Given the poor standard of service and lack of professionalism, it is often difficult to sympathise with Air India employees when they go on strike. But despite all the opprobrium they are attracting from management, stranded passengers and the media, the 800-odd pilots of the former Indian Commercial Pilots Association, the now derecognised union representing pilots of the former Indian Airlines, may have a case for parity with those pilots who belonged to Air-India when it was solely the international flag carrier. Indeed, it is a matter of concern and shame that a basic managerial issue like this had not been sorted out earlier. After all, the international and domestic organisations merged in the August 2007, so this demand for equal work for equal pay has been festering for over four years. The most vital aspect of corporate mergers is to settle such human resources management issues. The management, therefore, is as much to blame for the current imbroglio as the intransigent pilots. The problem has been complicated by the fact that the pilots have been badly let down by their representatives. As a report in Business Standard earlier this week highlighted, committees to deal with merger-related HR issues have been squabbling ever since. The unions fared no better.
Dubbing the matter via newspaper advertisements as a problem of pilot avarice is to divert attention from the issue at hand. Sure, the pilots earn high salaries, but that isn’t really the point here. The heart of the matter is that “Air-India” pilots were paid better, with higher fixed salary and extra allowances, compared to “Indian Airline” pilots, for the same job done. AI also had better terms than IA for allowances linked to number of flying hours. This is the deal the unions negotiated in 2006. The reason the latter pay structure is pinching is that the loss-ridden merged Air India has since cut back on its domestic flying capacity by 40 per cent. That is why former Indian Airlines pilots are demanding, pending a final wage agreement, an interim pay structure that loads remuneration on to the fixed component and insulates them from the airline’s performance. Obviously, this would raise the salary bill, which is already a steep 18 per cent of operating cost. The problem is that with accumulated losses of Rs 15,000 crore and a debt burden of over Rs 40,000 crore – of which Rs 21,000 crore is for working capital loans alone – the airline’s management says it is in no position to pay higher salaries (though, it did not baulk at paying its recently departed Austrian COO Gustav Baldauf a generous “market-linked” package).
The management is in a bigger bind because it knows that giving in to the striking pilots’ demands would mean following through on similar demands for ground crew and so on. None of this would have arisen if the merger metrics had been put in place and everyone asked to take a haircut in the interests of survival. As it is, a proposal to convert 60 per cent of Air India’s short-term debt into long-term debt and the rest into preference shares is in the works, but it is uncertain how far this will help salvage an airline that has another Rs 20,000 crore on its books for aircraft that it doesn’t really need. These issues get complicated because the merger itself is suspect and seen as an act of political cronyism meant to benefit corporate vested interests and ground the airlines.
