Indigo cuts employee salary by 25% after GoAir asks them to go on unpaid leave

• An email from Indigo CEO said the pay cut applies to the salaries of all employees including CEO Ronojoy Dutta.
  
• It said that the pay cut is due to ‘precipitous drop in revenues’.
  
• The aviation industry in India had a worst-hit after the government announced the closure of its border for European and Middle-East nations.

As the coronavirus uncertainty looms, IndiGo announced that it would cut employee salaries by up to 25% starting from April 1, the airline’s CEO told employees in an email.

This pay cut also applies to CEO Ronojoy Dutta due to ‘precipitous drop in revenues’.

The decision came after GoAir is packing off employees on unpaid leaves. On Tuesday (March 17), announced that it is suspending international operations and offering leave without pay programme for its staff on a rotational basis, amid "unprecedented" decline in air travel due to the coronavirus pandemic.

The sources familiar with PTI said the airline plans to keep as much as 35% of its workforce on leave without pay for a month. This would include staff at overseas airports. It also said the airline was planning a 20% pay cut for employees in a staggered manner.

The cash-strapped national carrier Air India also announced cost-cutting measures which included reducing certain allowances or suspending certain services that it pays to its executive pilots, cabin crew and ground staff.

Indigo flagged a downfall in its quarterly earnings

Indigo's move of cost cutting wasn’t unprecedented as it said its quarterly earnings to be ‘materially’ impacted.

It also pointed out that the Rupee depreciated sharply, which will have an adverse impact on its dollar-denominated liabilities primarily on account of capitalised operating leases.

“In January and February 2020, IndiGo experienced a modest impact from the coronavirus. We cancelled our flights to China and Hong Kong and reduced frequency to certain other Southeast Asia markets,” the airline said in a filing to the BSE on Wednesday (March 18).

Airlines truncated routes after travel ban

The aviation industry in India was the worst hit sector after the government's travel ban across various countries including Europe, Middle-East and some of the Asian nations.

Even domestic travel is affected as people stay away from non-essential travel. Budget carrier GoAir suspended its operations for 28 days in some Northeastern states ensuing travel restrictions, officials said.

“The proposed flight between Delhi and Aizawl, which was announced to be introduced by the GoAir authority from March 29, has been put off and would be rescheduled once the situation is normal,” the Mizoram government’s principal consultant for civil aviation, wing commander J. Lalhmingliana, told the media in Aizawl.

After the UAE imposed travel restrictions, airlines such as Air India and IndiGo too truncated their flight operations.

The development comes after reports cited the UAE government as saying that it will suspend visas for all foreigners with the exception of diplomatic passport holders from March 17 in the wake of the growing coronavirus scare.

On its part, Air India truncated some of its operations to the gulf state from March 18. Besides, IndiGo said that owing to the curbs; the airline will cancel some of its flights to Dubai, Sharjah and Abu Dhabi from March 17 until the travel restrictions are lifted.

“We regret the inconvenience caused to our customers, and will be refunding the full amount to the impacted passengers,” the airline said in a statement.

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