SpiceJet stares at mounting employee trouble

SpiceJet employees have vehemently protested the management's layoff 'plans'

SpiceJet stares at mounting employee trouble
A SpiceJet B737 at the Delhi airport. Image courtesy: Wikimedia Commons/Kurush Pawar

SpiceJet may be upbeat about halving its net loss to Rs 57 crore in the third quarter of 2020-21, but the new year has brought with it some debilitating employee woes for the airline to deal with. 

On June 3, SpiceJet ground staff went to loggerheads with the management at Mumbai's Chhatrapati Shivaji Maharaj International Airport (CSMIA) over the airline "uncharacteristically" asking 64 of its workers to surrender their airport entry passes at the end of their shifts. 

This was construed as the airline making ground for the removal of these employees, who apparently have been working with the airline on a fixed-term contract for more than 10 years. What added to the fear of these employees was the fact that their contracts expired on May 31 but were not renewed, as pointed out by Arvind Sawant, president of Bharatiya Kamgar Sena (BKS), a recognised union of SpiceJet ground staff, The Times of India reported. The Covid-induced financial troubles in the aviation sector fuelled the belief that the airline was preparing to lay off employees as a cost-cutting measure. 

A video shared by a SpiceJet employee showed ground staff waiting inside Terminal 2 of the Mumbai airport. The employee said that the ground staff had been detained at the airport for over 12 hours and that the ground staff had refused to obey instructions for them to hand over their entry passes. The workers were at the airport till 1 am in the morning, putting them, especially those who stayed far away from the airport, in a lot of trouble. 

A SpiceJet spokesperson, however, countered that the airline had not sacked any employee and they were simply being asked to hand over their Aerodrome Entry Permit (AEP) in adherence to the government directive in this regard. 

However, BKS' Sawant was quick to point out that SpiceJet had not followed this 'rule' in the past 15 years, so why was the management insisting on doing so now? He added that talks were underway between the management and the union before the Labour Commissioner and it was unjust to sack workers in the meantime. 

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In April, the BKS had threatened to lead the ground handling staff to a strike after concerns that the company was planning to lay off some employees to cut costs. According to Times of India sources, SpiceJet had planned to discharge 300 out of 590 employees largely comprising drivers and loaders who were involved in ground handling work like loading/unloading baggage and transporting passengers between the terminal and the aircraft. These employees had been working for the airline for 3-15 years on fixed-term contracts. 

SpiceJet's cargo arm SpiceXpress had helped it stay afloat during the pandemic. Image courtesy: Wikimedia Commons/N509FZ

SpiceJet said in a statement that the second Covid wave had severely affected passenger demand and flight operations and in view of the uncertainty in the industry, the airline had decided to outsource a part of its ground-handling operations to the private operator CelebiNAS from May 1. As part of an agreement, CelebiNAS would have a recruitment drive to absorb the maximum support staff from SpiceJet, so that the interests of the SpiceJet employees are not harmed. 

Moreover, the Covid-induced pay cut issue came to haunt the airline again as ground staff, cabin crew, commercial staff and pilots were paid only 10-50% of their salaries in April, Business Standard reported. Junior staff, including loaders and drivers, however, were paid their salaries in full. Chairman and Managing Director (CMD) Ajay Singh forwent his entire salary. 

SpiceJet Vice President (Operations), Gurcharan Arora, however, assured that this was a temporary measure and the deferred salaries would be paid to the employees once the situation improves. He noted that the Indian aviation sector had seen over three lakh passengers per day in mid-February, showing signs that the industry, battered by the pandemic, was staging a turnaround. However, numbers have fallen drastically to less than 1.3 lakh passengers per day currently, which had made tough decisions unavoidable in order to secure the long-term prospects of the company. 

Indeed, SpiceJet has not been immune from financial difficulties. As of January 1, 2021, SpiceJet had the highest dues pending with the Airports Authority of India (AAI). Its dues were Rs 33.74 crore. It was reported to be making a daily payment of Rs 60 lakh to settle the dues. 

The AAI had decided to put SpiceJet on cash and carry mode since midnight of July 30, 2020, as the carrier's pending dues crossed Rs 200 crore, according to a Business Standard report. Cash and carry mode means that airlines have to make an instant payment on a per-flight basis to avail of parking and landing facilities at AAI-run airports.  

However, the AAI later deferred its order to put SpiceJet on cash and carry and allowed it to operate and pay on normal terms, PTI reported.  

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The airline had also defaulted on airline lease payments and had been served grounding notices too. Many vendors have also not got their payments on time. The unwillingness of the Directorate General of Civil Aviation (DGCA) to allow the controversial yet profitable Boeing 737 Max to fly again has harmed SpiceJet too. 

Irish aircraft lessor Goshawk and its trustees had sued SpiceJet for $16.2 million, which the airline has not been able to cough up, according to a Business Standard report. The airline had leased one B737-800 and two B737 Max8 planes from Goshawk, but owing to the travel downturn as a result of the Covid-19 pandemic and the ban on the Max, SpiceJet defaulted on rent payment obligations. A UK court, however, gave SpiceJet a breather and directed the two parties to opt for alternative dispute resolution (ADR). As a result of this judgment, the airline seems to have got protection from the 'hell or high water' clause, under which airlines have to pay rentals no matter what, whatever the situation may be. Indian carriers had sought to rework lease agreements as they have had to operate during the dark days of the pandemic.  

The court said that forcing SpiceJet to pay now may lead to its insolvency.  

SpiceJet is also staring at a separate lawsuit in London over Rs 200 crore of unpaid charges. Ireland-based BOC Aviation and Wilmington Trust Services had claimed that SpiceJet had defaulted on paying rent and other charges, which amounted to Rs 48 crore as of September 3.   

Recently, SpiceJet also lost a $42.9 million lawsuit against de Havilland. The Canadian planemaker had sued SpiceJet for the failure to make pre-delivery payments for 15 Q400 planes on order, Business Standard reported in March 2021. SpiceJet had also refused to take delivery of three planes.

The aircraft manufacturer had served a notice to the airline for termination of the purchase agreement. This means that SpiceJet would not be receiving any Q400 planes in the foreseeable future. While not having to buy new planes one way or the other during this difficult pandemic time may be a blessing in disguise for SpiceJet, in the long run, the airline may suffer from under capacity, considering the important role the Q400s play in operating on regional routes, smaller airports and as freighter planes, a simpleflying report pointed out.

However, cargo operations have been the silver lining for SpiceJet at a time when passenger traffic has been badly hit. The SpiceXpress fleet is being increasingly deployed for carrying Covid aid, vaccines and other essential supplies since last year.

(Cover image courtesy Wikimedia Commons/Kurush Pawar)