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DOI: 10.4172/2168-9601.1000114
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ISSN: 2168-9601

Case Report Open Access

Corporate Social Responsibility towards Employees (Case of Kingfisher

Airlines and Jet Airways)
Savita Shastri*
Bhandarkars Arts & Science, Kundapur, Udupi District, Karnataka, India

Introduction Objectives
In the past, Corporate Social Responsibility has taken the form of The Aviation sector was in its boom stage but there have been
codes of conduct written by Public Relations departments, without sporadic tremors which has upset the whole dynamics of employee
serious involvement of employees or other stakeholders, and without welfare. Time and again, leading airlines like Jet Airways and Kingfisher
any process of monitoring and verification of implementation. Too airlines have resorted to retrenchment and downsizing of their staff.
often, it has been measured in terms of charitable contributions, This has been done in the pretext of controlling costs and trying to stay
consultations with shareholders chosen by the corporation, and the put in the market. But is this justified when there is so much talk about
corporation’s own definition of “Best Practices” with regard to worker discharging Corporate Social Responsibility.
safety or environmental impact.
My objective of bringing out this case analysis is to understand
Today, business organizations are considered to be social the functioning of two of India’s leading service organizations when
institutions, apart from being economic entities for two reasons. Firstly, it comes to employee welfare. Are these companies sensitive to the
business organizations exist and operate within a social structure. They problems and needs of their employees? Do they really think before
need to win social acceptance for their survival. Secondly, business issuing them a pink slip and asking them to leave the organization?
organizations need to be socially responsible as they exercise a wide Who is to be blamed? Is it poor Human resource planning or economic
influence on the society’s life style. Corporations no longer exist to slowdown? The bottom line is that employees are the ones who become
only earn profits, but also strive to satisfy various societal needs. These scapegoats in the name of cost cutting, trimming or streamlining. All
societal needs are towards their customers, employees, shareholders, fancy terms which only send one message out – Organizations don’t
investors, community and the environment [1]. really care about their employees; they only are interested in staying
profitable. This has been proved right by two of the leading airlines of
Employees, also referred to as Human Resources of an organization
this decade Jet Airways and Kingfisher Airlines.
are described as the pillars of any organization. The employees are the
backbone of any organization. Their need and importance is accentuated Historical Perspective
when it comes to the Tertiary sector. In the last 2 – 3 decades, there have
been attempts to replace the employees by automated machines, robots, If we look at the historical perspective, prior to the First Industrial
computers etc. But the fact remains that we need human resources to Revolution, the industries were owned and managed by one or more
operate these machines. Hence, the need of human resources cannot be people and the employers maintained close relations with their workers.
undermined. Taking good care of its employees is the responsibility of This healthy worker – employer relation was demolished by the onset
the organization and its management. of Capitalism. The Industrial Revolution (1750 – 1850) was a period
of change and transformation from hand made products to machine
Tertiary industries or service industries are those industries which made products. Production started taking place on a large scale, which
provide services to help business to move unhindered or uninterrupted. resulted in rise in pollution levels, working conditions deteriorated and
Transport, Banking, Insurance, Communication, Advertising, there was a rise in the employment of women and children.
Healthcare, etc. come under Tertiary Sector. Service Industries are
popularly considered as Auxiliaries to trade, as they assist trade During this phase, Socialist Robert Owen’s name is noteworthy.
immensely. Service sector is a major contributor to our GDP and hence He tried to improve the lives of his employees, by increasing their pay
has received due attention in the recent years. and providing them with better working conditions. He was also the
first person to say that children below 11 years of age would not be
Transportation is one of the prominent service which forms part allowed to work in his factory. Due to his humanistic approach, the title
of the Tertiary sector. After the Indian aviation sector underwent of ‘Father of Personnel Management’ is bestowed upon him. In 1835,
liberalization in late nineties, it has seen a flurry of private service airlines another industrialist Andrew Ure stressed the importance of human
entering the industry. The aviation sector in India holds immense factor and provided his employees with benefits like Tea, medical
potential for growth; more so because it receives great impetus from
the booming tourism industry driven by higher disposable incomes
and favorable demographics. The Indian aviation sector was exposed to *Corresponding author: Savita Shastri, Bhandarkars Arts & Science,
intense competition with the advent of a low-cost airline –Air Deccan Kundapur, Udupi District, Karnataka, India, Tel: +919900213214; E-mail:
[email protected]
back in 2003. The success of Air Deccan spurred the entry of other
LCCs (Low cost carriers) like Spice Jet, Indigo, Go Air and subsequently Received August 11, 2014; Accepted September 16, 2014; Published September
low fare offerings from Jet airways and Kingfisher airlines. As a result, 23, 2014

