Why IndiGo Plans Pay Cut for 2020-21 Financial Year

Indigo is the largest passenger airline in India primarily operating in India’s domestic air travel market as a low-cost carrier with focus on 4 pillars; offering low fares, being on-time and delivering a courteous and hassle-free experience. IndiGo has become synonymous with being on-time.

Due to the current COVID-19 pandemic, Indigo reinstated its earlier statement of pay cuts of up to 25% for its senior employees, IndiGo airlines said it would take a decision on restoring original salary

“closer to the end of this financial year”.

The India largest domestic airlines announced the pay cut ranging between 5% and 25%, in addition to its leave-without-pay programme for senior employees. The pay cut announcement made through internal emails, came after a series of flip-flops on the matter as Indigo struggled to stay afloat amid grounding of all commercial passenger flights due to the COVID-19 triggered lockdown.

In the emails accessed by PTI, Indigo airline said the salary cut will be effected from May till the end of the 2020-21 financial year

It has already paid full salary of April to its employees. Indigo had first announced its decision to cut salaries on March 19 when the economic fallout of the COVID-19 outbreak was apparent, but rescinded the move on April 23 in deference to the

“government’s wishes”.

Again on last Friday, May 8 morning, Indigo said it would implement the

“originally announced pay-cuts” from May onwards.

“While we had paid employee salaries in full for the months of March and April, I am afraid that we are left with no option but to implement the originally announced pay-cuts from the month of May 2020,”

” IndiGo CEO Ronojoy Dutta told employees in an email on Friday, May 8 morning.

Later, in its Friday, May 8 night’s email, the airline clarified to the employees:

“At this time, we intend to run this (pay cut) through the year 2020-21.”

On the question if original pay would be restored whenever this pay cut is repealed, the airline said:


“As a company, we will be fair to our employees and do the right thing at the right time. We will make a decision closer to the end of this financial year.”

Mr Dutta had announced on March 19 that the airline was instituting pay cuts for senior employees and he would himself take the highest cut of 25 per cent amid the COVID-19 pandemic that has hit the aviation industry hard.

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“I am personally taking a 25 per cent pay cut, SVPs (senior vice presidents) and above are taking 20 per cent, VPs (vice presidents) and cockpit crew are taking a 15 per cent pay cut, AVPs (assistant vice presidents), Bands D along with cabin crew will take 10 per cent and Band Cs five per cent,”

Mr Dutta had said on March 19

On March 23, the Modi government had asked public and private sector companies not to cut salaries or lay off employees during the COVID-19 lockdown.

In his email on Friday May 8, morning, Dutta said,

“In addition (to pay cuts), given the gradual build-up of capacity, I am afraid we have to take the additional painful step of implementing a limited, graded leave without pay program for the months of May, June and July.”

“This leave without pay will range from 1.5 days to 5 days depending on the employee group. While doing so, we will make sure that Level A employees, who form a majority of our workforce, will not be impacted,” he said.

With around 48% share in the domestic air passenger market, IndiGo is the largest airline in India. As on March 31 last year, the company has 23,531 employees on its rolls.

As India is under lockdown since March 25 to curb the coronavirus pandemic, all Indian airlines have taken major cost-cutting measures such as implementing pay cuts and leave without pay programs.

GoAir has sent the majority of its employees on leave without pay till May-end.

Vistara has instituted a compulsory leave without pay for up to 6 days in April for its senior employees. In May and June, the same set of senior employees will go on leave without pay for up to four days each month.

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AirAsia India has cut salaries of its senior employees by up to 20%, while Air India has cut salaries for its staff by 10 per cent.

SpiceJet has cut salaries of mid and senior-level employees by 10-30%. As the majority of aircraft with Indian airlines are on the lease, they are currently seeking deferral of lease rentals by 6 months. Source

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