The Indian airline Vistara cuts off its flights in protest against changes in pilot salaries

India's Vistara airline has reduced its flights following cancellations and delays throughout the week, as pilots went on strike over a salary review.

Pilots called in sick to protest the terms of their new contract that will come into effect following the carrier's upcoming merger with Air India, causing the airline to cancel 150 flights, while as many as 200 flights have been postponed since Sunday, according to local media. Reports.

The Tata Group, which holds a 51% stake in Vistara – with the remaining 49% held by Singapore Airlines – announced its merger with Air India in November 2022. Singapore Airlines will own a 21.5% stake in Air India.

In the new salary structure, pilots were given fixed pay for at least 40 flying hours — the minimum was previously 70 hours — a source who has been with Vistara for more than five years told CNBC. The source preferred to remain anonymous due to the sensitivity of the issue.

The source added that pilots used to “get the same amount of money” whether they flew 10 or 70 hours before – although the minimum was 70 hours. The new structure will reduce salary from about $7,400 (for 70 hours but not always applied) to $5,200 for a strict 40-hour period, the source said.

Vistara was not immediately available for comment when contacted by CNBC.

Another employee of the company, who preferred to remain anonymous, told CNBC that more than 200 pilots did not sign the new contract, but their salaries were reduced according to the new contract. a

The pilots were given just 15 days to sign the new contract, with Vistara management sending a “threatening” email to defectors who would potentially lose a one-time payment of $4,000 to $5,000, the first source told CNBC.

“We didn't think this would happen. This is something you don't hear from any other Tata company in India,” the first source added to CNBC.

Vistara CEO addressed pilots on Wednesday and said flight cancellations and delays were not only due to pilots reporting sick, but also due to planes being grounded and pilots reaching their maximum working hours.

Local media reported that he assured them that the problem would be resolved in the coming days, and apologized for the poor planning of the schedule and the exhaustion at work.

“Business at Vistara is nothing like what it is at Singapore Airlines. This is very sad to say because Singapore Airlines has almost 50% ownership of Vistara,” the first source told CNBC.

“The rostering practices are very poor. They can change your schedules on a whim,” they said. CNBC did not immediately receive a response from Vistara when asked about its scheduling processes.

The concerns highlighted by Vistara pilots “are not isolated incidents but indicate systemic issues extending across the various aviation entities of the Tata group,” the Indian Commercial Pilots Association and the Indian Pilots Guild said in a statement to CNBC on Thursday.

Last month, the Directorate General of Civil Aviation fined Air India $95,658 for violating flight time restrictions, Reuters reported.

India's aviation sector has grown by leaps and bounds as the world's most populous country is expected to become the fourth-largest travel spender globally by 2030, largely due to a growing middle-income population that will see a rise. significant in household profits.

Indian travelers are expected to take five billion leisure trips by 2030, 99% of which within the country, according to a report by Booking.com and McKinsey.

“It is common to see personnel and operational changes any time two companies decide to merge… but we do not expect there to be a tangible knock-on effect from the ongoing event, although there will certainly be disruptions in the short term,” Malcolm said. Durson, head of emerging markets strategy at investment firm Global X

He added that airlines need to ensure they have enough pilots to keep up with the high demand.

CNBC's Naman Tandon contributed to this story.