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Air India pilots face financial turbulence

Last updated on: July 25, 2011 09:33 IST

Air India pilots face financial turbulence

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Mihir Mishra in New Delhi

Commander Satish Sharma (name changed), a pilot with Air India (AI), is in a financial mess.

Once part of AI's elite with a fat pay packet and swanky lifestyle, Sharma had to recently take a loan on his bank fixed deposit to pay Rs 80,000 equated monthly installment for a house he bought a few years ago.

"This is the first time I have had to depend on my fixed deposits, but if our full salaries are not paid for another two-three months, I will have to look for a new job. I cannot survive on the minuscule part of my salary that I am getting now," he says.

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Image: An Air India aircraft and its crew.

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Sharma, a senior pilot with a flying experience of 12,000 hours, is troubled because the cash-strapped AI has been paying only 20 per cent of his salary for the last few months.

AI has not been able to pay him flying allowance, also called the productivity-linked incentive, which accounts for a bulk of his pay.

His harrowing experience is shared by the 1,700 other pilots of AI.

The well-paid pilots have been hit more than the others as PLI is a very large part of their pay.

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Image: Two Air India aircraft.

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However, most were not ready to come on record.

AI pilots who fly domestic get Rs 400,000 every month, out of which as much as 80 per cent, or Rs 320,000, is PLI.

AI is paying them only the basic salary of Rs 80,000 per month, that is, one-fifth of their total salary.

An AI spokesperson said the airline was in a financial crisis and all employees were facing a financial crunch.

"Our chairman has asked for support from the employees. All of us should work together to ensure that the company revives quickly and our salaries are restored," he said.

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Image: People walk inside Terminal 3 of the New Delhi International Airport.
Photographs: B Mathur/Reuters
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Air India pilots face financial turbulence

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Pilots who fly international get a fixed gross salary of Rs 500,000.

This includes basic and other emoluments of Rs 80,000, Rs 320,000 for 80 hours of flying (they get this even if they fly less, unlike the domestic pilots) and a flexible component called the flying allowance which comes to $2,100 (Rs 1 lakh).

They are being paid only the fixed salary and the flying allowance.

This means they are getting Rs 180,000 per month, a third of their total salary.

Another commander whose monthly budget used to be over Rs 100,000 said he had to cut expenses.

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Image: Journalists look at a new Boeing 737-800 aircraft in the livery of AI Express at Mumbai airport.
Photographs: Punit Paranjpe/Reuters
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"I have stopped getting gifts for my wife and child. We have reduced family outings. We are under stress all the time," he said.

He said many of his colleagues had taken loans on their provident fund corpus.

The problem is made worse by the fact that the take-home salaries are even less.

"Out of Rs 80,000, we take home Rs 35,000 after tax, PF and other deductions," said the commander.

According to the latest figures, AI has dues of Rs 450 crore (Rs 4.5 billion).

While it has not paid PLI for May, June's salaries have not been paid yet.

Salaries for May and PLI for April were disbursed in June.

Without financial restructuring, most experts said, the gap might continue for a while.

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Image: Inside an Air India Boeing.
Photographs: Reuters
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The problem has been accentuated by the fact that AI has to buy fuel on a cash-and-carry basis.

So, out of the average revenue of Rs 22 crore (Rs 220 million) a day, Rs 14.5 crore (Rs 145 million) is paid to the oil companies, leaving just Rs 7.5 crore (Rs 75 million) for aircraft loans and interest on working capital.

Air India has accumulated loss of over Rs 20,000 crore (Rs 200 billion).

It lost Rs 2,226 crore (Rs 22.26 billion) in 2007-08, Rs 7,189 crore (Rs 71.89 billion) in 2008-09, Rs 5,551 crore (Rs 55.51 billion) in 2009-10 and Rs 6,000 crore (Rs 60 billion) in 2010-11.

Its total debt is Rs 46,950 crore (Rs 469.5 billion).


Image: An Air India aircraft.
Photographs: Reuters
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