the sector which was completely dominated by full-service airlines Citation: Shastri S (2014) Corporate Social Responsibility towards Employees
till a decade ago is now dominated by low-cost airlines. This also had (Case of Kingfisher Airlines and Jet Airways). J Account Mark 3: 114. doi:
10.4172/2168-9601.1000114
led to diverse job opportunities in this sector. There was an increasing
demand for cabin crew, pilots, engineers, ground support staff, trainers Copyright: © 2014 Shastri S. This is an open-access article distributed under the
terms of the Creative Commons Attribution License, which permits unrestricted
etc. By 2020 traffic at Indian airports is expected to reach 450 million, use, distribution, and reproduction in any medium, provided the original author and
making it the third-largest aviation market in the world [2]. source are credited.

J Account Mark Volume 3 • Issue 1 • 1000114

ISSN: 2168-9601 JAMK, an open access journal
Citation: Shastri S (2014) Corporate Social Responsibility towards Employees (Case of Kingfisher Airlines and Jet Airways). J Account Mark 3: 114.
doi: 10.4172/2168-9601.1000114

Page 2 of 5

treatment and sickness payments. In Indian context, it was J.N Tata who 33 To be honest in communicating with employees and transparent
in the year 1886 instituted a Pension fund for his workers and in 1895, in sharing information
he introduced accident compensation. These were the small beginnings
33 To listen to and where possible, act on employee suggestions,
in the direction of being socially responsible towards employees.
ideas, requests and complaints
The Human Relations Movement gave impetus to the employee centric
approach of management. The Great Depression in 1929 in America 33 To engage in negotiations in order to resolve conflicts whenever
and the Labour movement contributed in developing good employer – they arise
employee relations. It believed in treating employees as human beings
33 To avoid discriminatory practices and guarantee equal
and not machines. Employee’s feelings, sentiments, ambitions were duly treatment and opportunity regardless of gender, age, race and
recognized and they were involved in the decision making process. religion
The Behavioral Science Approach also stressed on the importance of
employees in the success of an organization. 33 To protect employees from avoidable injury and illness in the
workplace
A legal contract of employment governs the relationship between
the organization and the employee. The relationship is considered 33 To encourage and assist employees in developing skill and
to be important by society. The reason is that employees contribute knowledge which are required for accomplishing the task.
towards the growth of an organization and this in turn results in the There are many business decisions that do not flout the law, but
improvement of society. The employment contract makes the employer raise several ethical questions. The manner in which a business deals
responsible towards their employees. In return for their work and effort, with its employees is a clear indication of its ethical character. Treating
employees expect wages, benefits and security. It is the responsibility of employees ethically does not mean that the business should work
every organization to stand up to these expectations of their employees. towards maximizing employee satisfaction, playing down the need for
maximizing long term owner value. But employees should be given
The scope of these responsibilities is determined by the nature
their due reward for contributing towards the achievement of business
of employment. Usually the permanent employees enjoy trust and
objectives [3].
job security, whereas the temporary and probationary employees are
the ones whose interests are sacrificed whenever there is a crisis in According to the principle of Ethical Remuneration, a business
an organization. To foster a sense of belonging among all employees should not reward anything other than employee’s contributions
an organization should maintain a healthy work environment where to long-term owner value. Although effort, talent, and abilities are
following responsibilities are adhered to towards all employees. desired in a person, possessing them alone will not lead to rewards. An
employee is rewarded only when these qualities translate into results that
33 To provide adequate compensation based on experience and
contribute to long-term owner value. The Most Japanese corporations
standard of living conditions
provide security to their employees by offering lifetime employment.
33 To provide working conditions that respect each employee’s Some MNC’s like Wipro offer shares to their employees and make them
health and dignity owners in the organization. Some organizations regularly conduct

