Exclusive: Surplus pilots, weak demand amid pandemic may force IndiGo to pause hiring

While the airline, and the aviation industry at large, has witnessed a shortage of commanders in the past, COVID-19 is changing shortage into surplus for the near-term. The renegotiations regarding aircraft delivery period indicates that the issue will go beyond a period of just a few months.

Notably, IndiGo is the largest customer of Airbus as its cumulative neo order book comprises 730 A320neo family aircraft, of which order for 300 aircraft was placed in October 2019. As of March 2020, IndiGo had 262 aircraft in its fleet including 100 A320neo, 13 A321neo, 123 A320ceo and 25 ATRs. This means that IndiGo is yet to take deliveries of 616 A320neo family aircraft.

While the airline was adding an average one aircraft every week during 2019 (208 aircraft as of December 2018 and 257 aircraft as of December 2019), it added just five aircraft during January-March 2020 or about one aircraft every fortnight.

Further, IndiGo has now planned to replace most of its ceo fleet or nearly 120 aircraft over the next two years with the upcoming neos, indicating that the fleet size may remain stable for at least some time. This translates into a measured approach as far as pilots and crew size is concerned.

CNBC-TV18 had reached out to IndiGo and a comment is awaited.

At IndiGo, the pool of pilots starts with the youngest pilots via a cafe program.

"We get the pilots with 18-19 years , train them and then after 4-5 years they will be upgraded to captains. And as we take this project further, we have added cadet schools to our programme and we have the unique pool of senior first officers.

“It is the last stage before you become a captain which we can upgrade internally and if you cross a certain size, which we have already crossed, then you can generate enough captains on your own because you have a huge pool of first officers of which something about 20 percent every year can be upgraded to captains,” chief operating officer Wolfgang Prock-Schauer had said in July 2018.

As of March 2019, IndiGo had 3,187 pilots and 6,248 cabin crew on its rolls. Employee expenses for the airline stood at Rs 1,145.5 crore in the March quarter of 2019-20, 23.8 percent higher than the year-ago period.

The airline so far has been planning for hiring pilots and expanding capacity on an annual basis. However, the uncertainty regarding the COVID-19 pandemic, resultant restrictions by states and countries, subdued outlook from global agencies and aircraft manufacturers has forced IndiGo to take decisions for a window of three months rather than a year for now.

"In normal circumstances, airlines plan on an annual basis. So we have an annual plan, we have an annual budget, based on that we do aircraft acquisitions, we do hiring, all of that, new station openings. Clearly, this environment doesn't lend itself to that long-term planning, because there are so many unknowns. Therefore, our planning horizon now is three months,” chief executive officer Ronojoy Dutta told analysts in June 2020.

“So I can tell you what we are planning to do for the next three months, and after that we will take another call. So every month we will say, 'Okay, how are we looking? What do the next three months look like?’”

As of June 2019 the airline had 600 pilots in training which went down to 400 in December. The unit employee costs associated with these pilots and aircraft utilisation rate were set to improve as and when they get available to fly on completion of training.

“Our employee costs per ASK

Notably, in addition to these pilots who are on rolls but yet to complete training, there are also commercial pilot licence holders who have completed their type rating abroad after clearing IndiGo tests and are waiting to sign the joining letter. So they are associated with the airline but not yet on the rolls.

The airline had also inducted at least 285 pilots from Jet Airways in May 2019, who were set to be online within 3-6 months but it is understood that some of these pilots are also in line to get online.

For the pilots it appears to be a flight through a rough, if not stormy, weather in the near-term.

For now, the airline has already announced a ten-day leave without pay policy and a substantial pay cut, to the tune of at least 40 percent for its pilots.

"So, as I said, about 40 percent of our cost is fixed. Within that, on an employee cost basis, we expect on a full-year basis we will be able to save 25 percent on our total employee cost, that's the goal that we are working towards,” chief financial officer Aditya Pande had said in June 2020.