News: COVID-19 impact: IndiGo to cut pay of most employees including CEO

Compensation & Benefits

COVID-19 impact: IndiGo to cut pay of most employees including CEO

The management at IndiGo has been forced to take some tough calls as the entire aviation sector experiences a huge setback due to the novel coronavirus pandemic.
COVID-19 impact: IndiGo to cut pay of most employees including CEO

With travel ban and/or restrictions across many countries, the airlines are experiencing steep drops in revenues, and urging the companies in the sector to cut manpower costs. The latest airline to announce pay cuts is the budget carrier Indigo. 

Among the many employees who will experience salary cuts is also IndiGo CEO Ronojoy Dutta, who will himself take a 25 percent cut in salary. Senior vice presidents and above are taking a 20 percent pay cut while vice presidents and cockpit crew are taking a 15 percent pay cut.

The CEO wrote, “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.”

It was only yesterday that another budget carrier GoAir announced that it is suspending its international operations. Citing "unprecedented" decline in air travel, the budget carrier has announced suspension of international operations and offering of leave without pay programme for its staff on a rotational basis. GoAir has in fact begun terminations of contractual employees. 

While GoAir would be the first lot of job losses in the Indian airline industry citing the impact of COVID-19 on revenues, IndiGo becomes the first one to announce pay cuts. 

IndiGo’s CEO agreed how hard it was for families to take a cut in ‘take-home pay’, but “We have to pay careful attention to our cash flow so that we do not run out of cash,” he added. 

According to a PTI report, government-owned Air India may also take measures like cutting the salary of employees by 5 percent amid its growing financial woes particularly in the wake of the coronavirus pandemic, which has nearly grounded its entire international operations. Air India was already in losses and in the process of a second attempt of privatization, the novel coronavirus pandemic has made it more difficult for the airlines to manage costs.

For how long would the situation remain the same and the travel restriction will continue remains unknown. How could the airlines manage talent in this situation of crisis? How can they help them through these difficult times as they suffer pay cuts or in some cases job losses? These are some extremely difficult questions the entire world of work has to come together and ponder upon. 

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Topics: Compensation & Benefits

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