Jet Airways joins SpiceJet, Vistara, starts variable pay to save wage bill

Plan covers 100 execs; fixed pay at 80-85%, rest based on staff performance, firm's profitability

Jet Airways is introducing 15-20 per cent variable pay component for its top management as it looks to save on its wage bill.

The Mumbai-headquartered airline has a higher cost structure than other listed domestic airlines and is undertaking cost control exercises to remain nimble. The variable pay scheme will be applicable to around 100 senior executives of Jet Airways and is expected to result in annual savings of Rs 25-30 crore, an airline source.

While the fixed salary component will be 80-85 per cent, the remainder will be linked to employee performance and airline profitability. The senior executives will also not receive salary increment this year.

A Jet Airways spokesperson did not offer immediate comments.

Some of Jet's peers already have a variable pay scheme in place. Vistara and SpiceJet too have variable pay for its senior management. Air India a productivity linked incentive scheme which was a variable pay out in mid-1990s but the same was discontinued in 2012.

Jet Airways has a staff strength of around 15,000 and had a wage bill of Rs 2,316 crore in the first nine months of FY 17. Employee costs rose 26 per cent on a year on year basis for the period. The airline has around 2000 pilots on its rolls whose salaries account for nearly half of the wage bill. Read more

Cabinet clears civil aviation policy; replaces 5/20 rule

Cabinet clears civil aviation policy, replaces 5/20 condition with 0/20 rule

Amid hectic lobbying, the Cabinet on Wednesday gave its approval for partial abolition of the 5/20 rule, which will enable new carriers like Vistara and Air Asia to start international operations sooner.

According to the Civil Aviation Policy, released by the ministry on Wednesday, the government has decided to scrap the minimum five years requirement. However, an airline will have to allocate 20 aircraft or 20% of their total fleet of aircraft, whichever is higher, to the domestic sector if they wish to fly overseas. This effectively means a carrier must have a minimum 20 aircraft in its fleet.

“This is to ensure that any new airlines starting business in India should essentially serve the remote parts of the country,” a ministry official said.

In an interview to Business Standard, Mahesh Sharma, Minister of State for Civil Aviation, had hinted at this proposal. “In place of 5/20, we can make it 3/10 or 3/12. We have also looked at options like 0/10 and 0/20,” he had said.

ALSO READ: We are looking at partial abolition of 5/20 rule: Mahesh Sharma

While proposing to liberalise India’s skies, the government had earlier kept proposed three different options to replace the rule: continuing the present norms, complete abolition from immediate effect and a credit-based system to replace it. At present, an airline requires five years of operations and 20 aircrafts in its fleet to go on international routes. Read more.