Air India to enforce 10% cut in staff allowances, renegotiate contracts

Air India will cut staff allowances by 10 per cent, reduce on board service, renegotiate contracts and explore invocation of force majeure clauses in agreements to battle the demand slowdown due to Covid-19 crisis. 


Aviation consultancy CAPA estimates Indian airlines (except Air India) will post $500-600 million loss in first quarter as carriers are cutting salaries and enforcing leave without pay. 


The cost cutting measures were decided by executive management committee of the airline and order issued today by director (personnel) Amrita Sharan. 


The airline will enforce deduction in allowances, excluding basic pay, house rent allowance and variable dearness allowance, for all employees, except cabin crew for three months starting March.


Under the preventive measures, only packed food will be served onboard to ensure minimum contact with passengers while magazines, wet towel and blankets are barred. Flights will be curtailed or clubbed, efforts will be taken to boost cargo load and recover dues from government departments. 


The management has also decided to renegotiate rates with lessors and crew accomodation hotels and examine the invocation of force majeure clause for a limited period to overcome the financial crisis.  


"There will be no fresh post retirement contractual engagement in any category, except for pilots and certain other critical categories," Sharan said. Fresh hiring too is being stopped.


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