NEW DELHI: Raising salaries is a difficult and thorny issue but IndiGo will constantly review and adjust wages based on its profitability and the competitive environment, the airline's CEO Ronjoy Dutta said on Friday.
IndiGo had on Monday suspended a few pilots who were planning to organise a strike on Tuesday to protest against the pay cuts that were implemented during the peak of the Covid 19 pandemic. In a communique to employees on Friday, Dutta said the issue of salaries is on everyone's mind.?
"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 empathize 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," he noted.
It is not an easy task to hit exactly the right balance between all these factors but the good news is that the airline will constantly be reviewing and adjusting wages as the competitive environment and profit picture evolve, he said.
As on March 31 last year, IndiGo had 23,711 employees on its rolls. Dutta said on Friday the aviation industry is struggling due to the sky-high oil prices. Pre covid, in January 2020, oil was at USD 65 a barrel, and as of April 7, it was at USD 112 dollars a barrel -- an increase of 72 per cent, he noted.
Since aviation fuel represents 40 per cent of IndiGo's cost, its total costs have increased significantly, he maintained.
"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," he noted.
It is this balance between higher costs and higher ticket prices that the airline is having to manage very carefully, he said. "Mercifully, Covid came and went and we are hoping that the spike in fuel prices will also similarly subside," he noted.