A Layoff policy, its challenges & consequences in Jet Airways

Made by Anupam Pal (GMAE BATCH- 06)

Introduction
Change and upgradation have become buzz word in the present world of
business. Economy has changed from close to open to digital economy and
business has expanded from regional to national to globe.
Sometimes, to meet with the growing challenges or to sustain in the market an
airline industry forced to take drastic steps.
The Indian aviation Industry was one of the fastest growing aviation industries in
the world. The Air Corporates (Transfer of Undertaking and Repeal) Act 1994
opened the Indian skies up to private operators. Apart from government-owned
airlines, the aviation industry was flooded with private operators and low-cost
carriers.

SERIAL NO CONTENT
1 OBJECTIVES
2 FALL FROM GRACE
3 REINSTATEMENT OF 1900 EMPLOYEES
4 CASE ANALYSIS & CRITICAL REVIEW
5 IMPLICATIONS & SUGGESTIONS
6 CONCLUSIONS

Objectives
This case study is carried out with an objective of understanding of the complexity
of introducing a policy without concerning with its employees from multiple
perspectives. Being a highly price sensitive sector, airlines strive hard to cut costs
and improve efficiency in operation. When an airline is running loss, that time a
layoff kind of situation arises. Most of the top airlines in world or the other
experienced trouble from it. Jet Airways where I worked earlier as a mechanic
had been witnessing such kind of layoff scenario. This paper will throw light on
the following aspects
♦ To understand the sequence of events and reasons behind Jet Airways’
layoff policy.
♦ To study the case of layoff in aviation sector.
♦ Critically review various techniques to implement the policy successfully.

Fall from Grace

Jet bought a struggling Indian airline called Sahara for 14.5 billion rupees ($209
million) in 2007 that had an ageing fleet and did not fit Jet's corporate culture,
depleting cash. At the end of September,2008 Jet Airways experiencing
operational cost increasing on the back of rising crude and falling rupee.
In October, 2008 Jet Airways showing door to 850 crew members, at very next
day Jet Airways (India) Ltd. decided to lay off more than 1000 employees to
streamline the operation. This retrenchment was the 2nd phase of its trimming
operation. Company decided to lay off its employees with no prior notice but one-
month remuneration in advance. The 2nd phase of retrenchment included
employees from various departments like engineering, flight attendent,ground
crew, operations, management etc.
A month later in November,2008 Jet Airways announced it would consider serious
salary cuts for its staff to handle the aviation crisis. The sudden decision not only
took employees by surprises but also caused alarmed situation in Indian Aviation
sector.
Reinstatement of 1900 employees
Company had said it was forced to trim its staff to cut its losses but Goyal had
claimed he had not been consulted before the jet senior management ordered
the retrenchment. This statement was quite contradictory with the earlier one.
Some aviation experts felt it was in the interest of the company to retrench
employees to remain competitive. Others felt there may not be well in
communication mechanisms. Jet Airways chairman Naresh Goyal reinstated all
the employees a day later saying he was not aware of these sackings. A large part
of the experts felt that Mr. Goyal had capitulated under pressure from external
parties.
Case Analysis & Critical Review
There is no doubt about mishandling of the Jet Airways sacking and reinstatement
of 1900 employees was an HR & PR disaster. But it is also a question of what Mr.
Goyal knew, when he knew it, then who did all the bungling.
The above-mentioned case of lay off employees brings the following issues to
light
▪ Did the Airline management have no prior information about this? If yes,
then it reflects very poor employee grievance mechanism in the
organization.
▪ Was the airline management aware in advance about company’s financial
situation? If yes, then what steps had been taken to cut the losses other
than lay off.
▪ No company would know of a risk overnight, its build over a period and
there should not be any drastic steps that endangers employees.
Employee layoff scenario brought up serious issues related with the financial
mismanagement of the company, alarming indicator for the Indian aviation
sector. It also tells us if any policy decision has not been properly implemented,
then what kind of chaos situation will arise.
Implications and Suggestions
Sometimes airlines also consider layoff of their employees to meet the growing
challenges in aviation market. But the key learning how to implement it, so that it
serves as a catalyst not a hinderance for the improvement of the company.
The role of HR executive is important here. Before reaching to decision, make the
environment conductive to accept the decision. With no discrimination
communicate with all the department people, ventilate the company’s financial
position in front of them. It is also responsibility of the company’s CEO to come
forward and make a statement about all the employees who lost their jobs and
assure them that they will be absorbed when company will recover from this
situation.
There is one more suggestion I would prefer, if possible, let the employee take
unpaid leave for certain amount of time on rotational basis rather than layoff.
If there is no other option left, then layoff those employees who are on
probational period, working on temporary basis and those who are more than 55
years old. At least, company will have competent, experienced, youth manpower.
Conclusions
Layoff kind of policy is always unfavorable but it is sometimes unavoidable for
company’s own good. However, if proper analysis and evaluation of the causes
behind this layoff is understood, then it can go a long way in not only resolving
but also avoiding similar kind of situation in near future. To implement a policy
like layoff kind, need to be proper plotting, scheming and direction. The
organization needs to develop an interactionist view towards its policy and
implementation. This approach would take the organization to great heights and
make it more efficient and productive.