Mumbai: The top management of Jet Airways, led by its chairman Naresh Goyal, has taken a voluntary pay cut of 25 per cent, effective 8 December.

This essentially means employees earning a gross salary of over Rs75,000 a month will take a graduated wage cut over the next 12 months. Pilots will have to take a combination of wage cut and allowance rationalisation, to bring the contribution of pilots in line with the company's other employees, the airline said.

Indian pilots, however, asked the airline to lay-off 240 expatriate pilots, who earn 50 per cent more than their Indian counterparts.

Now in a letter to employees on Tuesday Goyal has suggested wage cuts next year for those employees whose gross salary is at least Rs75,000 a month.
Goyal described the move as ''tough measures for tough times.''

In the letter Goyal said that the airway's top management has already volunteered a 25 per cent cut in salary effective from December. A Jet spokesperson confirmed Goyal wrote the letter.

''I am confident that you will also accept this is in best interests of the company and its continued operations-and continued employment-of all the employees,'' Goyal wrote.

Analysts say the decision to cut wages will not have a significant impact on Jet's profits as this will result in 10 per cent savings on the total employee remuneration cost and the airline is incurring huge losses.

The number of employees at Jet Airways increased almost 19 per cent to 13,163 in March from a year earlier. Employee costs increased 28.5 per cent to Rs1,205.2 crore during the same period.

Reeling from the earlier crude oil shock, falling air traffic in a slowing economy Jet Airways is cutting costs and curtailing its network. The company is rationalising routes, frequency and capacity in line with demand, pruning long-haul expansion plans, renegotiating contracts and payment schedules with its vendors and pushing back new aircraft deliveries.

The airline is also putting on lease its aircraft, sacking excess foreign pilots in accordance with the terms of their contract and cutting executive level jobs by reducing expatriate executives in India and overseas. The company is also reviewing and rationalising perks and allowances across the company, enforcing a freeze in recruitment, eliminating overtime, identifying and eliminating wasteful activities.

The beleaguered airline industry has been hit by high operation costs due to mainly to the high cost of jet fuel even ATF prices have been slashed six times since August, giving some relief to airlines.

The airline has also made major cuts in its long haul international flight schedule.

The Jet-JetLite combine has posted losses of Rs 384 crore in the second quarter of the current financial year and has lost over Rs 1,500 crore in 18 months ended September 30, 2008. Jet, like other airlines, has also cut down flights both domestic and international. As all airlines kept hiking fares in past few months, the number of fliers has fallen drastically and now getting travelers even on the reduced capacity has become a challenge.

AI has made a beginning by reducing fares to bring back travelers while Jet and Kingfisher are yet to do so.