Some 20,000 employees of Air India have begun a three-day hunger strike over plans to cut their pay.

The protest comes as the debt-ridden national carrier plans a series of drastic cost-cutting measures, which include productivity-linked bonuses by up to 50 percent.

These bonus payments account for between a third and a half of the take home pay of the majority of the airline’s employees and cost the airline about £175 million last year.

Air India lost £625 million last year and debts are currently running at $4bn.
In June the Indian government threw it a lifeline by offering a financial aid package on condition it undertook a “massive cost reduction” programme.

At the time, Praful Patel, India’s aviation minister, said that as a condition of the bailout Air India “must shape up, become leaner and trimmer, and also must put its best foot forward”. Although critics said the government should just wash its hands of the perennially loss-making outfit.

The airline has already said it was looking to cut Rs5bn ($103m) in staffing costs, about 17 percent of its total wage bill as it faces its worst liquidity crisis in its 75-year history.

He said the Indian national carrier had reached “the moment of truth”, and needed to cuts about 17 percent of its total wage bill. In July 150 top executives forwent salaries.

India’s aviation industry has been particularly hard hit by the downturn, following years of stratospheric growth. In the current downturn, the country’s airlines have collectively racked up the world’s second largest losses after the US.

This month India’s governing body Federation of Indian Airlines (FIA) called off a proposed one-day strike at the eleventh hour. The FIA was demanding cuts to fuel taxes and airport charges.

Last October, Jet Airways, India’s largest private carrier sacked 1,900 air hostesses after racking up huge losses and defaulting on its fuel bills. But the next day, after a public outcry and a threat from an extremist political party to prevent Jet’s aircraft from landing in Mumbai, the airline made a U-turn and took back all the laid-off staff.

“The employees are like family members to me,” Naresh Goyal, the chairman of Jet, who claimed that he was unaware of the decision to cull 15 per cent of his company’s workforce, told The Times. “I was mentally disturbed when I saw tears in their eyes.”

Experts warned that the incident would play into the hands of other workers.

Two thirds of its workforce - about 20,000 people - were said to be committed to the three-day hunger strike, according to a spokesperson for the Air Corporation Employees Union (ACEU).
After years of monopoly, Air India’s domestic market is coming under increasing pressure from leaner private airlines, reflected in its share in passenger traffic falling from 38 percent in 2004 to 15 percent early this year.

On an international level, markets are being eroded by intensifying competition from Gulf carriers, which are expanding aggressively into India.