Jet Airways sacks expat pilots: Cost cutting or seizing the opportunity?

It seems like Naresh-Goyal led Jet Airways is not only making sure it stays relatively insulated from the aviation industry’s turbulence but also that it stays ahead of the game. In its latest effort to cut costs and take advantage of the unrest at crisis-ridden Air India and Kingfisher Airlines, the private airline has decided to sack 72 of its 183 high-cost expatriate pilots, according to a report in The Economic Times.

Jet Airways’ move to do away with expat pilots who cost twice as much as their Indian counterparts stems from the surplus of pilots in the market, courtesy its one-time rival Kingfisher Airlines and the ongoing pilot crisis at Air India. Mallya’s airline has already downsized operations and slashed its fleet to 20 aircraft, against 64 a year earlier.Meanwhile, Air India has already sacked one-fifth of its 500 striking pilots belonging to the Indian Pilots Guild.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

“….more than 50 percent of its pilot force has been rendered redundant. Kingfisher has lost almost 300 pilots to competing domestic as well as international airlines in a span of six to eight weeks,” it said.

[caption id=“attachment_318379” align=“alignleft” width=“380” caption=“DebarkaBanik/Flickr”]  [/caption]

Earlier this month, the airline had decided not to hire any foreign pilots in order to save costs as the rupee had dropped drastically. Additionally, the Directorate General of Civil Aviation had given airlines a 2013 deadline to phase out expatriate pilots. In 2009, Indian pilots of Jet Airways have also gone on a strike over the exorbitant pay packages and better facilities offered to expat pilots.

The airline made its highest-ever loss of more than Rs 700 crore in the second quarter (September-ending quarter).

Meanwhile, the Centre for Asia Pacific Aviation (CAPA)’s annual outlook for 2012-13, released on Tuesday, said that Jet Airways will continue to be the largest beneficiary of the Air India, Kingfisher crisis as it may place an order for almost 100 narrow body aircraft in this financial year “to meet both replacement and growth requirements”. While Air India could face a temporary shutdown due to human resource issues, Kingfisher Airlines’ revival is completely dependent on whether direct investment by foreign airlines is allowed by the government, the report said.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

“Kingfisher’s dramatic contraction from 66 to 16 operational aircraft, of which half are regional ATR aircraft, has left the domestic market open for Jet. Similarly the temporary industrial action on AI’s long haul international routes has driven North American and UK traffic to Jet,” the report says, adding, “It (Jet) may decide to take advantage of the situation to expand both domestically and internationally as it had done in 1996 when a number of its competitors had closed down.”

Already, the complete withdrawal of Kingfisher from international operations is benefiting Jet with higher yields in terms of revenue per passenger. And with Air India downsizing its international operations, Jet Airways is bound to gain as there is a situation of under-capacity in peak travel season.

As Firstpost said earlier , Goyal wants to take Jet’s overseas operations from just 370 per week to a whopping 528 by the winter of 2012 - an increase of over 42 percent.

Already, with a change in the right of first refusal policy, Jet has been allowed to operate 74 additional overseas flights from the ongoing summer schedule. These include new flights to Bangladesh, Kuwait, Dubai, Sri Lanka, Maldives, Singapore, Dar-E-Salam and Bangkok. And if all goes as planned, Jet Airways will soon surpass Air India as the largest international operator in our country by this winter.