Low-cost carrier IndiGo’s Chief Executive Officer Ronojoy Dutta is of the opinion that raising salaries is a “difficult and thorny issue”, but assured it will constantly review and adjust wages based on the company’s performance.
“It is a difficult and thorny issue but I think the underlying imperatives are to consider the wage structure in competitive industries, to take into account the profitability of the company, to empathise with employees trying to earn a living wage in an inflationary environment and above all to consider the contributions made by employees every single day to the success of this company,” Dutta said in a communique to the airline’s staff.
In the letter, sent on Friday, Dutta assured that the issue of salaries is on everyone’s mind, and added that the aviation industry was struggling due to “sky-high” oil prices. The letter also said that the company will constantly review and adjust wages based on the competitive environment and profitability.
Indigo employs 23,711 personnel as of March 31, 2022.
The letter gains importance as earlier this week, the carrier suspended some pilots who were planning to organise a strike against the salary cuts during peak days of the pandemic.
“I want to assure you that the interest of our employees is our utmost priority but at the moment we have to carefully manage a balance between higher costs, higher ticket prices.”
“The general perception is that we can simply pass through the cost of higher fuel by charging more from the customer. The truth, however, is that as we raise fares fewer people choose to travel, so beyond a certain point, higher ticket prices actually result in a decline of revenues,” the CEO’s letter said, explaining the situation.
He also expressed hope that like the pandemic subsided, the high fuel costs also will subside.
Last week, airline turbine fuel (ATF) prices, which account for about 40% of an airline’s operating cost, was hiked by 2%. This followed a steepest ever hike of 18.3% on March 16, and was affected due to rising global prices.
In the letter, the IndiGo CEO also urged its staff to provide a wholesome service and experience to corporate customers, who were being lured by rivals Vistara and Air India.
“We have looked carefully at our product positioning and at the end of the day we think IndiGo is positioned quite correctly in the sweet spot that is important for all customer segments – safe, on time, hassle-free and courteous service,” the letter said.
The combination of full-service carriers Vistara and Air India is more to target high-end customers, particularly corporate customers, while the competition in the low-cost space is also increasing with IndiGo, SpiceJet, Go First, AirAsia India and Akasa Air all vying for the same pie.