Tata Group Plans Second VRS At Air India

After taking over the airline in January, Tata group offered early retirement plans to 4,500 employees in June, which 1,500 employees accepted. At the time of its privatization, the airline had about 12,085 employees, of whom 8,084 were permanent employees.

“The topic of VRS has been brought up, and it could happen in the next two-three months," said one of the three people cited above, all of whom spoke on condition of anonymity.

“The airline is on a hiring spree, and the VRS will be a good option for a lot of their employees who have spent a good amount of time with the company and may want to look at other options," the person added.

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According to the second person, an Air India executive, employees across operations and teams who meet certain age and employment tenure criteria will be eligible for the scheme.

Air India offered the first VRS to those above 40 with 20 years of continuous employment.

“The airline is looking to add new talent in the organization, in line with the transformation plan. It plans to accelerate the company’s growth in domestic and international aviation markets. The company is trying to reduce the multiplicity of roles and bring in more efficiency in the employees," the person said.

Air India is rapidly hiring pilots, cabin crew and managerial staff.

“So, both plans are to work simultaneously; that is of hiring fresh talent and offering VRS to the eligible employees," he added.

A spokesperson for Air India declined to comment on Mint’s queries.

Air India aims to have a 30% share in domestic and international markets in the next five years. Currently, it has a domestic market share of 10% and an international market share of 12%. The full-service airline will be inducting 30 leased aircraft over the next 15 months. It is also looking to place a fresh order for a sizeable number of aircraft.

Air India, along with AirAsia India, Vistara and Air India Express, are under the umbrella of Tata Sons, the holding company of Tata group companies. Tata Sons is working on an airline consolidation strategy to save costs, build synergies by optimizing aircraft utilization and routes, and gain a larger market share to take on IndiGo, India’s biggest airline, which has a market share of 58%. The group is also working with Singapore Airlines to merge Air India and Vistara.

“Employees are a significant aspect of Air India’s turnaround strategy. Also, around 4,000 employees are set to retire over the next two years. So, this is the correct timing to restructure as, within three months, it will be one year of Air India’s takeover by the Tata group," the third person added.

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