SpiceJet's employee expenses remain high at Rs 143.4 crore; attritubed to top management flab

MUMBAI: SpiceJet may need to take some tough decisions on its senior management soon, say industry observers as a highly-paid top brass offsets benefits accruing from last year's attrition, thereby leaving employee expenses virtually unchanged.

The low-fare carrier's employee expenses came to Rs 143.4 crore for the October to December quarter, down just 1.5% from last year and 3% from last quarter. This, despite the fact that its total headcount had fallen 26% to about 4,200 since January 2014. Pilots, who are usually the highest paid section of an airline barring top and some members of middle management, accounted for the largest chunk of the attrition. SpiceJet's total expenses fell 22% on year and 11% on quarter to Rs 1550.2 crore in October-December period.

Industry watchers attribute it partly to flab in the top management. To be sure, a senior executive recently said it will cut down the total number of vice-presidents to 5 from 20.

SpiceJet underwent a major management reshuffle last year after Sanjiv Kapoor was brought in as chief operating officer and given a free hand to run the airline. Kapoor brought in Kaneswaran Avili from AirAsia as chief commercial officer, Fares Kilpady from AirA sia as vice-president and head of revenue management, and Sudhakar Kondisetty as head of IT among others.

Three sources ET spoke to said Avilli came in with a package of Rs 3.5-4 crore, more than double of what his peers in other LCCs get. Kilpady and Kondisetty came in at Rs 1.6-1.8 crore, also double the industry standards. When contacted Kapoor didn't comment.

In a letter to employees on Monday, Kapoor said the airline would constantly look at cutting costs. A source in the know said the benefits of attrition will be seen in the January-March quarter and that salary expenses in January are down 20% since the peak in May. He said many of the employees were serving notice periods in the airline after resigning. Also, there was a salary hike across staff effective July which would have offset the decline in expenses from attrition, he added. He didn't give the percentage of wage hikes.