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Stock Analysis, IPO, Mutual Funds, Bonds & More

Air India sacks 45 cabin crew members on grounds of absenteeism

The decision of AI to crack the whip comes amid reports that several cabin crew members were eyeing jobs in Gulf carriers.

, ET Bureau|
Updated: Jun 18, 2014, 08.17 PM IST
0Comments
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MUMBAI: National carrier Air India has in the last six months terminated the services of 45 cabin crew on ground of absenteeism and will be serving final notices to 59 more in the next month and half, a senior executive said Monday.

"We began this drive last year when we saw a large gap between the number of cabin crew on our rolls and the number reporting for work," said the executive who didn't want to be named.

The carrier currently has about 3,400 cabin crew on its rolls and above 800 more on contract.

Under the new drive, the carrier sent notices to people who were absent from work without authorized reason for more than 15 days. That was followed a few weeks later with chargesheets and a few months after that, termination notices.

About 400 such employees were given such notices last year, the executive said. Many came back to work, while others resigned on their own. The rest--about 20--were fired.

The tough moves augur well for the loss-making airline, one of whose main problems is a large wage bill, which is a large chunk of its losses.

Air India, once synonymous with its royal mascot the Maharajah has in the last seven years made heavy losses after a hasty merger with erstwhile domestic carrier Indian Airlines. The carrier has been, like the rest of the industry, hit by high fuel costs and tough competition but is also plagued by its own problems of overstaffing and mandatory flying to unprofitable routes.

But Air India has been working hard to reduce its costs. Last January, it implemented a 25% salary cut across its employees, although it also promoted 6,000 of them. It also eliminated several perks such as the sick leave encashment, under which if an employee did not use the 20 days of sick leave due to him, he could avail of an incentive over and above his salary.

Over the last two years Air India's salary bill has reduced by Rs 400 crore to Rs 3,100 crore in 2013-14. The total revenue per employee increased to Rs 99 lakh from Rs 59 lakh in 2011-12 and total expenditure per employee reduced to Rs 13 lakh from compared to Rs 17 lakh. It's losses last year reduced 25% to about Rs 4,000 crore.

Air India's current number of employees currently stands at 23,034, down from more than 33,000 at the time of merger. The carrier in January hived off its two units of groundhanding and engineering into two separate units. Barring employees in those, the airline's staff count is just above 13,000, the executive said. It also has 3,500 employees on contract and 2,200 casual labourers.

Its employee-to-aircraft ratio has reduced to 1: 245 (245 employees per aircraft) from 1: 301 in 2007, then one of the highest among airline companies in the world. Barring the subsidiaries, the ratio would be 1:139. Air India aims to bring it to 1:92 by 2016, by taking a number of other measures such as a cutdown in the number of employee unions apart from stricter promotion and transfer rules. The company however is yet to separate balance sheets of the two subsidiaries. This means their expenses add to the airline's losses.

But the airline has to shed much more flab. For instance, India's aviation regulator mandates a total of 125 hours of flying for cabin crew and pilots every month. Air India's crew does only 60 hours for widebodied planes such as the Boeing 787 Dreamliners and 747s and 52-54 hours for narrowbodied planes like the Airbus 320. Pilots too fly for 40-50 hours amonth meaning both sections of employees are still heavily underutilised.
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