REPORT ON JET AIRWAYS’ LABOUR

DISPUTES

GROUP MEMBERS:

ANJALI TALIA

PRIYANSHI GANDHI

NIDHI HADVAID

VISHAL RATHOD
JET AIRWAY’S BACKGROUND

 JETAIRWAYS (INDIA) LIMITED (“JET”) is a Public Limited Company listed on

both BSE and NSE.
 The company “Jet Airways (India) Limited” has its registered office at Siroya Centre,
Sahar Airport Road, Andheri (E), Mumbai - 400 099.
 Shareholding as on March 31, 2019:

PARTICULARS CURRENT STAKE

Promoter 51%

Etihad Airwyas 24%

Public 25%

 JET AIRWAYS (INDIA) LIMITED (“JET”) was facing liquidity crunch & on 17
April 2019 temporarily suspended all its international & domestic operations.
 The cash-strapped company went into bankruptcy after the Mumbai bench of the
National Company Law Tribunal (NCLT) admitted an insolvency petition filed by
SBI on behalf of lenders on June 20.
 Pursuant to an order dated June 20, 2019 of NCLT Mumbai Bench, Corporate
Insolvency Resolution Process (CIRP) has been initiated for Jet Airways (India) as
per the provisions of Insolvency and Bankruptcy Code, 2016.
 Upon initiation of CIRP, the powers of the Board of Directors of the company have
been suspended and shall be exercised by the Resolution Professional. Mr. Ashish
Chhawchharia has been appointed as the Resolution Professional to take forward the
CIRP process for Jet Airways.

HISTORY
Inception: 1992 – 2005

 1992: Incorporated by Mr. Naresh Goyal (promoter)

 May-1993: Commenced operations as an air taxi operator with a fleet of four leased
Boeing 737-300 a/c
 Jan-1995: Granted scheduled airline status • Mar-2004: First international flight
commenced (Chennai – Colombo)
 Feb-2005: IPO (Indian exchanges)

2006 - 2012: Expansion

 Commenced operations to the UK (2005) and the US (2007) and started the use of
wide bodied a/c
 2006: Maintenance hangar opened in Mumbai
 Apr-2007: Acquired Air Sahara and rebranded as Jet Lite
 2007: Opened Brussels gateway with flights from India – US
 2008: Focus on high-value regional international expansion (mainly Gulf)

2013 - Ongoing: Strategic growth

 Nov-2013: Etihad Airways acquired a 24% stake for a total consideration of Rs. 2,058
crores. ($380m). It further invested Rs 859 crores towards 50.1% equity investment in
Jets Frequent Flyer Programme, (Jet Privilege)
 Dec-2014: Repositioned as a single brand and uniform full-service operator
 2016: Strategic commercial agreement with Delta and Air France-KLM, shifted
European hub to Amsterdam
 2017: Entered an ECA with Air France-KLM

OTHER INFORMATION
Fleet Size

 The Company had a fleet size of 112 aircrafts as on 31.03.2019 (Out of which, 3 were
owned by the Company, 96 were taken on Operational lease & balance 13 were taken
on Financial lease).
 As on 15.07.2019, the fleet size reduced to 12 aircrafts i.e. 6 Boeing 777, 3 Airbus
330 and 3 Boeing 737.
 6 Boeing 777: On Financial Lease. Out of the 6 Boeing 777, 1 aircraft is arrested at
Amsterdam Airport.
 3 Airbus 330: On Financial Lease. 1 out of the 3 Airbus 330 is leased to International
Airline.
 3 Boeing 737: Owned by the Company.

Slots

 Slots are allotted to airlines in two groups: Winter schedule and summer schedule.
The winter schedule starts on the last Sunday of October and the summer schedule
starts on the last Sunday of March.
 Slots are governed by the IATA WSG (International Ops) and MOCA Slot allocation
guidelines (Domestic Ops).
 Prior to halting operations, the Company had various prime slots at Domestic
(Mumbai, Delhi, Chennai, etc) & International Airports (Heathrow, Amsterdam,
Singapore, Hong Kong, etc).
 Since the Company’s operations have been temporarily suspended, the slots have
been temporarily reallocated to other airlines.
 The Company needs to provide winter 2019 schedule by 30th September 2019 in
order to revisit allocation of slots by MOCA/DGCA.

