UPDATE 2-India flights again disrupted as Jet pilots strike

* More than half of Jet's 760 pilots strike

* International services hit, deadlock drags

* Stir may spur unions in other private carriers - analysts

By Aniruddha Basu

MUMBAI, Sept 9 (Reuters) - India's Jet Airways (JET.BO) said it cancelled more than 200 flights on Wednesday as a pilots' strike dragged into a second day, underlining uneasy labour relations that can hurt competitiveness.

More than half of the airline's 760 pilots, banned from striking without informing the airline's management in advance, have reported sick since Tuesday, forcing the cancellation of flights affecting about 13,000 passengers.

The cancellations included 174 domestic and 32 international flights.

"Till Tuesday night, 80 percent of passengers had been accommodated on other carriers and for the balance, their fares had been refunded," Chief Operating Officer Hamid Ali told reporters.

Shares in Jet Airways, India's second largest airline by market share, ended 0.2 percent higher in a Mumbai market that extended gains into a fourth consecutive session on Wednesday. The firm's shares had fallen as much as 6.5 percent during trade before recovering.

Jet officials said bookings had fallen around 40 percent to about 14,000 a day from a daily average of 23,000. The company, valued at $465 million, would normally earn $4-$4.5 million a day from ticket sales, one official said.

SICK EN MASSE

The pilots reported sick en masse after talks between the management and the National Aviators' Guild (NAG), a new Jet Airways pilots' union, broke down over a demand to reinstate two sacked pilots.

The union said the pilots were sacked because they were trying to get management to recognise it. Jet said the four were fired for indiscipline and called the mass absence of pilots a "simulated strike".

The strike is seen as an example of touchy labour relations in a country where archaic labour laws place myriad limits on hiring and conditions for retrenchment, hurting competitiveness and leading to worker unrest.

A World Bank report on ease of doing business ranked India a lowly 122 of 181 countries and suggested greater flexibility in labour laws would help create more jobs and reduce poverty.

Most Indian private airlines do not have unions and analysts warned the unrest at Jet Airways could become the trigger for labour unrest in other airlines.

"It will catch fire easily and spread to other airlines," Kapil Kaul, chief executive of consulting firm Centre for Asia Pacific Aviation's India and Middle East operations.

"It will also have a bearing on other industry players and how Jet deals with it, how the government deals with it will be perhaps a test case."

He said the crisis could further hurt Jet, which is reeling under high operating costs and was forced last year to reinstate 800 flight attendants it sacked after angry protests by employees that drew enormous media and political attention.

The pilots remained absent despite a restraining order Jet said it had obtained from the Bombay High Court late on Tuesday against the pilots' action.

But the union said it was willing to end the action.

"We are ready to go for negotiations with the management -- just call us, we will be there," said Sam Thomas, the union general secretary and one of the sacked pilots. "We have no demand except the reinstatement of the pilots." (Additional reporting by Devidutta Tripathy; Writing by Krittivas Mukherjee; Editing by Alex Richardson)