By VEN SREENIVASAN

Faced with tumbling loads and excess capacity, Singapore Airlines (SIA) has started preliminary talks to get its passenger plane pilots to take voluntary no-pay leave.

This comes as the airline prepares to slash up to 11 per cent of capacity by grounding 17 planes (about 15 per cent of its fleet), cutting routes and consolidating services in the face of the sharpest slump in air travel demand in more than five years.

Over the past couple of months, the airline has been engaging its three key unions - the SIA Staff Union, Airline Pilots' Association and Airline Executive Union - to work out measures to accelerate the clearance of leave entitlements, voluntary leave without pay, voluntary early retirement and shorter work months.

It recently convinced 25 of its 300 cargo pilots to volunteer to go on no-pay leave for up to 30 months. Given the dire state of the air cargo business, at least 25 more cargo pilots could be asked to also opt for unpaid leave.

But this is the first time in over five years that the airline could be asking its passenger pilots to take extended time off from work.

However, negotiations could get complicated as both sides try to hammer out how to deal with benefits - such as medical coverage and free flights - during their unpaid absence from work.

Generally speaking, staff on no-pay leave beyond a month have to give up some of their benefits. And in the case of its pilots, SIA seems willing to allow them to work elsewhere (but not with immediate rival airlines) during their extended time away.

Neither the pilots union nor the airline would comment specifically on the issue, but the airline's spokesman Stephen Forshaw said both sides were approaching discussions with a 'good understanding' of the dire operating circumstances.

'We will be acting as best as we can to preserve the jobs and skills of our pilots, but sacrifices will be needed,' he said.

'The issues which arise will not be easy and there may not be unanimity on all the points. But we all know the task ahead of us is to respond to this downturn.'

SIA and its pilots have a history of testy ties, which burst into the open in 2003-2004 after the airline grounded planes, restructured remuneration and benefits, and laid-off staff in the wake of the Severe Acute Respiratory Syndrome (Sars) crisis.

The current crisis could prove to be even longer and deeper.

International air passenger traffic dived for a fifth straight month in January, with Asia-Pacific carriers suffering the sharpest falls. Worldwide passenger numbers fell 5.6 per cent in January, after a 4.6 per cent slide in December 2008, confirming a deepening year-on-year slump.

Asian carriers led the decline in passenger numbers, with an 8.4 per cent year-on-year drop in January.

SIA's own January passenger load factor fell to 74.1 per cent, from an average of about 78 per cent in the October-December 2008 quarter. Its cargo load factor was just 54.2 per cent - well below the breakeven point.

Last month, SIA's chief executive Chew Choon Seng said the airline was taking various measures in order to avoid retrenchments.

'We have already taken action such as expanding and stepping up training and retraining programmes, and we will contemplate retrenchment only as a last resort, but we do not have the luxury of time and we need to agree and act on some measures quickly so that we can push back the point of retrenchment as far as possible and improve our chances of avoiding it altogether,' he said.

This article was first published in The Business Times.