Air India employees will no longer see performance linked incentives in their pay as the government has announced its decision to discontinue the controversial incentives scheme with effect from 1st of July this year.

The civil aviation ministry had dragged the performance linked incentive scheme under scrutiny after the carrier slipped into losses and its pilots went on 58-day strike in May.

Staring 1st of July this year, Air India employees shall get salary and allowances as per the guidelines of the department of public enterprises. The performance linked incentive, which is also called as productivity related pay, will be given to employees only when the company turns profitable.

The civil aviation ministry said in a statement, "Productivity Related Pay shall be determined on the achievement of Key Performance Indicators (KPIs) like yield, aircraft utilization… PRP shall be given only after the company starts making profit."

Over the past years, performance linked incentives payout continued increasing as the financial health of the carrier continued declining. In 2004-05, the carrier paid Rs 438 crore in performance linked incentives as it reported a profit of Rs 66 crore. In 2009-10, the employees received Rs 750 crore in performance linked incentives, while the carrier’s standalone loss inflated to Rs 2,774 crore.

Nevertheless, the decision could trigger fresh unrest at cash-strapped carrier.