Austerity, More Austerity... LCC Executives to Pilots Voluntarily Return Salaries

Air Busan, Former Executives Submit Resignations... 25 of 32 International Routes Suspended in March
Eastar Jet Pilots Union Agrees to 25% Wage Cut

On the 10th, amid ongoing concerns about the spread of the novel coronavirus infection, the domestic check-in counters at Gimpo Airport in Seoul showed a quiet scene. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Yoo Je-hoon] The tightening measures among low-cost carriers (LCCs) due to the novel coronavirus infection (COVID-19) continue. Air Busan's executives have collectively submitted their resignations, and Eastar Jet pilots have agreed to a 25% wage cut, among other high-intensity self-help measures.

According to the industry on the 24th, all executives of Air Busan submitted their resignations collectively on that day. Previously, Air Busan executives had agreed last week to return 20-30% of their salaries, and department heads voluntarily decided to return 10% of their wages.

Employees were also allowed to voluntarily choose options such as ▲ four-day workweeks ▲ 15 days of unpaid leave ▲ 30 days of unpaid leave. This was to resolve the issue of idle personnel following the decision not to operate 25 out of 32 international routes to China and Southeast Asia in March due to the COVID-19 situation.

Air Busan stated, "Since last year, we have been in a severe situation due to unforeseen adverse factors," and added, "We plan to make every effort to normalize management by reducing costs and improving profitability until the situation improves."

Eastar Jet reached an agreement through special wage negotiations between management and the pilots' labor union to cut wages by 25% for four months starting in March. The agreement was approved with over 70% support in a union member vote.

The pilots' union initially received a request from management for cooperation regarding unpaid leave, but it is known that they proactively proposed the wage cut plan, which has a greater cost-saving effect than unpaid leave, to management. An Eastar Jet official said, "This agreement reflects a shared understanding between labor and management regarding the management crisis."

Eastar Jet is also experiencing the worst management crisis due to last year's boycott of travel to Japan and this year's COVID-19 outbreak. Accordingly, last week Eastar Jet decided to have executives return 30% of their wages from March to June, and for employees, it plans to implement unpaid leave and reduced workdays and hours. This is a desperate measure to maximize cost savings while avoiding layoffs.

Industry insiders expect that the cost-cutting trend in the industry will continue until the COVID-19 situation enters a stabilization phase. An industry official said, "Currently, all airlines except Korean Air have entered an emergency management system," and added, "If the infectious disease situation continues for several more months, the intensity of restructuring, such as accepting voluntary retirement, may increase."