Airline Business Is Soaring, But Frequent Industrial Action Shows A Deeper Malaise

“The disruptions have cascaded across the network forcing us to curtail the schedules over the next few days. We had to do this to cope with the non-availability of crew and to recover schedules,” wrote Alok Singh, CEO of Air India Express, in an internal mail. 

In both Vistara's and AI Express's cases,  the management's response was to try and put a lid on the agitations. But many felt the halting of what was really industrial action in the high skies was really like applying scotch tape on a deep wound. 

The fact remained that these events revealed a malaise much deeper than unhappy employees here and there or problmes related to just one or the other  airline. 

As the global pandemic ran out its course, airlines around the world started reporting better days. Fares soared as a pent-up demand for travel helped sell more seats. So far so good for the global and Indian airline industry. However, what came as a dampener to airline workers here was that their wages did not increase in a manner commensurate with that of their counterparts in Europe, the US, West Asia, and China, who started reporting faster increases in earnings.

The end result of the dichotomy was: low morale, threats of industrial actions which saw thousands of flights canceled, jeopardising the travel plans of hundreds of thousands of passengers, besides bad press for all stakeholders. 

Low Salary vs Airline Financials

Three companies, among Indian carriers, are listed on domestic bourses - Indigo, Jet Airways, and SpiceJet. (Though Jet Airways doesn’t exist anymore, its stocks are still traded in the hope that the airline may be revived someday).

The financials of Indigo have seen phenomenal changes since the COVID-19 pandemic died down. The total income of the company has gone up manifolds, and so has its profit. The stock price too has gone up by more than 400 per cent in the last four years. Another listed airline, SpiceJet, has improved in terms of financials, with revenues going up and share prices doubling, but the company is yet to make a profit. 

“Look at the financials of the companies, some of them made profits. Their businesses are soaring, expansion in terms of operations, new destinations are being done” said Shakti Lumba, a retired pilot from Indigo.

“But when it comes to sharing the income with employees, they have several excuses,” he added.

Indigo revenues were impacted by the pandemic, coming down from Rs 37,291 crore in 2019-20 to a low of Rs 15,677 crore before going up to Rs 55,881 crore in FY 2022-23. In the three quarters of 2023-24, the total income of the airline stood at Rs 52,725 Crore. 

Likewise, SpiceJet earned a revenue of Rs 13,134.7 crore in 2019-20 before hitting a low of Rs 6,072 crore in 2020-21. Subsequently, it rose slowly to Rs 7,571 crore rupees in 2021-22 and then to Rs 9,841 crore in fiscal 2022-23.  

Similarly, Air India after witnessing two years of lower revenues in the Covid-stricken 2020-21 and 2021-22, bounced back to a better topline, reporting revenue of Rs 31,377 crore, which was about 10 per cent more than pre-Covid times.

Post Covid Troubles

However, most of the airlines continued to be in the red even after COVID-19 ended,  as prices of jet fuel and aircraft spares kept going up. 

Indigo was the only major airline in India which made a profit. However, Spicejet and Vistara reported a significant reduction in their losses.

The fact of the matter was that none of them including the profitable Indigo agreed to raise salaries even though globally other airlines were going ahead with higher salaries and bonuses to retain staff loyalty and cope with increased work because of a boom in air travel, regardless of whether they were making profits or anticipating profits, after the Covid pandemic ended. 

IATA has projected that airline operating profits, globally, will rise from US $ 40.7 billion in 2023 to US $ 49.3 billion in 2024. Net profits will rise more moderately from US $ 23.3 billion in 2023 to US $ 25.7 billion in 2024. 

In a report prepared in February 2024, CRISIL says the operating profit of domestic airlines is expected to go up by 20 per cent in FY 2024-25, riding a strong recovery of passenger traffic, which may grow by as much as 18-20 percent. 

“Next fiscal, operating profit growth is expected to be in the vicinity of 20 per cent from Rs 18,000-20,000 crore estimated this fiscal, even as technical issues in some engine types could ground some aircraft and limit the increase in operational fleets,” said Mohit Makhija, Sr Director, CRISIL Ratings in a report published in February.

“The impetus to passenger traffic growth should continue next fiscal though growth in operating profits will normalise given the high base of this fiscal,” Makhija added. 

India’s aviation analysts concur that the country's airlines had been fast with cuts in salaries and slow in raising them as the aviation scenario improved. 

“The management was quick to respond to the Covid induced situation, after the Covid-19 pandemic hit globally, our salary cut came as a surprise for us,” said Preetam Singh, a former pilot of Indigo.

“After normalcy came a few months later and traffic started going up, we thought our compensation and other perks would be restored. Unfortunately, that did not happen, it took more than two years before we got back to the 2019 salary level” Singh added.

Indian Carriers’ Loss Is Foreign Carriers Gain 

The net, net result is that the salary of Indian Pilots is not comparable with that of other Asian airlines. Experts believe that low salary structures in India often provide good opportunities for foreign carriers to lure pilots away from the country as they come relatively cheap.  

“Foreign airlines such as Emirates, Qatar Airways, Etihad Airways, Air Arabia and a new airline in Riyadh are all looking at India to hire talent, and are paying much higher salaries when compared to India’s airlines,” said Mohan Ranganathan, a former pilot.

High Mortality Rate:  A Reason For Low Salary? 

One of the most critical aspects of Indian aviation is the high mortality rate of airlines. This keeps throwing challenges to the salary structure, not only for pilots but for other employees too. 

The trend shows that as soon as the airline market stabilizes, another set of problems confront carriers making it tough for them to raise wages. 

The closure of any airline leaves hundreds of pilots jobless. When Jet Airways stopped operations in 2019, it left more than 700 pilots in the market without a job. 

After some time, when the job market equilibrium was again getting restored, Go First Air went bust. As a result, some 400 pilots were thrown out of their jobs. Given this scenario, salaries remained depressed.

“In the recent past, some major airlines stopped existing - Kingfisher, Jet Airways and lastly Go First. This leads to an over-supply of well-trained pilots. After the carriers were shut down, pilots and other staff were willing to lower wage expectations. This affected overall salary levels” said Alok Kumar, Ex-Marketing Chief, Go First.  According to the DGCA, by the close of FY 2023, India had 10,000 pilots. 

According to government data, the aviation market in India, currently the third-largest in the world, boasted of more than 771 aircraft as of 21 December 2023. This is expected to grow exponentially for the next 10 years according to an industry estimate. 

What Is In Store For Indian Aviation

According to India Boeing Commercial Market Outlook 2023, South Asia is about to welcome over 2,700 new airplanes over the next two decades, with 90 per cent of them destined for India. This growth projection also says that the region will require approximately 37,000 pilots and 38,000 maintenance technicians over the next 20 years, driven primarily by growing demand in India.

“As I see it, pilot salaries will go up in the near future as soon as more aircraft join the fleets of different airlines,” said Harsh Vardhan, Chairman, Starair Consulting.