Hot Pick : Akasa Air
Manisha Singhal
Its ugly in the courts between Akasa and its pilots. A year into operations, the airline has antagonized its pilots, aviation regulator and fliers. Has Akasa failed to live up to its promise of a ‘different’ airline? Or is Akasa just a symptom of the bigger malice plaguing Indian aviation? It’s a different market reality of duopoly with bigger players flexing muscles – will Akasa clear this turbulence? Read here.
“Money is not everything. Akasa is fooling itself if it thinks it’s about money pilots are going after and leaving. Pilots are leaving because there is no respect, promises not kept, no redressal mechanism and nobody bothers to listen. This airline has become a hub of favoritism and nepotism.”
This is just one of the pilots I quote here from the young airline Akasa. But the sentiment is echoed by a lot many of its pilots – some who left and some on way out.
It’s rather stark as till about a couple of months back Akasa was the blue-eyed boy of Indian Aviation and Vinay Dube, its Founder and CEO was sitting pretty with a dream take off. It created global aviation history as first airline to scale its fleet to 20 aircraft within first year of operations and a market share of 4.8% from 0.2%.
Didn’t Akasa come with a pedigree , a marquee promoter in investor Rakesh Jhunjhunwala and some of the best names in aviation industry like Aditya Ghosh, its Co-Founder? It seemed to have cracked that magic code that Indian aviation craved for long of keeping fliers, employees and stakeholders happy, all at the same time.
But, today, barely a year into operations, that dream run is turning into a nightmare. Akasa’s part of sky has turned turbulent rather early. What is unfolding in the Akasa story has three parts :
- Pilot Strife : The ongoing court battle between Akasa and its pilots . Nearly 50 of Akasa pilots left. Airline claims without serving the mandatory six months’ notice period. It has sued its pilots for loss of revenue, reputation and inconvenience to passengers.
- Roping in the regulator: The attempt by the airline to make pilots’ quitting Akasa without serving notice period as an industry issue. Tries lobbying with aviation regulator and aviation minister for support in penalising errant pilots. It did express dissatisfaction in the court for not getting adequate support from the regulator.
- Aviation landscape: An evolving aviation landscape where duopoly is a certainty and bigger players are flexing their muscle , smaller ones being squeezed and fighting for the same pool of manpower resources, specifically pilots that are in short supply in India.
Pilot strife
Ripples of what is a legal battle today were there much before Akasa was to complete a year of operations on August 7.
A section of its pilots felt may be the idea of a ‘different’ and ‘employee-centric’ airline sold by Akasa management was nothing but mendacious and they were dealt a rotten hand. A few were deciding to quit, waiting for an opportunity.
When I interviewed Dube in the month of July (Planes.Talks.Travels – Unplugged: Vinay Dube The Interview), I asked him why Akasa’s pilots are feeling the way they are? And why some feel ,“the middle-management of the airline has failed to address their issues. There is favoritism. They are flying much more or the first officer’s flying less than contracted. Its weeks before they get to be with their families.”
The pilots had base choice issues, their flight meals were not up to satisfaction, they felt flight operations and other management pilots from the erstwhile Jet Airways weren’t playing fair.
A dismissive Dube then said, Akasa has the best aviation talent in its middle management and that he is approachable. Assumption being pilots are crying wolf.
Apparently not. Akasa’s pilots aborted a dream take-off.
Nearly fifty of its pilots handed over their resignations when the opportunity presented itself , reportedly with a rival Tata Group airline scouting the market for Boeing pilots. It has aggressive expansion plans and disgruntled Akasa pilots were there for a taking.
Unavailability of pilots to operate flights forced the airline to cancel and reschedule flights, fliers were irate slamming the airline for cancellations and for rescheduling flights.
In August , Akasa had to cancel nearly 700 of its flights. September average is 24 cancellations per day. If this continues till the month end, Akasa’s revenue loss for the two-month period will be near about Rs 96 crore.
The above figure based on assumption presented by Akasa in the court stating each of Akasa flight earns a revenue of Rs 6,80,400 per flight on 90% seat occupancy. It’s operating loss for the first year is Rs 602 crore.
Akasa’s healthily growing market share slid to 4.2% in August down from 5.2% in the month of July and Akasa had to cede the market position to another low-cost carrier SpiceJet, it settled for the sixth spot in a market where there are eight major airlines.
A singed airline assessing the number of cancellations it was staring at August onwards, decided the issue needs to be nipped in the bud and it’s pay up time for its pilots. The year-old airline chose to go legal.
Akasa math is simple, it seeks Rs 0.3 crore under training agreement, loss of operational profit of 7 crore, reputational loss of 14.3 crore, totaling to Rs 21.6 crore that each of its six pilots need to compensate the airline for. In its filing it also names 43 other pilots in exit mode to be subjected to same legal recourse.
The narrative thus changed for Akasa and its positioning of being an employee-centric airline with work-life balance as a corner stone of its employee philosophy is on a shaky ground.
The pilots on the other hand seem unfazed, they aryet to file their response in the court. But the fraternity largely agrees that contractual validity is when both sides keep their part of the bargain. They feel that their salary structure and flying hours have been unilaterally changed by the airline, thus the obligation to adhere to the notice period does not hold ground.
Aviation Regulator and Ministry of Civil Aviation:
As per information with me , Akasa , in the court filing has submitted two letters dated August 3 and August 18 addressed to the DGCA, that is the aviation regulator, and Minister Civil Aviation, Jyotiraditya Scinida as exhibits.
In the letter addressed to the DGCA the airline puts its case forth, “Request to take strict penal action against certain pilots and first officers under Rule 39A(2) of the Aircraft Rules, 1937 for violation of ‘Civil Aviation Requirement’ or CAR dated 16 August 2017 and terms of their employment agreements.”
