IndiGo has restored its leave-without-pay (LWP) policy for its employees following the difficult second wave of COVID-19 in India. Staff will have to take anywhere between 1.5 to 4 days off every month, resulting in cuts of 5% to 13% for three months. This decision comes as all airlines look to scale back costs as passenger numbers remain low.
Back again
In January, IndiGo become one of the first Indian airlines to roll back all salary reductions and its LWP program. However, fast forward just four months and the carrier is once again being forced to cut salaries in the face of a crippling second wave. The policy goes into effect from today, June 1st, and will remain in place until September.
Starting this month, many employees will have to take LWP ranging from 1.5 to 4 days every month, according to Business Standard. The exact number of days depends on the pay scale, with pilots taking three days off every month and those in lower brackets seeing lesser cuts. Senior executives will be taking the full four days LWP, along with previous pay cuts.
Notably, the changes only affects employees who are not in Bands A and B, the two lowest ones. A majority of IndiGo staff are in these two brackets, exempting from these latest round of pay cuts. The carrier has always exempted Band A employees but seems to have extended this to even more staffers this time around.
However, more senior employees will see a reduction of anywhere between 5 to 15% as a result of LWP, as flying is reduced once again.
Capacity down
The announcement comes just days after the Indian government slashed domestic airline capacity from 80% to 50%. IndiGo was reportedly opposed to the move and wanted to continue flying as much as demand required. However, the government decided to protect financially struggling airlines like SpiceJet and GoAir.
With capacity now down once again, IndiGo has decided to reduce employee pay as well. However, considering that domestic passenger traffic is down nearly 75% since the second wave, cost cuts have long been expected.
In addition to cutting costs, IndiGo previously said that it would raise up to ₹3,000 crores ($412 million) to weather the second wave. While the airline had passed on raising funds during the first year of the crisis, this year has brought fresh challenges. The fundraising will bolster IndiGo’s substantial cash reserves and ensure it can comfortably make it through this crisis as well.
Others too
While the cuts at IndiGo might seem harsh, other airlines have taken measures to survive. SpiceJet announced yesterday that it will defer salaries and switch to a pay-by-hours-worked policy, substantially cutting employee pay. While this is the most extreme example, made due to lack of cash, other airlines are taking similar steps.
One year later and Indian aviation has found itself in a similar position. With traffic at a fraction of pre-pandemic levels, the road to recovery has only gotten longer.
What do you think about IndiGo’s LWP policy? Let us know in the comments!
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