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Wednesday, 01 February, 2012, 12 : 00 PM [IST]

Panel suggests combining incentives with Air India employees’ basic salary

The three-member Justice Dharmadhikari Committee, which is looking into Air India’s contentious HR issues, has suggested that Performance-Linked Incentives (PLI) of the public sector carrier’s 29,000 employees be merged with their basic salary. The committee, which submitted the report yesterday to the Ajit Singh, Union Minister for Civil Aviation, also recommended to link incentives with the profitability of the carrier and not with operational parameters as is currently in practice.

The move would affect the take-home salary of all Air India (AI) employees, including pilots, other members of the cabin crew and engineers. The new package, the committee says, will be cost-neutral.  In case the report is implemented, the incentive part, which currently accounts for 50 per cent of the gross salary, would fall. As per the current PLI norms, incentives are linked to the number of passengers and punctuality of flight take-offs among others.

The airline’s profitability is not a criterion at present. “The committee suggested a pay structure which is in conformity with the DPE (Department of Public Enterprises) guidelines. The suggestions if implemented would be cost-neutral,” official sources said, according to a report by The Financial Express. The official added that with basic salary to be high as a result of the proposal, the PF (provident fund) contribution and gratuity of employees (which are determined as percentage of the basic salary) would go up.

As per airline projections, Air India is not looking at any profit at least in the next five years with interest and operating cost remaining high. The airline has a total debt of Rs 43,000 crore on its books and is saddled with an accumulated loss of Rs 22,000 crore.  Air India’s current annual wage bill is about Rs 3,200 crore, 12-15 per cent higher than rival airlines like Jet Airways and IndiGo.

The government had last year set up a committee under Dharmadhikari with other members being R Dholakia of IIM-Ahmedabad and Rajeshwar Dayal, former Director, DPE, to address pay-related issues of Air India and the erstwhile Indian Airlines. Following the merger of Air India and Indian Airlines, the issue of equal salaries and allowances came up, triggering protests and agitation by employees for pay parity.

“If the suggestions of the Dharmadhikari Committee are implemented, 90 per cent of the employees would get either the same or a little higher salaries. The rest, primarily high-paid pilots, would see a marginal cut,” sources said. Pilots who led the protest on several occasions in the post-merger years would, however, get flying and other minor allowances over and above the incentives. The set of recommendations would be implemented with retrospective effect since 2007.
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richer 2012-02-02 18:13:57
When the merger was taking place airindia appointed M/S Accenture to assist merger. where is the report and recommendations. what was the planning report before merger? on what basis the merger took place? Who is authorized to merge airindia. Who was opposed to merge airindia and why? To Impliment the Dharmadhikari Committee of recommendations it would have constituted the committee in 2007. Otherwise the committee cannot impliment their of recommendations from 2007, but only from 2011.
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