McDonald’s Commitment to Employees

Our people promise is more than words. McDonald and its independent owners / operators have made a commitment to employees that we strive to achieve with our
actions every day. And to make sure, we deliver on this promise, we have in place five people principles. These people principles reflect McDonald’s values and describe
the culture we embrace.

A. Respect and Recognition

• Managers treat employees as they would want to be treated

• Employees are respected and valued
• Employees are recognized formally for good work performance, extra effort, teamwork and customer service

B. Values and Leadership Behaviors

• All of us act in the best interest of the company

• We communicate openly, listening for understanding and valuing diverse opinions
• We accept personal accountability
• We coach and learn

C. Competitive Pay and Benefits

• Pay is at or above local market rates

• Employees value their pay and benefits

D. Leaning, Development and Personal Growth

• Employees receive work experience that teaches skills and values that last a lifetime
• Employees are provided the tools they need to develop personally and professionally

E. Resources to get the Job done

• Employees have the resources they need to serve the customer

• Restaurants are adequately staffed to allow for a good customer experience as well as to provide schedule flexibility, work-life balance and time for training
Table 1: Example of Organization’s Commitment to Employees.

J Account Mark Volume 3 • Issue 1 • 1000114

ISSN: 2168-9601 JAMK, an open access journal
Citation: Shastri S (2014) Corporate Social Responsibility towards Employees (Case of Kingfisher Airlines and Jet Airways). J Account Mark 3: 114.
doi: 10.4172/2168-9601.1000114

