How IndiGo lost confidence of its pilots & commanders

No flap 3 landings, no “set in” and “set out”, no accommodations of last minute roster changes, no rush to take off and try to meet the on-time performance requirements. These are some of the less than happy pronouncements by IndiGo flight crew in the last few days after the management’s attempts at mollifying its pilots fell flat. Even as they explore ways of getting more organised and setting up a union or guild, the commanders and crew -- many of whom are seething with anger – promise to be less accommodating and to do their job but nothing beyond.

The story of how the equation between India’s largest private airline and its commanders and crew touched such a low, however, starts a bit earlier. On March 31st, soon after an article appeared in this publication, revealing the details of the employee stock options (ESOPs) given to India’s largest private airline IndiGo’s top management in FY 2021, its commanders, first officers and cabin crew were furious.

Subject to significant pay cuts ever since the pandemic gripped the world, the commanders and crew were incensed at the jump in management earnings through ESOPs in the year while their salaries had not yet been reinstated. The employees were of the view that the ESOP allotments in effect negated the salary cuts taken by top managers in the year and that they (the pilots) were bearing a disproportionate share of the pain. It was argued by many that the management must share the burden of the pain of the pandemic and forgo the ESOPs, even if they were part of their contract. Alternatively, they could have taken a token salary of ₹1 through the year and made up through the ESOPs.

Soon after the Fortune India article, an internal circular from IndiGo head of operations Ashim Mitra - one of the beneficiaries of the allotment - announced 8% hike in salaries of pilots and crew, starting the next day itself, in an attempt to mollify them and contain the uproar that played out on social media and internal platforms.

The hike announced, however, proved counterproductive as the pilots felt the 8% increase -- coming as it did after such a gap -- was a “joke and insulting”. Many employees on different fora advised the management to “just keep it”. For the last week or so, internal platforms and social media were abuzz with messages from aggrieved pilots, several of whom categorically refused the hike. Subsequently, the airline “summoned” some vociferous protesters to Delhi and even suspended five pilots. The pilots are now looking at how best to go about setting up a union. They have contacted an independent pilot association to seek guidance.

In response to an email sent to the airline by Fortune India on various pilot grievances, an airline spokesperson said: “At IndiGo, we have always worked towards addressing the concerns of our employees even in the most difficult times like the onset of Covid, where we were the only airline in India to pay full salaries for the months of March and April 2020. This was despite the absence of any revenue for 2 months. We are constantly working towards reversing any kind of pay cuts, however, these measures have to be in line with the pace of business recovery and profitability. We have already announced an additional rollback towards the end of the year, anticipating business recovery.”

As the IndiGo fracas gained momentum, most of the other airlines also took a closer look at their policy on reinstatement of salary, allowances and other benefits. As a pre-emptive action to the uproar witnessed at IndiGo, SpiceJet announced pay hikes for its pilots almost immediately. Vistara reinstated the monthly bonus component in salary for eligible pilots starting from April 1, subject to the active hours being 70 in the preceding month.

To say that things have been grim in India’s aviation sector for the last two years ever since the pandemic gripped the world would be a severe understatement. Pilots the world over have borne the brunt in more ways than one, including several losing their jobs as flying came to a standstill. In India, when the crisis began, the loudest noises came from the pilots and crew of the erstwhile national carrier Air India who argued that they had been burdened with a disproportionate share of the pain with the sharpest cuts in salaries and allowances. Milder grumblings emanated from the crew of the low fare carriers, where many pilots felt that something was better than nothing: the carnage in the sector globally was playing out and almost everyone personally knew a few friends out of jobs altogether.

Right at the start, as the pandemic hit, IndiGo decided to continue to pay commanders and most of its staff a substantial portion of their usual monthly emoluments, winning it more loyalty points than it probably anticipated.

But as the pain of the pandemic continued far longer than anticipated, IndiGo deepened the cuts across categories, including pilots. At the peak of the crisis, the cut worked out to almost 60%, including forced days of leave without pay. For the last year or so - as the waves of the pandemic ebbed and raged - commanders and crew have been complaining off and on but have not taken the matter by the horns.

It is, however, the allotment of ESOPs to its top management - amounting to a total of Rs 22 odd crore in effect for its CEO Rono Dutta and similar amounts across managers - that stirred up a hornet’s nest.

In response to a detailed email, an IndiGo spokesperson said that “these ESOPs were issued in June 2020 as a part of a four-year programme that will go on until June 2024. No other ESOPs were issued after this date. All these ESOPs have a vesting schedule, most of which is backloaded”. She added that ESOPs are a part of executive pay across industries and not specific to just IndiGo.

Over the next two or three days, pilots calmed down but many argued that they would no longer play ball with everything the management asked of them. “We have always pushed the envelope while trying to save fuel and other costs for the company by doing flap 3 landings and switching off single engine during taxi IN and taxi OUT. But this will no longer be done,” said a senior commander.

Many argue that some of the practices that help in saving fuel are against what is advised by Airbus. “I would not say that a flap 3 landing or some of the other practices encouraged by management to save fuel are unsafe per se but they definitely require more concentration, effort and airmanship from the commanders. I don’t see anyone stretching himself or going out of his way for the company if this is how we are treated,” said a senior commander who has been with the airline since inception.

A few days after the fracas broke out, a letter sent by airline CEO Rono Dutta to staff to try and make amends and explain their side of the story to all the employees was termed as “wishy washy” and “vague” by crew members and pilots. A senior commander said the letter only served to add “salt to the wounds” and that they expected the CEO to come up with something far more “substantive” than what he did. Public shareholders of the airline had voted against the allotment of ESOPs to the CEO last April. Details of his salary - Rs 11.4 crore and a further committed bonus of Rs 5.6 crore are in the company’s annual report.

Analysts, experts and even those who have previously worked for IndiGo felt that the management has failed to manage the situation this time around. A senior commander said the “airline’s top team has only itself to blame for this”. His point is that if employees go on strike or lose trust in them, it can only be attributed to the management’s collective failure.

Within the aviation sector, IndiGo’s handling of pilots and crew has been one of its weaker spots and the relationship has, during less stressful times, appeared rather fraught. Although for a brief period in 2020 - when the management refrained from immediately cutting salaries or firing - the relationship seemed to have improved temporarily but with the latest chain of events, things have now taken a full circle. “It is unfortunate that it has taken a crisis of this magnitude for the equation between management and pilots to reach one of its highest points, only to be back to square one,” says one former senior management member of the airline.

But with no easy resolutions in sight, this latest crisis and the resultant hostility looks likely to fester for a while. As a critical section of the airline’s employees continue to feel aggrieved and look at ways of unionising and tackling their grievances in a more organised fashion, the airline can brace itself for a rocky ride in months ahead. The summer of 2022 promises to be stormier than usual.