National carrier Air India has unveiled its second set of cost-cutting measures to survive the COVID-19 outbreak and also ensure that it remains attractive when it is sold.
Highlights of the 21 steps proposed include a special drive to recover dues from government departments by March 31, negotiations with aircraft lessors and hotels overseas, a 10% cut in salaries, increasing cargo loads to make up for passenger loss and temporarily invoking force majeure in all agreements.
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An official order issued on Saturday said that in the wake of recent global developments and the serious impact of COVID-19, which has adversely impacted the aviation industry both in domestic as well international sectors, there is an insurmountable dip in the revenue, which calls for stringent measures to reduce costs. All airlines have taken drastic steps to survive the current crisis and an urgent need is felt to take steps to curtail costs to mitigate the current financial crisis.
The order said that at an emergency meeting of the executive management committee meeting held on March 18 it was decided that an exercise to review all agreements and renegotiate with lessors be undertaken.
In view of the suspension/reduction of various flights, especially international flights, the management asked the hotel committee to undertake a review of the existing agreements for reducing the rates to the extent possible.
“In case, there is any minimum guarantee clause, the same is to be immediately suspended for a period of three months, without impacting the rates once the situation normalises,” the order stated.
It was also decided that a special drive is to be undertaken to recover all pending dues from government departments in a time-bound manner. “Aggressive action is required by the concerned offices in the regions as well at the headquarters to collect the amount by the end of the current financial year,” the order said.
Reasonable wage reduction
The employees were further informed that during the meeting, there was general consensus in the committee meeting to undertake wage reduction of a reasonable amount. “lt was agreed to implement a deduction in allowances (excluding basic pay, house rent allowance and variable dearness allowance) in respect of all employees, except cabin crew, for a period of three months effective March 2020 salary,” the order said.
Among other measures to be adopted were implementing a quick turnaround of flights for cabin and cockpit crew; serving only packed food in flights; and immediately discontinuing magazines, newspapers, cold/wet towels and blankets. In view of the curtailed operations, and reduced requirement of aircraft and manpower, mandatory training for cockpit and cabin crew will be undertaken and completed during this period.
The Executive Director (Operations), under the guidance of Director (Commercial), will review flight schedules by clubbing and curtailing flights. Given the reduced work load and also the COVID-19 threat, Employees will be encouraged to avail their privilege leave.
Departmental heads have been told to formulate a detailed work-from-home plan with reduction in salary (where possible) and submit the same with work requirement and a cost-benefit analysis. The management also decided that there would be no fresh recruitment, induction, hiring and no extension/re-employment to retired officials (except for pilots and other critical categories). All overtime to employees would be discontinued.