Top Airline In India to Shed 1,900 Employees
Thursday, October 16, 2008
NEW DELHI, Oct. 15 -- Jet Airways, India's largest domestic carrier, said Wednesday that it will cut 1,900 employees because of high fuel prices and slowing global growth, an indication that India's once-robust economy is being hammered by the worldwide economic slowdown.
This week, Jet announced it would form an alliance with a major rival, Kingfisher Airlines. The carriers will share routes and crews.
Jet said 800 flight attendants hired for an expansion that has since been called off would lose their jobs first.
Few industries have symbolized India's economic modernization as vividly as its airlines, which have proliferated rapidly in the past decade. Two years ago, India had one of the world's fastest-growing aviation markets. But that seems to be changing.
In August, 2.92 million travelers took to the skies, compared with 3.8 million for the same month last year, according to the Civil Aviation Ministry. India's airlines are filling 67 percent of their seats, compared with the 90 percent needed to break even, Jet Chairman Naresh Goyal said. The industry is expected to lose a record $2 billion this year.
"No company can last if it doesn't cut costs," Kingfisher Chairman Vijay Mallya told reporters in the southern city of Hyderabad, where India's first civil air show was being held. Its purpose was to showcase a thriving industry, but airline leaders spent the day explaining the layoffs.
Mallya, a billionaire who also owns a beer company and is often billed as "the king of good times," said his airline expects to follow Jet's lead and announce cuts.
The industry is running short of foreign investment. The Federation of Indian Airlines, a trade group , is reported to be seeking a $1 billion loan from the government to help carriers make it through the credit squeeze. Before the downturn, India's airlines placed orders on hundreds of aircraft. But analysts say it is unclear whether the carriers will be able to pay.
"The cost of doing business in India is going up and up and up," Goyal said.
The airline industry had, in recent years, come to represent India's status as a rising economic superpower. It also meant increased mobility for the country's young people. Hundreds of training schools for flight attendants have opened across India. Even the smallest towns displayed billboards showing smiling, glamorous young flight attendants and slogans promising a bright future.
Now many schools are worried about recruitment.
"Prospective students will be deterred for a while. But it's such a popular career option," said Rajesh Nadia, 37, director of the Innovative Training Program in New Delhi. "If you visit any institute, you will find girls from rural areas who can hardly speak in English, yet they are wearing uniforms with pride and earning large salaries."
Still dressed in their bright-yellow uniforms, hundreds of distraught crew members protested the job cuts in Mumbai on Wednesday at the nation's busiest airport.
"I'm not from Mumbai. I've taken a place on rent. Paid deposit, spent so much on courses," said a young flight attendant who called himself Manav. He told reporters: "How can anyone manage?"
Others were shown on television weeping. Jet-fuel prices in Mumbai have shot up 24 percent since the beginning of the year. Goyal said the cost of running his business has increased 30 percent.
Special correspondent Ria Sen contributed to this report.