Unique Airways is a large airline company in India with over 300 domestic flights and 30 international flights to all the major cities. The company has a strong workforce of 10,200 employees, including 1,500 pilots and 1,100 aircraft maintenance engineers. It figured among the top-five airline companies in the country. The company has an excellent work culture and developed a high level of commitment and involvement in its workforce. It won several awards for its distinct HR practices. The HR department of the airlines is headed by HR Director Ramesh Divan, who is assisted well by a team of committed HR professionals.
A year back, Unique Airways initiated an ambitious expansion scheme to double its operations. The company directed the HR department to recruit and train the required number of employees to feed its expansion scheme. Subsequently, the HR department formed a panel to scan the external environment. After extensively scanning the economic, political and labour market environment including industry performance, it prepared a detailed report and submitted it to the HR manager. The report stated that the domestic labour market conditions were difficult for jobs like pilots and maintenance engineers due to a vibrant and booming economy. Alternatively, the company could exercise the option of employing foreign pilots and maintenance engineers. Although foreign employees are readily available, their salaries and other allowances are on an average 40 per cent more than their Indian counterparts. Still, the panel was in favour of appointing foreign employees on the ground that the aviation industry was expected to perform well in the future and the expected increase in the revenue could easily compensate the wage differences. The report thus recommended the appointment of foreign pilots and flight engineers in substantial numbers. It was subsequently implemented and the company gradually appointed foreign pilots and engineers in sizable numbers.
Soon after these appointments, however, the economy was gripped by recessionary conditions. The aviation industry proved to be no exception. Unique Airways witnessed a slowdown in its passenger traffic, especially on the international routes. Its sales and profits came under increasing pressure. The management found the salary bill of the foreign pilots and engineers unbearable and unreasonable. They began to blame the HR department for not assessing the external environment properly and for making extraneous recommendations. However, the HR Director resolutely defended the panel by arguing that its recommendations were highly relevant at the time of its submission. He contended that the economy turned weak suddenly and most unexpectedly. However, the management did not accept the view of the HR director and seriously pondered a future course of action.
Questions for discussion
- What is your assessment of the developments in Unique Airlines?
- Do you agree with the view of the management that the panel misguided it?
- If you were to be the panel member, what would be your recommendation?