Air India pilots to reel under pay cuts, non-flying staff may get dearness allowance (DA)

Pay cuts in Air India for the non flying employees may get restored in time with the system of Dearness Allowance (DA) but the loss of income for pilots may not recover. Observers say the pay cuts in Air India have been given to senior non flying executives and other non flying employees for mere optics as they will benefit from an automatic system that will restore their pay to pre Covid levels in about a year or so. This does not work for pilots.

The salary cut for non flying category of employees will be recovered by virtue of Basic Pay increments and periodically revised DA, whereas pilots will continue to languish because the quantum of the pay cut for them is disproportionate and much larger than non fliers and will not be recovered by DA revisions for many many years to come.

Pilots have been given a double pay cut. First, by reducing the minimum guaranteed amount payable to them under the head of flying related allowances (the pre Covid wage structure included a guaranteed 70 hours of payment which has now been reduced) and secondly a 40 per cent reduction on the hourly rate of payment.

Sources say this could be one of the main reasons why policy makers in Air India have left Basic Pay and DA untouched -- it helps them recover their small reduction in pay automatically (e.g. payslip of an E7 grade employee shows an IDA hike of approximate 11,000/- in the last year with lower inflation rates. This year the inflation rate has gone up (e.g. 6.9 per cent for July 2020).

The salary cut of a GM level non flying executive is approximate Rs 26,000, which will get recovered within 18 months or so since increments on basic pay and DA will both increase.

Unlike the Private sector, CPSU employees have an Industrial Dearness Allowance ( IDA), which is revised periodically. IDA or Industrial Dearness Allowance is a type of allowance given to the employees of the Public Sector Enterprises (PSEs) under the Government of India, as per the price index number declared by the labour bureau.

However, IDA is not a compulsory allowance when it comes to private sector employees, and this means the private sector companies are not forced to give their employees this kind of allowance.

IDA is revised quarterly based on the previous three months Consumer Price Index. This IDA is based on the Basic Pay which has been kept unchanged in AI. By imposing cuts on other allowances, the section of employees that are disproportionately impacted are pilots, as they have a larger portion of "other allowances" in their pay package.

This means that the IDA will keep increasing every three months by the inflation rate (approx 4-5 per cent depending on the published labour bureau index).

It is estimated that in a matter of a few quarters those non flying employees will be back to earning what they were earning prior to Covid, whereas pilots will continue to reel under salary cuts since the IDA earned will never be enough to compensate for the much larger loss of other allowances.