Coronavirus Hits Airline Employees' Incentives

24th Feb 2020

Nok Air Logo

The deadly coronavirus continues to take its toll on the aviation industry, with airline operators now considering an employee salary cut to reduce its operating expenses (opex).

A report by the Bangkok Post quoted Nok Air Chief Executive Officer as saying that the airline will reduce the per diem allowance, the bonus given for overseas trips, of some 500 pilots and crew members to offset the impact of the virus.

Last year, Nok Air was able to decrease its operating expenditure by 50 percent but the sudden virus spread prompted the airline to further tighten expenditures.

“Pilots and crews voluntarily proposed this idea, and we stopped 30 routes to China," Jurangkool said.

A captain’s basic salary is normally at 180,000 baht, exclusive of financial incentives. Meanwhile, a co-pilot earns 220,000 baht per month but this is inclusive of a 120,000 baht salary and a 100,000 baht per diem for every 80 flight hours.

"Luckily, we still have strong domestic routes where Thai customers account for 90% of traffic,” Jurangkool added.

A pilot who requested anonymity was quoted as saying that the airline cut off other financial incentives for its employees, including a 25 to 30 percent tax subsidy scheme for pilots. However, the airline will instead offer transport expenses from home to the airport.

Jurangkool said the airline will revise its business plan for this year based on an estimate that the virus will be resolved in seven months. Among the revisions include the reassessment of its planned China expansion.

For this year, the International Air Transport Association said passenger traffic in the entire Asia Pacific region is expected to decline by 8.2 percent and will result in some $27.8 billion revenue loss.