A major Indian airline is cutting costs by sacking expat pilots in a bid to stem two years of losses.
SpiceJet, the country’s only listed budget airline, is cutting the number of expat pilots and changing crew rotas to cut costs by ensuring that all crews return to their home base when flying rather than spending money on hotels.
However, the airline will keep some expat pilots for Bombardier turbo-prop planes.
SpiceJet recruited 60 expat pilots to fly a fleet of Boeing 737s. These will now be piloted by Indian pilots, who are generally 40% cheaper to pay than expats.
India’s poorly performing rupee only added to the expense, said SpiceJet’s chief executive Neil Mills.
He added: “Our expat pilots have supported us and helped us grow but their cost has become too huge, especially now that the exchange rate has gone up.”
Flying in to trouble
All of India’s airlines are finding things tough at the moment with Jet Airways and the state-owned Air India all having to trim spending as rising fuel costs, government levies and increasing competition put profits under strain.
SpiceJet shares doubled in value last year after aviation analysts predicted a tie-up with a major foreign airline after the government relaxed investment restrictions, but an attractive offer wasn’t forthcoming.
The carrier revealed that its wage bill for its expat pilots was running at around £47 million before the move to reduce numbers.
Fellow flier Jet Airways saw its wage bill increase last year by 18% and it too has said the Indian currency’s 12.4% drop against the US dollar has hurt it.
As a result, the carrier has put planes worth £1.3 billion up for sale and leaseback and is hoping to unlock £316 million in cash.
Airlines in crisis
Air India is also adopting new crew rotas to ensure staff end their working day at their home base.
A spokesman from Starair Consulting, an Indian company which advises airlines on how to run their business more effectively, said: “A good organisation should never pass up the opportunity to save a single rupee, irrespective of how much is saved.
“And pilot costs are a major expense for airlines.”
Now SpiceJet is hoping that it can end the financial year in profit and has unveiled plans to add seven more Boeing aircraft to the 36-strong fleet already in the air.
Mills said that airlines in India would continue to face financial issues because of airport charges and high fuel costs – a situation not helped by India’s banning last year of airlines directly importing fuel to avoid a 25% tax bill.