Bilateral Rights

 Rights are allocated in terms of only frequencies or only seats or in both frequencies
& seats. This is based on the way entitlements are specified under India's bilateral
with that country.
 Prior to halting operations, the Company had Bilateral rights from various countries
i.e. Amsterdam to Mumbai, Heathrow to Mumbai, etc.
  Since the Company’s operations have been temporarily suspended, bilateral rights are
temporarily withdrawn by UAE, Hong Kong, Qatar, Singapore & UK.
 Given the dynamic situation of the company, MOCA may reassess the position in this
regard at the end of S19 to ensure connectivity to/from India is not adversely
impacted.

Codeshare Agreements

 Codeshare agreements are the agreements that are signed between two airlines to
publish and market a flight under their own designator.
 The airline under codeshare arrangements puts a code on the other airline of this
arrangement to sell seats in order to provide a wider network to their own passengers.
 The Company had Code share agreements with various interline partners, 21
codeshare partners i.e. Air Canada, Air France, etc. In view of current situation of the
company, as of today all the existing partner agreements are suspended until further
notice.

KEY FINANCIALS
  Provisional Unaudited Revenue from operations for the nine months ended 31st
December 2018 stood at INR 183,196 million as compared to INR 232,865 million
for the year ended 31.03.2018 (Audited).
 Provisional Unaudited Profit/{Loss) after tax & extraordinary items for the nine
months ended 31st December 2018 stood at INR (32,082) million as compared to INR
(7,676) million for the year ended 31.03.2018 (Audited).
 The Financial Borrowings as on 31st Dec 18 stood at INR 38,852 million as
compared to INR 50,856 million as on 31st March 2018.
 The Short Term Borrowings as on 31st Dec 18 stood at INR 3,910 million as
compared to INR 2,096 million as on 31st March 2018.

OPERATIONAL METRICS

S. NO. INDICATOR FY2017 FY2018 FY2019

1 Fleet Size (No.) 112 120 112

2 Number of Departures 225,938 234,069 206,168

3 RASK 4.24 4.21 4.24

4 CASK 4.33 4.39 4.91

5 CASK-Ex Fuel 3.22 3.12 3.30

6 Yield (INR) 4.42 4.36 4.37

7 Pax Carried (million) 27.1 29.9 27.4

8 Load Factore (%) 81.3% 83.6% 83.4%

CURRENT STATUS OF THE AIRCRAFTS

EMPLOYEE STRENGTH

THE CONFLICTS
Jet had been constantly incurring losses since 2007-08."Buying Sahara was a big strategic
mistake by Jet. This happened at a time when Jet was growing aggressively on the
international front and facing tremendous competition in local market’, said the India head of
the Centre for Asia Pacific Aviation (CAPA). The first sign of real trouble in Jet became
apparent in 2008 when Naresh Goyal entered into an operational tie-up with arch rival Vijay
Mallya’s Kingfisher.

CRSIS 1: 1900 Employees Sacked and Then Reinstated

Sacking of 1900 Employees

 This step was followed by Jet sacking 1,900 cabin crew members in October 2008, all
probationary and temporary workers, across all categories and departments.
 It was justified as an attempt to switch to leaner business models and cost-optimize
the business operations of the airways.
 According to Jet, the layoffs were "unfortunate" but "unavoidable" because
"everybody is bleeding" as the cost of business has gone up by 30 percent and the
alliance is aimed at reaping "maximum synergies."
 "The economic viability of the industry has been severely affected by the record high
fuel prices and most recently due to the crisis of the financial markets globally and the
downturn in traffic," Jet Airways said in a statement. "Jet Airways expects these
difficult market conditions to continue."
 Jet Airway CEO Wolfgang Prock Schaeu and Executive Director B Saroj Datta held a
press conference in Mumbai where they explained the company’s decision to
terminate the services of company employees:

"It is an unfortunate decision, which all of us in the company regret. A total of 1,900
people are being served separation notice. 800 have already been served notice. In the
next few days the others will also be served notice. It is an attempt to save the jobs of
remaining 11,100 employees," said Dutta at the airline’s headquarters in Mumbai. He
said the decision to terminate the employees had nothing to do with the alliance
entered into with Kingfisher. "It (alliance) has nothing to do with the workforce of the
companies. These are independent decisions of the two companies."

