Do what makes salaries soar
The Himalayan Times , Monday, June 27, 2005
Pilots in India have hit the gravy train. Their take home pay is virtually touching the skies. A pilot, I know, who worked for Buddha Air was given 96 hours to resign, pack his bags, and be on his way to France for training by Vijay Mallaya's Kingfisher airline which had poached him.
Cockpit crews are in hot demand. Their salaries, dollar allowances and employment terms make them India's most pampered employees. They stay in the best of hotels, make money every time they take-off, are lured with offers of free travel for themselves and family, and are today the nearest thing to royalty.
Even pilots in the government run Indian Airlines (IA) and Air India (AI) have never had it so good. An IA captain married to Shalini's friend earns upward of US$10,000 a month, sends his son to the best engineering college in the US, and has made enough investments to retire now (i.e. about 15 years prematurely) and play golf for the rest of his life.
Times have changed for the cabin crew too, though not as dramatically as for those in the cockpit. Airline hostesses and flight stewards are in demand and a daughter of a friend of ours was hired and sent to England for training by Richard Branson's Virgin Atlantic. Her salary was better than what she expected, and triple of what she was making prior to her hire by the airline. Many schools have sprung up training boys and girls to work as stewards and hostesses. The demand from airlines for young, smart boys and girls seems insatiable.
It is, however, the shortage of people at the top management level which is being felt by airlines most of all. The salaries of CEO's is going into the realm of fantasy. The company heads engaged by the airlines can command salaries ranging from US$20,000 at the low end to US$50,000 a month at the high end. And this moolah does not include perquisites like housing, cars, travel, and medical expenses.
What has caused the companies and their founders to become so generous? Aren't money grubbing capitalists supposed to exploit those that work? When I put this question to an airline flight attendant in India, she smirked, and responded "if this be exploitation, then let me be exploited for ever".
She went on to say that it was the crew which was exploiting the owners. Scant regard was being paid to the niceties of giving notice, or fulfilling the terms of contract signed by the employees. If they got a higher offer, they would be out the following day and flying with someone else.
In fact, one of the reasons for the pullout - temporary, I hope - from Nepal of Jet Airways and Sahara Airlines, is their inability to find people to run their aircrafts even when they are willing to pay whatever is being demanded.
Why does the bargaining power now lie with the airline crews and not with the managements? The answer lies in the competition brought about in the skies by India's liberalization beginning in the 1990's; gone are the days when IA ruled the domestic skies and only AI flew the international routes. Today there is Jet, Sahara, Spice Jet, Kingfisher, Air Deccan and many more are planned. It is rivalry among them that has had the management bending over backwards to retain whatever talent it has got.
Are the airlines gouging out their customers to pay to their staff? On the contrary, the travelers have never had it so good, the tug-of-war amongst the airlines for customers is as strong as it is for its crews. Customers are being wooed with discounts, frequent flyer bonuses, lucky draws, and state of the art in-flight entertainment.
The lesson to be learnt from the warring airlines is this: let free markets rule, let capital be invested without hindrance in business ventures, and even as customers get a better deal, salaries too will soar. Competition leads to efficiency and efficiency leads to rewards not only for the consumers but for employees as well.
(The writer an economist and a proponent of free markets contributes to leading international dailies. Contact e-mail: firstname.lastname@example.org)