IndiGo CEO Announces Pay Cut for Self, Employees; Air India May Follow Soon

CEO of IndiGo, Asia’s biggest budget airline by market value, will take a 25% cut in his salary due to traffic slump as much as 30% in India.

New Delhi| Budget carrier IndiGo today announced that it will cut salaries of senior employees as airline companies are currently facing the worst loss.

IndiGo CEO Ronojoy Dutta, who will himself take a 25% cut in salary, said senior vice presidents and above are taking a 20% pay cut while vice presidents and cockpit crew are taking a 15% pay cut.

The move comes in light of the unprecedented loss that airlines all over the world are suffering due to the global outbreak of Covid-19. Most likely to join the same is state-owned airline Air India which is also planning pay cuts of up to 5 per cent.

The reduction will be across the board, they say. The loss-making airline, which is in the process of the second attempt of privatization after failing to get a single buyer nearly two years ago, has already taken some steps such as reduced flying allowances to cabin crew besides withdrawing entertainment allowance to executive pilots, among others.

With the precipitous drop in revenues, the very survival of the airline industry is now at stake, Dutta said while announcing the pay cut. “We have to pay careful attention to our cash flow so that we do not run out of cash,” Dutta said adding that he knew how hard it was for families to take a cut in “take-home pay”.

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“With a great deal of reluctance and a deep sense of regret, we are therefore instituting pay cuts for all employees, excluding Bands A and B, starting April 1, 2020,” the chief executive officer said. Band A and B are the lowest brackets in salary class, where most of the employees are.

Go Airlines India Ltd. also cancelled several domestic flights on Wednesday after suspending international routes, airport websites showed. Representatives at the airline didn’t respond to requests for comment.

Air-passenger traffic in India, one of the world’s fastest-growing aviation markets, rose 9% in February, data from the country’s aviation regulator showed Wednesday. While travel restrictions were being imposed elsewhere, particularly around China, India was largely unaffected last month, before the recent sharp escalation in travel bans globally.

Two of India’s most high-profile airlines- Vistara and IndiGo are considering grounding planes as the coronavirus ravages travel demand, people familiar with the matter said.

In addition to potential groundings, Vistara, the Indian venture of Singapore Airlines Ltd., is considering delaying delivery of some of the first batch of Boeing Co. 787 Dreamliners it has on order, another person said.

175 people have been infected with the deadly Covid-19 and claimed 3 lives in India. The virus has claimed almost 9000 lives all over the world.

(Inputs from agencies)

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