Mihir Mishra & Surajeet Das Gupta / New Delhi Jul 18, 2009, 00:41 IST
The government’s plan to restructure Air India, the loss-making state-owned airline, includes a proposal to rework the troubled productivity-linked incentive (PLI) scheme, which accounts for over 45 per cent of the company’s Rs 3,000 crore wage bill.
The scheme has been at the core of the airline’s inflated costs, so much so that the airline set up a company last month to examine ways of reducing the wage bill by Rs 500 crore.
The airline is suffering losses of over Rs 5,000 crore and the management has been given 30 days to come up with a viable revival plan.
REFUELLING AIR INDIA
* Restructure the productivity-linked incentive schemewhich accounts for over 45% of the company’s wage bill
* Extend retirement tenure of pilots for two years; not contract extension for expatriate pilots
* Air India-SATS joint venture for ground-handling to start operations in September
* Ask for an extension of loan payment by six months from lenders n Defer delivery of new aircraft
The plan also envisages deferring aircraft delivery, kick-starting operations of the joint venture for ground-handling operations from September, and requesting a six-month repayment deferral from lenders. Air India currently has debt of Rs 15,000 crore on its books.
Proposals are also being discussed on extending the retirement age of pilots by two years to 60, instead of extending the contracts of expatriate pilots. Air India also has 124 expatriate pilots who earn 40 per cent more than their Indian counterparts — with salaries of around Rs 10 lakh a month and contracts that run to July 31, 2010.
The productivity-linked incentive or PLI scheme, however, remains the major problem. “At the moment, the PLI in many cases is huge, sometimes many times more than the salary and is not always related to performance. We need to restructure the PLI and save costs and make it directly related to performance,” said government sources involved in the restructuring of the airline.
For instance, technicians get a salary of around Rs 50,000 per month and a monthly PLI income of Rs 1.3 lakh. The PLI in this case is linked to criteria such as the number of aircraft services, among others.
At the lowest category of employees, the PLI constitutes 20 to 30 per cent of overall salary. For instance, a superintendent with a salary of around Rs 25,000 a month gets a monthly PLI of Rs 9,000 to 10,000.
At the lowest level of a helper, with a salary of Rs 15,000 a month, the PLI is around Rs 2,000.
The issue, however, is still to be discussed with Air India’s six-odd unions, some of which appear favourably inclined. “We are ready to look at restructuring of PLI. The problem of mismatch of PLI, which is sometimes three times the salary, is at the higher levels, like with engineers and technicians, not with most of our members,” said Dinakar Shetty, president of the Air Corporation Employees Union, which claims to be the largest union, representing 80 per cent of the employees.
The management of Air India, which was formed through the merger of domestic airline Indian Airlines and flagship carrier Air-India in 2007, admits that restructuring PLI for the airline’s 31,000 employees won’t be easy.
The PLI is linked to productivity and not with profitability, so we have to see how the government is thinking of reworking them,” said a senior Air India executive.
Meanwhile, government sources said that the joint venture between Singapore Airport Terminal Services Ltd and Air India (in which it has 51 per cent stake), which was formed last year, for ground-handling would be operational from September and the process of registration of the company is on.
Some Air India staff will be transferred to this company , though the numbers have not been worked out yet, the sources said.
The joint venture has been the focus of controversy with many top Air India executives opposing its formation. They have contended that that AI now has to pay a substantial amount to the new company for services rendered which is much larger than the profits it would make as a majority holder in the company.
On aircaft delivery, the government official said: “We have not come to the numbers but there will surely be deferrement of delivery of the new aircaft.”
The company has already taken delivery of 48 aircaft out of the 111 it had ordered.
The only way to save Air India is privatizing it. Business in India must be privatized to make things work out efficiently. We know how our country work and what will kill our economy.
Try flying on Air India, you will stuff to death with the attitude of the check-in counter, and the services inflight. How do you expect a business to grow if they are not working for the benefit and interest of the organization.
Our leaders should start spending some money to visit and see how things work in America, Japan, Singapore and Korea. Without their Eyes wide open, there is far future for our country.
first u have to find out the root cause and then root out....increase in frequency of so called foreign carriers who can take fuel like water and operate at a low cost.i am not aware of as to how these low cost carriers have come.why we have not protected our own industry..u can see very well.so called pvt cariers jet ,kingfisher,paramount etc delay payment to fuel bills in crores .who is at fault....
unrealistic data. business standard should check the data from appropriate authority before publishing such data on the web or news paper. very sorry that the actual payment of technician is 4 to 5 times less than the published figure. again very sorry that i felt such a good reputation for business standard.
Posted by: Mihir.Mishra
July 20 , 2009, 18:25 IST
Civil Aviation Minister Praful Patel had mentioned these figures in his interaction with the press on the day the restructuring of Air India was announced. Air India CMD Arvind Jadhav and Aviation Secretary M Madhavan Nambiar were also present when the minister gave this information.
Requirement to rejig PLI must be for pilots & other top official who play a very little or negligible role in the actual produtivity of the organisation ( if one goes in the core definition of Productivity), and not the lower levels of engg. & other staff who flow their sweats in very poor, adverse & unheigenic working conditions and that too in 6x8 hrs. a week.
What is required is rejigging of productivity, but this cannot be done with AI, ever. The pays were rejigged for productivity in several successive bouts without any reflection in productivity. AI HAS ALWAYS DEFINED ALL REJIGGING GIMMICKS, ONLY ADDING TO THE WOES OF THE PASSENGERS AND OF THE TAX PAYER THROUGH ACCUMULATING LOSSES. High time this gigantic symbol of labour defiance and drain of public money is done away with, the men behind the grossly atrocious profile of AI,sent home, and the assets sold without delay.
Posted by: SunilN
July 19 , 2009, 22:18 IST
Privatize all business organization to work for the best interest of the country. Or you will find many unloyal customers switching to other private carrier. Are our government aware of all these???
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