While the Centre’s efforts to privatise Air India (AI) are facing some headwinds, the process is already ushering in some good practices in the company.
One such measure is the effort to get ‘leaner’. As many as 300 AI employees on contract after superannuation across all levels were let go recently. It appears that this will now become a formal policy.
AI’s employee cost is unsurprisingly high compared to its peers and takes up nearly 12 percent of its revenue.
According to senior airline officials, both past and present, an extension after retirement was almost a norm, across all levels.
In fact, after it was merged with Indian Airlines, there was no fresh recruitment but some retired employees were retained on contract. This tradition has now come to an end, they said.
The policy was put to the test recently when the question of offering an extension to Pankaj Srivastava, Director, Commercial, who is due to retire on April 30, came up before the top management.
“To maintain uniform policy, granting an extension to an officer post-retirement on one hand and terminating the services of large numbers of similarly placed officials/officers would not be proper and will lead to resentment amongst the rest,” Pradeep Singh Kharola, CMD, Air India, wrote in a letter to the Secretary, Ministry of Civil Aviation. He added that an “extension to Srivastava would hamper the chances of other suitable officials who are eligible for the post.” Instead, the airline could promote an eligible officer, he suggested.
A copy of the letter, which was dated March 16, is available with BusinessLine.
As of December 2017, Air India had 11,214 permanent employees, of which nearly 4,200 are due to retire in five years, says the Preliminary Information Memorandum for Inviting Expression of Interest for the Strategic Disinvestment of Air India, issued by the Aviation Ministry in March.
The airline also has 2,913 employees on contract, 2,155 casual workers and 549 officials in the ‘others’ categories, including 236 local employees recruited at foreign stations and 313 employees on contract post-retirement, says the document.
Globally, only pilots are given an extension beyond superannuation due to a shortage of professionals. Global regulations also permit them to fly till the age of 65. However, in AI, most officials were also either given extensions or re-employed on contract.
“Giving an extension was a ‘disease’ in Air India for the last 25 years. Only when the disinvestment process gained momentum did the airline look at this issue. They should have stopped giving extensions long back to make the airline healthier financially,” said another former airline official.