NEW DELHI: The massive impact coronavirus is having on aviation has led IndiGo to decide on reducing its employee count by 10%. This is the first time India’s only cash-rich airline has decided to take such a step to survive the downturn. IndiGo has about 24,000 employees. Its employee cost in fiscal 2019-20 was Rs 4,395.4 crore.
All Indian carriers are struggling to survive and the government has so far not given any relief to this sector. On the other hand, jet fuel prices have been hiked sharply after schedule domestic flights were allowed to resume on May 25 after a two-month suspension.
“…it is impossible for our company to fly through this economic storm without making some sacrifices, in order to sustain our business operations. Therefore, after carefully assessing and reviewing all possible scenarios, it is clear that we will need to bid a painful adieu to 10% of our workforce. It is for the first time in the history of IndiGo that we have undertaken such a painful measure. This is indeed a very unfortunate turn of events from the optimistic growth trajectory we had carved out for ourselves just six months ago; but this pandemic has forced us to re-evaluate our best laid plans,” a note from IndiGo CEO Ronojoy Dutta on Monday said.
IndiGo has created a “6E care package” for the impacted employees, under which they will be given notice pay in lieu of serving notice applicable to them and severance pay which will be calculated as one month of CTC for every completed year of service, subject to a maximum of 12 months. “At a minimum, an impacted employee will receive at least three months’ gross salary, including both the above payments,” the note said.
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Bonus for FY 2019-20 will be paid when the company decides to make this pay-out to the rest of the employees this fiscal, even after the impacted employee’s exit. Gratuity, leave encashment and longevity bonus (for cabin crew) will also be given. Medical Insurance coverage for impacted employees will be extended until December 2020. There shall also be a provision to continue with the policy post December 2020 as per applicable market rates. For those employees who had covered their parents via the policy, such insurance will also be extended until December 2020. As is currently existing, payment will be borne by the employees.
“This has been one of the toughest decisions that we have had to take and we are ensuring that the transition process for the impacted employees is carried out seamlessly, professionally; and with the utmost respect and compassion. We would like to express our heartfelt gratitude and sincere thanks to all our people who have stood by us through thick and thin; and we are confident that both individually as well as collectively, we will emerge stronger out of this crisis,” the note added.
Dutta listed the steps the airline had taken so far in face of the pandemic. “…aviation has been one of the sectors that has been impacted the hardest (by the pandemic). Even now, IndiGo is flying only a small percentage of its full fleet of 250 airplanes… IndiGo was one of the few airlines globally which paid full salaries for the month of March and April 2020, despite the disruption in business. Subsequently, we did have to undertake a number of measures such as pay cuts, leave without pay and various other costs; but unfortunately, these cost savings are clearly not enough to offset the decline in revenues,” his note said.