Page 3 of 5

training and development programs to keep the employees motivated At Kingfisher Airlines, the front line staff plays a critical role in
and also help them in moving up the organizational hierarchy (Table 1). ensuring that the service is delivered to the customers as promised. This
ensures some amount of reliability, and this in turn affects the degree
Methodology of responsiveness sought from customers. The quality of service that
In order to understand the contributions of the two leading the front-lone staff of Kingfisher Airlines provides is highly dependent
airlines towards the discharge of their Corporate Social Responsibility, on his/her ability to communicate. The front line staff needs to possess
information was collected from media reports. The affected employees ‘empathy’ which implies that these personnel listen, adapt and be flexible
of both these organizations were hesitant to disclose any information in delivering what individual customers need. Some of the employees
regarding their ordeal. Hence, Secondary data was collected from at Kingfisher Airlines are sent on a 21 day training programme to the
articles and reports published by magazines and newspapers about the US and Frankfurt which motivates them to stay on with Kingfisher.
pending salary issues at Kingfisher airlines and layoffs at Jet Airways. They are also provided with offers such as one-month bonus or some
Having worked in the Aviation sector for over a decade, I have a incentives, on the achievement of the sales targets.
complete understanding of the Management attitude and employee Until 2007, things were going as planned. KFA had carried 17.5
problems in the sector. million passengers in its diverse 41-aircraft fleet, on 255 scheduled
Analyzing the cases of Jet Airways and Kingfisher airline brings flights. But the losses had stacked to INR 4 billion. KFA took a bold
about few questions which are basic foundations of Human Resource step of buying out of Air Deccan, a low cost carrier with the intention
Management in any organization. Concepts like Human Resource of monopolizing the low cost market. In 2008, KFA they got their
Planning, Employee Welfare, Quality of Work Life, Effective Wage and international license and for the first time, flew from Bangalore to
Salary Administration, Organization Change and Development, Career London. Their revenue increased to $55 billion, but so did the losses,
Planning and Development, and Grievance Redressal have been grossly $16 billion. By 2010, the clouds over KFA grew dark. Jet re-established
neglected. Both the cases have been dealt in detail so as to understand its #1 position with a 25.5% market share, leaving KFA at 19%. By
the history of the organization, the values that it stood for and the HR this time, Indigo had established its hold over the Low cost segment.
Practices followed in the organization. These cases are an example of Struggling to cope with competition and increasing taxes, KFA further
how a customer service oriented organization takes the key resource i.e. reduced its network.
Human resource for granted. In 2011, for the first time, KFA declared that is was having some
Case analysis serious problems with cash flow. It blamed rising fuel costs and taxes.
Oil companies refused to supply Aviation Turbine Fuel on credit basis.
Case 1: Kingfisher airlines Delayed salaries caused dozens of pilots and hundreds of crew to leave
KFA for other airlines. Finance companies estimated that KFA needed
$159 million in equity in order to restructure their debt. But KFA’s top
brass believed that the situation was under control, but it eventually
slipped out of their hands. Income fell to INR 4 billion, but losses
remained at INR 5 billion. In 2012, things were at rock bottom. State
Kingfisher Airlines was set up by the flamboyant liquor baron Bank of India, the largest creditor of cash- strapped KFA had declared it
Dr. Vijay Mallya. It started operations in 2005, with its major hub in as a Non-Performing Asset. KFA owed SBI a staggering INR 15 billion.
Bangalore and secondary hubs in Delhi and Mumbai. Though originally Job cuts and strikes by angry unpaid employees made news.
conceived as a low cost model, he was quick to morph it into a stylish Kingfisher Airlines had staff strength of 6,000 and spent 58 crores
full- fledged carrier. Hoping to pose as a competitor to the 12 year old on salaries a month. KFA delayed payment of salaries of its employees
market leader-Jet Airways, Kingfisher rapidly expanded its fleet and for four months in succession from October 2011 to January 2012.
served 34 destinations. In 2010, the company placed an order for 50 wide Kingfisher also defaulted on paying the Tax Deducted at Source from
body aircrafts (including the A380 and A350) for planned international the employee income to the Income Tax Dept.
expansion. Until December 2011, KFA managed to retain the ‘5 star’
On 4th October, 2012, 45-year-old Sushmita, wife of Kingfisher
airline tag held the 2nd largest share in India’s domestic market. Among
Airlines Store Manager, Manas Chakravarti, hanged herself to death at
numerous awards, Kingfisher Airlines has been awarded “NDTV Profit
her residence in Manglapuri, New Delhi. Her suicide note, written in
Business Leadership Award for Aviation” by NDTV and been declared
Bangla, purportedly said: “My husband works with Kingfisher, where
“India’s No. 1 Airline in customer satisfaction” by Business World. they have not paid him for the last six months. We are in acute financial
Kingfisher Airlines, believed that ‘people’ are the most important crisis and so I am committing suicide.” This was the first instance of the
when it comes to delivering world class customer service. The KFA’s financial crisis claiming a human life. There are numerous stories
airhostesses at Kingfisher come in contact with the customers in of employees in distress, some even selling family jewelry to keep their
the process of providing the service, while the cockpit crew (pilots) stoves burning. The employees continued working without being paid,
contribute to the service product but do not come in direct contact with with a hope that things will become better and they would receive their
the customers. Dr. Mallya handpicks the air hostesses for his Airlines as salaries soon but that day never came.
they are expected to possess a pleasing personality with polite service What made things lead to such a chaos? Did Vijay Mallya put ego
handling whereas the cockpit crews at Kingfisher Airlines require to before prudence? Were the banks and regulators blinded by Mallya’s
possess high analytical and technical skills. Also at Kingfisher, there political clout? Were the operating costs too high? Many such questions
is the ancillary service personnel, the travel agent who plays a very arise in the examination of the events that led to the Kingfisher fiasco.
important role in creating the service exchange but is not a part of the Newspaper headlines and TV bites flashed Vijay Mallya posing with air
service. hostesses atop the wings of the planes that would rule the skies. Mallya

