news got little publicity mainly because there was no large scale retrenchment at one go and instead the process was carried out in a gradual manner.

Other airline companies have not been immune to similar crises. Air India, for instance, ran into trouble with their employees over delayed salaries as a result of the huge financial losses faced by the national carrier. It also faced an agitation over the huge performance linked incentives (PLI) being paid to the employees which were proposed to be cut as yet another way to reduce losses.

Only some of the budget carriers like Indigo and Spicejet seem to have been able to overcome the recession blues with its reduced passenger loads. The no frills carriers seem to be attracting the bulk of air travellers and full service airlines like Air India, Jet and Kingfisher have had to rely largely on business and government travellers. The strain has clearly been felt by the leading domestic airline, Jet Airways, which is now facing yet another crisis on the employee front.

As far as the strike, or the mass sick leave, as they call it, by the pilots of Jet Airways, there is no doubt that it needs to be strongly condemned, particularly as there was no provocation warranting it.

Thousands of people who made advance travel bookings and needed to reach their destinations urgently were put into grave discomfort and even faced medical emergencies. People who had booked flights at a relatively lower price had to pay heavy amounts for booking in other airlines. Many had been travelling by air because of serious medical reasons while others had to join jobs and yet others had to make it in time to take up new educational courses. Nearly all of them faced serious difficulties though about 60 per cent were reported to have got alternate bookings on other airlines.

The pilots’ strike was not fair to the public.

In the midst of such misery being faced by passengers, it has been strange to watch pilots talking to the media about their “constitutional rights” to have a union while stressing that they are highly qualified and can easily get other jobs.

It would have been amusing, if the situation had not been so grim for the general public, to think that pilots who are paid in lakhs of rupees are equating themselves to factory workers who actually have a dire need to be unionised to get their rights. If the pilots who have been sacked – probably in an arbitrary manner one must concede – can get alternative jobs, then the question we must ask is, what is the fuss all about?

The spokespersons of the new aviation guild have made statements about going back to work when their “boys” are taken back. It sounds very much like a rich man’s club where a few members have been blackballed. It appears to be more an issue of prestige rather than danger to anyone’s livelihood.

It is also amusing to note that while pilots in an air force are distinguished officers, pilots in airlines are like factory workers, looking for labour rights.

As for the Jet Airways management, there is evidently a lack of communication with their highly paid pilots who are the critical component of their flight crews. Surely, there should be an ongoing process of negotiations with the pilots over any issues that could lead to such a flashpoint. If what the Jet pilots are saying is correct, the company management objected to their forming a guild or association.

This is undoubtedly an unreasonable stance as most professionals do have some such organisation to protect their interests. Besides, even the Chief Labour Commissioner has pointed out that pilots cannot be sacked merely for setting up a union. The termination of the pilots can easily be challenged in the courts and this process is under way, judging by media reports.

Obviously, the aim of setting up a guild or union was to take up certain specific employment conditions with the managements of airlines. Despite their high salaries, pilots are bound by rules which force them to give a long six months notice before resigning.

This is indeed a restrictive condition but occasionally the airlines invest a lot on their training, and sometimes, the management as well as the pilots, need mutually restrictive conditions so as not to disrupt either the flights or the pilots’ jobs at whims.

At the same time, the stress on their constitutional rights sounds strange because, as mentioned earlier, they appear to be equating themselves with industrial workers. This is clearly an unequal comparison because of the much higher reumuneration as well as their specialised professional qualifications.

A guild of pilots is entitled to take up professional issues and irritants with the airline managements. But surely should not be carrying out a strike or mass sick leave causing serious harm to the general travelling public for the sake of a few of their members who have been asked to leave the airline.
Besides, the pilots should be well aware that their airline is already facing pressure on its bottomline owing to the overall recession in the economy and its impact on the aviation sector.

A strike such as this is bound to have increased losses tremendously. As professionals, the pilots should have been acutely conscious of the fact that it is extremely important for the carrier just to remain afloat for the time being. The strike might help them to retain the jobs of two pilots, but how will it help if ultimately the company has to wind up. This is, of course, not a probability right now but certainly further losses will hit the company’s bottom line even further.

Bonuses cannot be paid by any organization which is suffering from losses.

In this context, one must note that even the government is concerned over the fact that pilots are still legally considered “workmen” . It is even reported to be considering withdrawing pilots from the category of workmen – and rightly – under the Industrial Disputes Act, 1947.

Whatever the outcome of this strike, there is no doubt that Jet Airways is facing crisis after crisis. The full service airline which has been dominating the domestic airline industry for the past few years needs to have a major review of its management policies. It is already under severe financial strain owing to the recession and the preference of air travellers for budget airlines. Besides, the acquisition of Air Sahara put a further stress on its bottomline. It has been resorting to several steps to come back on an even keel including entering into a code sharing agreement with Kingfisher as well as tie ups on ground handling facilities. Jet has also launched another budget carrier Jet Konnect, earlier this year. But it looks like a long haul for one of the country’s largest air carriers to reach more tranquil skies.

It is not just Jet Airways, however, but the entire domestic airline industry that is suffering from the recession that has reduced passenger loads, forcing companies to develop innovative marketing strategies. As for fares, travellers are finding these to be extremely volatile. Last year fares had dipped, making air travel cheaper than ever before. Then with high fuel prices and reduced passenger traffic, airlines were forced to hike fares steeply.

Then fares began to decline once again as competition stepped up as airlines tried to lure passengers with cheaper rates. With the pilots strike, fares have soared once again and the DGCA has had to step in to direct airlines to ensure fares are provided at normal rates rather than resort ing to profiteering in the short run.

In this context, some industry experts argue that government intervention regarding fares is not desirable in the aviation industry. They feel that by allowing fares to rise and fall depending on the market demand, the consumers will actually get a better deal in the long run.

In fact, it is because of the heightened competition that air travellers are still getting relatively cheap fares in recent months despite the fact that the number of passengers has declined considerably since last year. At the same time, the government probably feels and rightly so that it has to intervene in times of crisis to protect the members of the travelling public.

In any case, the present strike has shown that the civil aviation industry is still in a fragile condition. A major airline like Jet Airways is clearly having difficulties weathering the storms of recession.On the other hand, some of the budget airlines like Indigo and Spicejet have bounced back from the changed economic scenario.

Spice Jet has also offered free tickets in August and September to Armed Forces and Paramilitary personnel.

One can only wait and see how the full service airlines like Jet, Kingfisher and Air India, are able to tackle the economic turbulence in the skies and ultimately make a smooth landing.

Air India of course has far too many employees per aircraft than perhaps most airlines in the world, thanks to periodic political interference. The taxpayer will have to fund it more periodically.

© India Strategic