Air India to adopt contractual employment for new hires; wage bill nears Rs 3,000 cr

Being on contract will be new for Air India - years after enforcing a jobs freeze.

Mumbai | Updated: April 21, 2014 10:42:43 pm
The airline is currently in the process of formulating a policy in this regard, said the above mentioned senior official. Reuters The airline is currently in the process of formulating a policy in this regard, said the above mentioned senior official. Reuters

By: Rhik Kundu

Being on contract will be a new norm at Air India, when it decides to hire employees – after years of freezing its jobs – first time since its merger with Indian Airlines. Barring certain roles that require statutory compliance, policy making decisions, managerial positions, tendering roles and other senior job roles, recruitment for most front-line staff, including pilots, cabin crew and non skilled workers will be based on contracts.

The concept of contractual hiring was taken during an Air India board meeting during May 2012, a senior official with the airline, who was present at the meeting, recounts.

“But, it hasn’t been put to practice yet as we haven’t hired anyone since then. This could change.”

Senior officials of the airline say that with new aircraft coming into possession of the airline there would arise a need to induct cabin crew to cater to the additional requirements.

However, the tenure of the contracts aren’t clear yet.

The airline is currently in the process of formulating a policy in this regard, said the above mentioned senior official.

“We could have contracts for five years, like many others, which can be extended by five years at a time,” he said. “Nothing has been finalized in this regard though.”

Air India expects deliveries of five Dreamliners between May and November.

“As of now, we are comfortable with the existing number of pilots and cabin crew that’s already present in our ranks, especially for Dreamliners. But, we could hire cabin crew in near future though it’s hardly unlikely that we will be hiring more pilots,” the senior Air India official added.

At the end of March 31, 2014, the total staff strength of Air India stood at 23,400 heads as compared to 25,000 a year ago. Th total number of pilots, cabin crew and security constitute a total of 6,000 — while the number of pilots alone stood at 1480.

The total wage bill at Air India which stood at Rs 3,100 crore during FY 2014, is expected to fall to around Rs 2,900 crore in FY 2015, the senior official said.

Out of the airline’s annual wage of Rs 3,100 crore in FY 2014, Rs 1,750 crore was spent on wage and allowances for licensed category employees such as pilots, cabin crew and engineers.

With the new recruits in the cabin crew and pilot segment slated to be on contract, the airline hopes to curtail unnecessary expenditure to bolster its bottom-line.

“We expect our staff strength to fall further down by 1500-1700 heads by the end of FY 2015. Out of this 1500 would leave the airline on retirement. On an average about 200 people resign or opt for VRS to leave the company every year,” he said. “We expect this to continue till FY 2017.”

Air India currently has over Rs 39,000 crore debt , according to another senior official of the airline. While its long term working loan stands at Rs 17,000 crore, short term working loan is about Rs 4000 crore, and aircraft related debt stands at Rs 18,000 crore.

It estimates a huge 44 % slash in its operating losses in 2013-14 to Rs 3,900 crore on the back of several measures, with staff streamlining being one of them.

Air India had about 15,000 employees and Indian Airlines 19,000 before they were merged in 2007. Its employee strength fell by 26% to 25,000 during the last six years and is expected to touch the 13,000 mark in the next decade. At present, 55% of the airline’s staff are over 45-years-old, and will retire in the next 10-15 years. This is slated to further bring down the wage bill of the airline by the end of the current decade.

The airline has recently proposed to slash its allowances for pilots and other employees which could come into affect by the end of this month if approved by the concerned parties.

“It will help the airline save more than Rs 150 crore annually,” the senior airline mentioned above said.

“The aim is to get the airline back to its profitable ways and we are hoping to achieve this in the coming years,” he added.


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