J Account Mark Volume 3 • Issue 1 • 1000114

ISSN: 2168-9601 JAMK, an open access journal
Citation: Shastri S (2014) Corporate Social Responsibility towards Employees (Case of Kingfisher Airlines and Jet Airways). J Account Mark 3: 114.
doi: 10.4172/2168-9601.1000114

Page 4 of 5

was called a game-changer, India’s version of Richard Branson. But to ambitious plans to develop its own maintenance hangers and pilot
anyone willing to forego the momentary aura, this story had flaws even training centers.
from its early days. Who were the sufferers finally? It was people, those
Jet had been constantly incurring losses since 2007-08. Buying
who were supposedly the strength of the airline paid a heavy price.
Sahara was a big strategic mistake by Jet. The first sign of real trouble
An airline that was known for the glam quotient of its employees in Jet became apparent in 2008 when Naresh Goyal entered into an
has changed completely. The women employees of KFA who once used operational tie-up with arch rival Vijay Mallya’s Kingfisher. This step was
to feel proud associating themselves with the airline are now crying followed by Jet Airways sacking 1,900 cabin crew members in October
“Shame Mallya”. Yes just a day before Women’s Day the KFA women 2008, all probationary and temporary workers, across all categories and
employees have written a stinging open letter to Mallya questioning the departments. It was justified as an attempt to switch to leaner business
very integrity of the organization. The explosive letter not just charges models and cost-optimize the business operations of the airline.
Mallya of duping the employees, breaking their trust but also blame
him for what the employees say commodification of women. According to Jet, the layoffs were “unfortunate” but “unavoidable”
because “everybody is bleeding” as the cost of business has gone up by
The government is a silent spectator even though TDS violation 30 percent and the alliance is aimed at reaping “maximum synergies.”
has taken place. If the judiciary does not intervene in favor of “The economic viability of the industry has been severely affected by the
Kingfisher employees, it is a very sad reflection of denial of justice. record high fuel prices and the crisis of the financial markets globally
The harried employees of defunct Kingfisher Airline (KFA) approached and the downturn in traffic,”
the office of Regional Labour Commissioner (RLC) in New Delhi, on
March 2, 2014, seeking its intervention over non-payment of salary This statement by the airline officials invited severe criticism not
dues. But the alarming fact is that none of the executives from KFA just from employees but also from the government, political parties and
management came forward to attend the meeting called by RLC. regulatory bodies who forced the airline to take back the sacked people.
It was in fact an example showcasing the importance of managing
This is the story of passion gone wrong and all the proponents of internal stakeholders in a change management plan. Jet Airways had
Passion as the driver of success may do well to take a lesson out of this. been ruthless in the way they ended the careers of these employees.
We are taught that persistence is essential to success, but here is a story
There were cases where staff waiting at home for office transport found
where it led to a meltdown on a grand scale. In a recent move, United
that the vehicles never came; when some of them reached the airport on
Bank of India has declared Dr. Vijay Mallaya as a Wilful Defaulter, but
their own, they discovered that their jobs were in jeopardy.
what happens to those employees who still await their pending dues.
Shouldn’t there be an intervention to protect the rights of the hundreds Jet Airways Chairman Naresh Goyal in a dramatic press conference
of employees who gave their sweat and blood to build the airline. This reinstated the employees a day later saying that he was not aware of
indicates complete neglect towards the rights of employees, the right to these sackings. Goyal said his conscience did not allow economic
receive a fair remuneration and earn a living [4]. consideration to be the reason for sacking employees. This statement
Case 2: Jet airways was contradictory to the earlier ones and puzzled quite a few analysts.
Anjuli Bhargava, Columnist, Business Standard, remarked in
October, 2008 - “While the mishandling of the Jet Airways sacking and
reinstatement of 1,900 employees was an HR and PR disaster, the larger
implications of what happened are also worth considering. It is not just
that the chairman of India’s most successful airline became the butt of
jokes, it is also a question of what he knew, when he knew it, and who did
Recipient of several business and leadership awards, Naresh Goyal the bungling.”
established Jet Airways (India) Private Limited in 1991. It commenced This case of Jet Airways shows that the layoffs seemed to be a step
commercial operations on May 5, 1993. At that time, Jet Airways
taken in haste and with some other motive rather than just cost cutting.
claimed to be the only profitable privately owned airline in India.
In India it is really difficult to get a job and loosing job is something that
Indeed, by 1997, five of the seven airlines that had been launched since
creates a mental, physical and emotional turmoil. Hence any company
1992 were grounded. Jet Airways was one of the very few survivors. On
March 22, 2004 Jet Airways and rival private airlines in India were free before taking such a step should think many times, there were other
to begin flying outside the country. Jet had borrowed about $800 million ways of cost cutting also. Secondly as a HR person one should be aware
to finance new aircrafts. Jet was poised to profit from an expected of how people behave as a group, laying off 1900 people at a go certainly
extension of flying rights throughout Asia. had to create a team and a big emotional upheaval in country where
people are so emotional. Hence if such a step had become necessary,
Over the next few years Jet established itself as a leading Indian it should have been done in batches of 20-50 people with some time
player, becoming a case study for in-flight excellence. Possibly excited gap.
by this euphoria, industry insiders say, the management made its first
big gamble by eying Air Sahara in 2006. Naresh Goyal moved in to buy Thirdly the layoffs were made in the month of Deepawali a festival
Sahara a year later for Rs 1,450 crores. Acquiring Sahara meant a huge which is the most important festival in whole of India, such a step should
drain on Jet’s resources, both on financial and management fronts. have been delayed some more. This really showed the management in
All this happened at a time when the concept of low-cost carriers a bad light. This is a month when people give bonus and gifts to its
was completing two years in India. The domestic aviation market was employees and what a gift Jet Airways gave. The management should
growing at 30-40% and players like Air Deccan were challenging the have made a thorough ground work before venturing into the process
might of full service carriers like Jet Airways. The management had of retrenching 1900 employees [5].

