Air India is to cut the productivity linked incentive (PLI) scheme of close to 7,000 executive level employees, including pilots and engineers, in an effort to reduce its ballooning wage costs.
The airline has a total staff strength of 31,500.
The move will help the airline reduce its monthly wage and PLI bill of Rs 350 crore by about Rs 30 crore.
“The cut in the PLI is to be graded. Those drawing monthly incentives of less than Rs 10,000 will see a 25 per cent cut, while senior officials who draw upwards of Rs 2 lakh will see a 45 per cent reduction,” a senior official said. For those drawing PLI between Rs 10,001 and Rs 25,000, the reduction will be 35 per cent. The PLI cut is effective from August, sources said.
This was decided by the airline board at its meeting held in Mumbai on Wednesday. PLI forms a large portion of employees’ monthly salary and has led to a lopsided wage structure with salaries and wages constituting 35 per cent of the total operating costs.
The latest decision will affect those in the rank of Senior Managers and above. “The move is symbolic but is meant to send a clear signal that Air India is keen on cutting its flab,” sources added.
The airline will now begin talks with the unions to get them to agree to a cut in PLI for the remaining airline staff.
Recently, the Finance Ministry had asked Air India to work towards reducing its costs if it wanted to receive the Rs 5,000-crore bail out from the Centre.
Earlier, the Cabinet Secretary-headed Committee of Secretaries had agreed to provide it an equity infusion of Rs 5,000 crore over the next three years.
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