Air India’s plan to shift around 19,000 of its employees to its ground handling (GH) and engineering subsidiaries hinges on the decision of its employee unions, meeting on Monday to take a decision on moving to new subsidiaries.
A large section of the staff is willing to go on deputation, but is against taking transfer to a subsidiary. “We want employee interests to be protected. We have our own wage agreements, salary conditions, travel passage and medical facilities and want all that to be protected,” a member of the AI Employees Union said.
The engineers union has similar views. “We will not take a transfer,” a member of the AI Aircraft Engineers Association said.
| AI RESTRUCTURING: WILL UNIONS AGREE? |
| * AI plans to shift 19,000 employees to two subsidiaries |
| * The ground handling subsidiary to take 12,000 and engineering subsidiary 7,000 employees |
| * Unions reluctant to shift; employees willing to go on deputation, but against outright transfer |
| * Shifting employees will bring down the strength from 38,000 to 19,000 |
| * The ground handling subsidiary will operate at all airports, barring New Delhi, Hyderabad, Bangalore, Mumbai and Trivandrum |
| * The engineering subsidiary is looking at a joint venture partner |
| * Apart from providing services to AI, the engineering subsidiary will look at getting third-party business from the Rs 2,000-crore maintenance, repair and overhaul industry |
The seven unions meeting on Monday are the Indian Pilots Guild, All India Service Engineers Association, AI Aircraft Engineers Association, AI Engineers Association, AI Employees Union, Air Corporation Employees Union and AI Officers Association.
With the shifting of staff to the two new companies, the ailing government-owned carrier plans to bring its employee-to-aircraft ratio to 142, much better than the average international norm of 150 to 160 employees per aircraft.
The current employee strength is 38,000, including 11,000 on contract. With the shifting of 19,000 employees, the airline estimates its annual salary burden will come down by almost half, to Rs 1,569 crore.
The airline management, including civil aviation minister Ajit Singh, expect problems in convincing the employees to shift to the new subsidiaries. A senior official said the airline would have to go beyond persuasion. “The employees would not like to shift to a subsidiary company and the management will have to order them in a manner that they do not go on strike,” he said.
Both the proposed companies — AI Engineering Services Ltd (AIESL) and AI Air Transport Services Ltd (AITSL) — will get an equity infusion from the parent company. The engineering subsidiary will get an infusion of Rs 375 crore in three years and the ground handling subsidiary Rs 393 crore in 12 years.
The GH subsidiary will induct around 12,000 employees from the parent company and offer services to any company at airports, barring New Delhi, Hyderabad, Bangalore, Mumbai and Trivandrum. It will charge AI half of what it would charge other airlines.
In the five key airports named, AI already has a joint venture with Singapore Airport Terminal Services. Most AI staffers would not join this new company, AI-Sats, despite an order. Only a tenth of AI-Sats employees have shifted from AI. Shifting meant signing new terms and conditions.
The engineering subsidiary, looking at a joint venture partner, will look at getting third-party business from the Rs 2,000-crore maintenance, repair and overhaul (MRO) industry, expected to see fast growth in the coming years. The current engineering division in the airline only services AI planes.
"We have studied MRO business models in other countries and feel this will not be sustainable,” said a union leader. “The MRO business has thin profit margins. Further, AI will have to incur additional costs in the form of service tax.'' He added AI hangars did not have certification from the European Aviation Safety Agency. Without this, foreign airlines would not service their planes with AI.
