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Airlines seek govt help to pay salary

March 25, 2020 17:04 IST

Chief executive officers of airlines have asked the government to bear 50 per cent of three months’ salaries of employees.

Airlines have sought help from the government to help them pay employees’ salaries as the coronavirus disease (COVID-19) outbreak has forced the authorities to stop air transport.

Sources aware of the development said, chief executive officers of airlines have asked the government to bear 50 per cent of three months’ salaries of employees.

 

The demand emanates from the government direction stating that companies shouldn’t fire employees even if functions are stopped because of the pandemic.

“In the backdrop of such challenging situations, all the employees of public or private establishments are advised to extend their coordination by not terminating their employees - particularly casual or contract workers for their job or reduce their wages,” an advisory issued by the Ministry of Labour and Employment said.

Executives of airlines said it is difficult to pay employees as already they function on a wafer-thin margin and are mostly dependent on cash flows, which comes from forward ticket sales.

Airlines say that even after air transport resumes on  April 15, and even after that they say that consumer demand will be very weak, forcing them to ground many aircraft.

“The period of pain has just started. It’s not that as soon as the ban lifts we will see full flights.

"It will take at least six months for customer confidence to return. There is an urgent need of government intervention,” the executive said.

According to a calculation by the government, Indian airlines are likely to operate only 30 per cent of their fleet for the next two months.

“Air transport was shut down under a direction from the government.

"Our cash flow is nil but the fixed costs stay the same. Unlike other businesses, if aircraft don’t fly we still will have to pay lease rentals and salaries.

"Government should bear some of that burden if they want the business to survive,” said an executive of a private airline.

Except IndiGo, other Indian airlines don’t have the cash balance to see through a prolonged crisis.

IndiGo CEO Rono Dutta on Tuesday assured employees that despite the shutdown the airline will pay salary.

“Let us be cognizant of the fact that during this temporary suspension we will be spending our cash reserves to continue to pay salary and benefits,” Dutta wrote.

Government officials confirmed that such a demand has been made but said that it was difficult to take care of all employees. Instead a package might be worked out to pay salaries of lower level employees.

A large portion of airlines’ employees - like security agents, loaders, drivers, ground handlers - work on contractual basis and they fear that they could lose their jobs soon.

Employees of multiple airlines, speaking to Business Standard, expressed anxiety.

“Companies may not fire permanent employees on payroll as Prime Minister himself directed against it, but for contractual workers like us the future is uncertain,” said Manoj Saikia, who works as check-in desk agent for a private airline at Agartala Airport.

GoAir has already started terminating contracts of expat pilots since the first week of March.

Delhi-based SpiceJet has decided to curtail notice period of around 20 pilots, who recently put in their papers.

Photograph: Reuters

Arindam Majumder in New delhi
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