Charat Ram, the industrialist, used to say that all labour disputes are the fault of company managements. That would certainly seem to be the case with Air India (as indeed it was earlier with Jet Airways—not once but twice). The national airline’s new chief executive came into a crisis situation that cried out for change and for costs to be cut—never an easy or pleasant task. There was some tough talking done initially, followed by some tough measures. But along the way, what seemed to have been forgotten was that consensual functioning had much to be said in its favour. The result was a pilots’ strike that threatened to cripple the airline. At one stage, the management seemed to be readying for a lock-out—which would have handed a lollipop to Air India’s private sector rivals. Fortunately, wiser counsel prevailed, primarily (it would seem) because the Prime Minister intervened. The situation has now been defused, the pay cut has been referred to a committee in order to buy time, and the pilots are back at work. But Air India’s troubles are still there, waiting to be tackled—and the pay issue will not go away.
Credit should be given to the airline management for having tried in the interim to cut costs in many other areas; information put out by the company suggests that the cumulative savings from the various measures being taken could be in the range of Rs 1,000 crore and more in a year. While that would be a very creditable achievement, it is also clear that viability cannot be achieved without cuts in employee costs. One solution would be a reduction in staff numbers, but there are limits to how much of that can be done, and in what time frame. In the interim, an obvious target would have to be the emoluments of highly-paid employees, including pilots. However, it is one thing to recognise that, and quite another to get the affected people to accept overnight cuts in emoluments to the extent of 25 per cent or more of their current pay packets. Such a situation needed sensitive and careful handling, especially when it was known that pilots could bring the airline to its knees very quickly (as past episodes of industrial strife have demonstrated in Indian Airlines and in Jet).
The situation is not unique to the airlines. Many companies in a variety of industries have dealt with cost pressures over the last two troubled years, and introduced pay cuts for their more highly-paid employees without provoking industrial strife. There is of course the vital difference that pilots are unionised while people in management are not. All the more reason, then, why the Air India management should have tested the water before diving in. It comes back therefore to what Charat Ram said. The lesson that airline managements need to learn is that tough measures need sensitive handling, especially when it is obvious that the failure to operate flights benefits the competition immediately, and could cause a lasting loss of market shares.