J Account Mark Volume 3 • Issue 1 • 1000114

ISSN: 2168-9601 JAMK, an open access journal
Citation: Shastri S (2014) Corporate Social Responsibility towards Employees (Case of Kingfisher Airlines and Jet Airways). J Account Mark 3: 114.
doi: 10.4172/2168-9601.1000114

Page 5 of 5

Suggestions and Conclusions part of the society and environment in which an organization operates.
A corporate which cares for the welfare of its employees, not only fulfills
If we summarize both the cases, we can conclude that Human its responsibility towards the internal stakeholders but also towards the
Resource Department in any organization should analyze the social and community at large. From the economic point of view, it becomes cost
political atmosphere prevailing in the country and make decisions. The effective to undertake CSR through employee welfare. It is important
lay-off could demoralize the rest of the team and employees’ confidence to understand that employees spend majority of their life at workplace
on the company will be down for ever. Secondly HR department should and have long term interest in the organization. Concepts like ESOP
have searched for alternate jobs in the industry for their employees if and Employee Pension schemes play an important role in creating an
that was not possible then the company should have held a meeting eternal bond between the employees and the organization. Employees
and explained to their employees about the companies difficulties and are brand ambassadors of the organization and hence it is a wise decision
asked them to voluntarily resign. They would have made a half yearly for the top management to invest in employee welfare activities.
performance evaluation (as this is the mid of FY 08 - 09). The low
performers can be given the pink slip. They can abstain from recruiting References
new employees and can avoid replacement of the resigned employees. 1. Business Ethics and Corporate Governance
The percentage of salary hike can be lowered. Cost cutting can be 2. http://www.indianaviationnews.net/
achieved through the withdrawal of the certain avoidable allowances
3. Realty comes back to bite the Pawar family (2012) Tehelka Magazine, New
and perks.
Delhi.
Every organization should understand and acknowledge the role 4. http://en.wikipedia.org/wiki/Kingfisher_Airlines
of employees in the success and growth of that organization. The
5. http://en.wikipedia.org/wiki/Jet_Airways
employees are not only a part of the organization but also an integral

J Account Mark Volume 3 • Issue 1 • 1000114

ISSN: 2168-9601 JAMK, an open access journal