Mumbai: Amongst its primary cost cutting measures will be the pay and perks of the top 200 of its people.
Jet Airways, the largest private airline in the country, is planning to slash the pay of its top 200 officials by anywhere between a quarter or a third in order to combat costs. The firm is also reported to be undecided on the payment of a Diwali bonus this year.
Reports quoted officials of the airline as saying that the proposed salary cut would impact Jet employees who make Rs10 lakh or more each month, and could be effective as early as next month. Reports say an official announcement is likely just before the weekend, ahead of India's largest festival, Diwali.
Senior employees are most likely to be hit, with the range including pilots, aircraft maintenance engineers, and management and planning people. Salary is said to contribute 12 per cent of Jet's costs, and it remains to be seen how much exactly the airline would save by paying its people lesser than they currently are. Jet's largest cost component is aviation turbine fuel, which makes up around 33 per cent of the operating costs of the airline.
Reports quoted Jet Airways executive director Saroj Datta as saying that the airline would do ''everything'' to reduce costs, and would implement salary cuts for its top management ''if necessary''. He also said that Jet is yet to decide on the issue. Reports also suggested that the company's employees in the highest tier take-home salaries of around Rs10-15 lakh each month, which varies according to experience and the position. Reports said that around 2,000 Jet employees make over Rs1 lakh every month, mainly pilots and aircraft maintenance engineers. The company is said to have 13,200 employees.
Though last week it had been reported that the reinstated Jet staff would not go through any changes to their salaries, reports now suggest that their salary structure too could see a change, with a large portion of the salary moving to the variable component, which is typically linked to performance. Cabin crew would be hit from the other end as well, since their flying hours would reduce substantially as the number of flights reduce once the code share agreement with Kingfisher comes into effect, and the total number of flights reduces. Reports pegged the reduction in flight capacity at around 30 per cent.
Just last week, Jet had laid off 1,900 employees, and done a volte-face a day later, reinstating the whole lot. The Aviation Industry Employees' Guild, the largest organised aviation trade union in the country, had said that it would boycott Jet Airways across all major airports in the country to protest its decision. Reports said Jet Airways bill for salaries in 2007-08 was Rs1,205 crore, against Rs938 crore in 2006-07, mainly on account of the recruitment of pilots, engineers and cabin crew which the airline thought would be needed for its expansion plan. Jet had also hired a number of expatriates as employees, who are typically more expensive than domestic staff.
Jet is said to have reported a quarterly loss of over Rs589 crore ($120 million) for the quarter ending in September 2008.