 It resulted in a severe backlash not just from employees but also from the government,
political parties and regulatory bodies who forced the airline to take back the sacked
 people. It was in fact an example showcasing the importance of managing
stakeholders in a change management plan.
 Some commented on the manner in which it was conducted-employees waiting at
home for office transport found that the vehicles never came; when some of them
reached the airport on their own, they discovered that their jobs were in jeopardy.

Reinstatement of 1900 employees

 Jet Airways chairman Naresh Goyal, in a dramatic press conference late on Thursday
night, said his airline would take back each and every one of the 1,900 sacked Jet
employees because he understood their pain and “would not be able to sleep
peacefully” if he did not reverse the retrenchments.

“I apologize for all the agony that you went through,” Mr Goyal said, his statements
directed at the retrenched staff.

 The volte face caught everyone by surprise. Jet Airways Chairman Naresh Goyal
reinstated the employees a day later saying that he was not aware of these sackings. “I
was not there when this decision was taken. I came to know about it later." “I have not
been able to sleep all night. I apologize for what has happened,” an emotional Jet
Airways Chairman Naresh Goyal told reporters at a late night press meet. “I request
all of you to start work from tomorrow morning,” he said.
 Goyal said his conscience did not allow economic consideration to be the reason for
sacking employees. “When I saw the tears rolling down some of the workers face I
was moved. I cannot see you all unhappy. My workers are like my family members,”
he said. “It is my personal decision as father of the family”.
 The company had said it was forced to trim staff to cut its losses but Goyal claimed
that he had not been consulted before the Jet senior management ordered the
retrenchment. This statement was contradictory to the earlier ones and puzzled quite a
few analysts.
 The Indian aviation industry was going through a tough phase and experts felt that it
was in the interest of the company to retrench employees to remain competitive.
Experts largely felt that Goyal had capitulated under pressure from external parties
while others felt that all may not be well with the organizational communication
mechanisms at Jet.
CRISIS 2: The Pilots Revolt

Formation of the NAG

 The retrenchment and then the reinstatement saga had bred insecurity among the
employees. The airline pilots did not have any union and being contract employees
could be shown the door anytime. It was reasoned that the current financial crisis may
badly affect the lives of the younger pilots who may be laid off any time as the mass
sacking had indicated. This led to the formation of the National Aviators Guild the
NAG.
 On July 24, 2009, the NAG - National Aviators Guild was registered by the Regional
Labour Commissioner.
 Captain Sam Thomas and Captain D Balaraman played a significant role in the
formation of the Union. By the end of July, the management terminated both the
pilots.

The Email Announcing the Termination of Service

 On July 31, 2009, the two senior pilots of Jet Airways, who were both office-bearers
of the newly formed NAG, were dismissed. They were sent a single-line e-mail
stating that their services were terminated with immediate effect and no reasons were
assigned for the same. Management alleged that the two captains went around
coercing pilots into signing the union membership form. The pilots on their part
maintained that their request for discussion and representations were ignored by the
management.

Sequence of Events

 The airline management and NAG could not internally reconcile the conflict and the
matter was taken up by Central Labour Commissioner, under the Ministry of Labour
and Employment for Conciliation.
 Without awaiting the conciliation meeting on 14th September, 2009, the NAG took a
drastic step on 7th September, 2009 when 363 pilots went on sick leave. The airline
management sent doctors to the houses of most pilots to help establish that the mass
sick leave was actually a planned strike and that it was illegal.
 The government too intervened by quoting that air transport being a public utility
service, the pilots could be booked under violation of Essential Management Services
Act (ESMA). The Mumbai High Court on the appeal of the airline management ruled
the decision against the pilots.
 The airline’s chief Naresh Goyal remarked, “What the pilots have done is illegal.
Pilots are holding the airline and country to ransom. The two sacked pilots were
misleading the others.”
 As the strike entered its second day, 72 more pilots reported sick for duty. Looking at
the seriousness of the issue Jet Airways chief Naresh Goyal sought help from Union
Civil Aviation Minister Praful Patel but the government was hesitant in intervening
and taking sides as it owns an airline too (Air India) and has similar problems. The
airline management was willing to negotiate on the condition that 432 pilots on strike
have to return to work and also warned the pilots that to continue operations they will
not hesitate to hire expatriate or retired pilots to replace current staff, if matters
become worse.
 On the third day of the strike, 200 flights were cancelled affecting thousands of
passengers. This caught the attention of the then Prime Minister Manmohan Singh
who was concerned about the welfare of air travellers. The pilots seemed unconcerned
and backed out of the conciliation meeting with the Labour Commissioner. The pilot
union (NAG) appealed in the Madras High Court to stop Jet Airways from hiring
foreign pilots, something the management had outlined as a back-up plan for the
nearly 400 pilots who had called in sick. The airline’s ground staff appealed publicly
to the pilots to get back to work but the pilot’s union stuck to their ways.
 The competitors saw this strike as an opportunity and hiked air fares on all sectors. A
Mumbai - Delhi flight ticket went up by two thousand rupees. Taking note of this the
Director General of Civil Aviation (DGCA) stepped in and ordered airlines not to
hike fares and stick to previous week’s fares. Mr. Naresh Goyal was getting desperate
by the day as the losses were mounting and tried to meet virtually anybody who could
help break the deadlock. From the Aviation Secretary to the Aviation Minister to the
Union Home Secretary, and even Congress MP Sanjay Nirupam who was supporting
the voice of the pilots.
  The fourth day of the strike brought as many as 246 Jet Airways flights to ground and
the government instructed other airlines to increase their flights so that passengers
have alternatives to cancelled Jet flights.
 The management – pilot’s marathon nine-hour talks before Chief Labour
Commissioner resulted in the airline management willing to reinstate the four sacked
pilots but it wanted the newly-founded pilots union (NAG) Guild to be disbanded.
The pilots were unwilling to dissolve the union but their presence at the conciliation
meeting was a positive sign.
 The Jet impasse ended a little before midnight on 12th Sept ’09, after five days of
chaos, protracted negotiations, demands and counter-demands. The striking pilots
agreed to form a coordination committee which is likely to replace the Jet pilots’
union. The airline management agreed to reinstate the sacked pilots. Representing the
pilots, Capt. Girish Kaushik remarked, “An amicable settlement has been reached. It
was like a misunderstanding in a family.” In a statement issued to the press, Jet
Airways chairman Naresh Goyal apologized to the customers who were
inconvenienced and expressed gratitude to other airlines that helped take the load of
passengers and government agencies and ministries that helped resolve the matter.

WHAT DOES THE LAW SAY?

 The right to form a Union is the essence of any socialist state (including India) and
apart from the Constitution, it has also been codified in the Trade Union Act, 1926.
 According to the Trades Union Act: Trade Union [Sec. 2(h)]: Trade Union means
any combination, whether temporary or permanent, formed primarily for the purpose
of regulating the relations between workmen and employers or between workmen and
workmen or between employers and employers for imposing restrictive conditions on
the conduct of any trade or business and includes any federation of two or more Trade
Unions. 
Provided that this Act shall not affect - 
(i) any agreement between partners as to their own business; 
(ii) any agreement between an employer and those employed by him as to such
employment; or 
(iii) any agreement in consideration of the sale of the goodwill of a business or of
instruction in any profession trade or handicraft.
The law relating to the registration and protection of the Trade Unions is contained in
the Trade Unions Act, 1926 which came into force with effect from 1st June 1927.
 In common parlance, Trade Union means an association of workers in one or more
occupations. Its object is the protection and promotion of the interests of the working
 class. Trade Unions have a home grown philosophy based on workers' experience and
psychology. It grows out of the workers' day-to-day experience. 
 The management obtained an ex-parte order from the Bombay High Court by virtue
of Sections 22 and 23 of the Industrial Disputes Act restraining the NAG from
striking
 The Industrial Disputes Act, applied- the management imposing the order under the
Sections 22 and 23 of the Industrial Disputes Act, 1947 was lawful and binding
towards the Union NAG as-
Section 22 (IDA) – Notice of strikes. Section 22(1) prohibits going on strike by the
workers except where above conditions are fulfilled. The issue of notice of strike is
mandatory. The date of the strike must be within six weeks from the date of issue of
strike notice. The day of the strike must not be within 14 days from the date of the
notice. There can be no strike on any day before the date specified in the strike notice.
Strike by workmen in violation of section 22(1) is illegal.

Section 22(2) of the Industrial Disputes Act, 1947 provides that no employee of any
public utility service shall lock-out any of his workmen-

(a) without giving them notice of lock-out as hereinafter provided, within six weeks
before locking out; or

(b) within fourteen days of giving such notice; or

(c) before the expiry of the date of lock-out specified in any such notice as aforesaid;
or

(d) during the pendency of any conciliation proceedings before a conciliation officer
and seven days after the conclusion of such proceedings.

Thus, Section 22(2) of Industrial Disputes Act, 1947 prohibits employer to declare
lockout without complying with above conditions. Any lockout without complying
with above conditions is illegal.

Section 23 (IDA): General prohibitions of strike. The provisions of section 23 are

general in nature. It imposes general restrictions on declaring strike in breach of
contract in the both public as well as non- public utility services in the following
circumstances mainly: -
(a) During the pendency of conciliation proceedings before a board and till the expiry
of 7 days after the conclusion of such proceedings;
(b) During the pendency and 2 month's after the conclusion of proceedings before a
Labour court, Tribunal or National Tribunal;
(c) During the pendency and 2 months after the conclusion of arbitrator, when a
notification has been issued under sub- section 3 (a) of section 10 A;
(d) During any period in which a settlement or award is in operation in respect of any
of the matter covered by the settlement or award.

The principal object of this section seems to ensure a peaceful atmosphere to enable a
conciliation or adjudication or arbitration proceeding to go on smoothly. This section
because of its general nature of prohibition covers all strikes irrespective of the
subject matter of the dispute pending before the authorities. It is noteworthy that a
conciliation proceedings before a conciliation officer is no bar to strike under section
23.
Legal Opinion- As we have seen above, that Section 22 and 23 of the industrial
Disputes Act, deliver the general conditions and prohibition regarding strikes. It
should be noted that, in Section 22(1), it has been clearly stated that no strikes can be
conducted during conciliation proceedings, hence the ex-parte order brought in by the
management stood lawfully binding. To which, the leaders of the NAG stated that
there was no communication between the Union and the management regarding a
conciliation meeting and they were not aware about any such proceedings and the
leader also mentioned that “the Union would be interested in negotiating with the
management.” Another important point to be brought into attention is regarding the
Notice of Strike, Section 22(1) clearly indicates that any Union wanting to opt for a
Strike should provide a notice regarding the same at least six weeks before the strike,
no such notice was provided to the management but rather one morning more than
half of the pilots called-in-sick and the management was then made aware that it was
not a sick leave but rather a strike by the members of NAG.
After all these violations, the negotiations and the strike finally came to an end when
the management and the members of the Union, came to an agreement wherein, the
management agreed to hire the sacked employees on the condition that the Union
shall be dissolved and rather an association should be built. The members of the NAG
again revolted against the settlement. And finally the parties came to an agreement
wherein a grievance committee was formed by the management to look onto such
issues, the employees hired back and the NAG dissolved.
RESULTS OF THE CONFLICT

 Though the strike ended, it left the ailing airline with more damages. Cancellation of
the scheduled flights led to massive loss. Even after the flights were resumed, a
reduction in the average daily revenue and the number of passengers clearly indicated
that the damage was difficult to repair.
 The company lost INR 20 crore ($4.5 million) on an average on the days of strike
owing to the cancellation and a drop of 30% in the ticket bookings.
 The developments were deepening the trouble as the company had lost INR 225.3
crore in the quarter ending June 2009. India’s largest private sector airline also has a
debt of INR 16,000 crore.
 After the 5-days of dispute, Jet Airways’ daily revenue of $8 million reduced
considerably and the number of passengers dropped from 23,000 per day to 7,500.
The 5-day long protest of pilots has created new problems for the struggling company.
 All that Jet Airways got was bad publicity, cancelled flights, angry and upset
passengers and a deep hole in the already draining pocket.