This letter details abrupt pilot resignations which the airline had apprised the regulator in a personal meeting before writing the mail. The airline met Secretary Civil Aviation and the minister too for discussion of the issue on August 17. The letter to the minister mentions clearly that CAR empowers the Indian regulator to suspend/debar errant pilots on failure to adhere to the notice period of six months.
“The problem of pilots resigning without any prior notice to the airline is not new and has been lingering for decades. In the past, several other airlines also faced this issue where pilots quit their jobs overnight and joined airlines abroad. This reckless practice by the pilots deeply hurts the Indian aviation industry and public interest.” Akasa wrote to the minister.
But the airline lobbying to get the regulator and the ministry on its side on the issue did not cut ice . Truth be told neither the airlines nor the pilots or the regulator has dealt with this issue with any seriousness and if the precedents are anything to go by status -quo has been maintained.
The amended Civil Aviation Regulation, 2017, did fix the notice period between 6-12 months depending upon the experience of the pilot. At the time when the government was taking opinion of the stakeholders, that is the airlines , aviation company heads were divided over the six-month period enforcement. At that time newer airlines like Air Asia India, sources say, wanted the notice period to be three months, as in other jobs.
It is understood that bigger carriers, wanting to expand fast, opposed this and maintained that it needs to be six months as pilots are skilled resources and replacing them in three months is difficult. And that is where the amended CAR stands today.
But even for the stipulated notice period, enforcement lacks teeth as the regulator leaves it as a matter between the employee and the employer. And pilots contest this long notice period, more so when their service conditions or salary contracts have been unilaterally altered by the airlines.
Within the context given above, the regulator and the ministry refused to come to Akasa’s rescue or side up with the airline and get muddled with the issue which it felt is strictly between the airline and its pilots. It maintained Akasa has not been able to share sufficient and satisfactory data on flight cancellations due to pilot resignations with the regulatory authority so there isn’t any need for intervention.
DGCA said it is bound by pervious matters to not action upon pilots’ grievances , unless specifically directed by the court. Akasa was trying to turn this tussle, change of power equation between the airline and the pilots in its favour but it played out differently for the airline and definitely Akasa finds itself isolated and saddled with a massive setback.
The DGCA, on above grounds, argued in the court that Akasa’s plea need to be dismissed.
To be fair, pilots leaving an airline without completing their notice period and throwing schedules haywire, in some cases bringing the airline down on its knees, does merit a serious re-think and a resolution by the industry players and pilots.
But Akasa wasn’t talking of the industry issue, it tried to dovetail its own pilot challenge with the industry issue.
Duopoly and short supply of pilots:
Every growing or new airline in Indian aviation right from the 1990s when government allowed private players to start air operations has poached pilots and tried that pilots join without completion of notice period on any pretext.
It was early 1990s. An airline promoter was addressing a clutch of disgruntled pilots threatening to join rival airline for better pay and few more perks. “You are my diamonds, very precious, I will always keep you close to my heart,” said the promoter as he begged pilots to stay.
This issue became a survival threat to the industry 2010 onwards as Captains were hired by expanding foreign and Gulf carriers. The ‘exodus’ of pilots from India then forced airlines to either poach or hire expensive expat pilots to operate different aircraft types.
In fact, Akasa in its court filing refers to this exodus of pilots as an example and therefore a need to enforce notice period strictly.
Fact is India wasn’t licensing enough pilots then and it’s not doing so now even after more than a decade has lapsed. India is third – largest aviation market in the world today and Indian carriers have a large order book with nearly 1,500 aircraft on order and deliveries planned till 2030. Part of these deliveries will start from 2024 onwards .
The data in public domain puts number of pilots in the country today to 9000. India will need almost double this number in the coming years but the regulator issues not more than 600 or so commercial pilot licences per year .
Hemanth DP, CEO, Asia Pacific Flight Training Academy points out to a near emergency situation when he says that in the coming years, “India will need 150% more pilots than it currently has.” He also points out to issues like shortage of simulators or the availability of slots aboard for pilots to train, derailing training and thereby pilots coming into system .
Add to this the fact that DGCA itself is grappling with shortage of competent manpower to fill its vacant positions thereby increasing pendency time for issuance of commercial pilot licences.
Also, duopoly – dominance of two large airlines, low cost carrier IndiGo and four Tata Group Airlines – is more or less an established fact of Indian aviation. Between them they share nearly 85% of the domestic Indian market . They have multibillion-dollar aircraft deals, totaling to more than 1400 aircraft between them. Both have backing of big business houses and financial muscle.
With IndiGo on an aggressive expansion mode the race is likely to be fueled further as Air India tries expanding in domestic and international market as a catch up.
This development is essentially skewed against smaller players like Akasa who are trying to shore up market share and, in this case, pilots reportedly joined rival carrier. As big brothers try dwarf other airlines, young airlines will face the heat and the might as the pool of manpower resources, specifically pilots likely to remain constrained.
It’s a worrying development and also unhealthy for a market which is growing exponentially and needs more connectivity and certainly more players. Indians are taking to the skies like never before, an estimated 145 million passengers are travellin annually within the country and half as much to international destinations.
Way forward for Akasa:
Sources at Akasa say they had a successful roadshow for hiring pilots and Akasa offered joining bonuses, yet again. This is probably the fourth roadshow Akasa held for hiring pilots within a year of its operations. The airline maintains it currently has 400 pilots, sufficient to fly its fleet of 20 (planes go on rotational configuration change for uniformity so not all 20 might operate).
Putting up a bravefreont the airline sources say this issue is behind them. “We are looking forward to go international.” The airline got regulatory approval to launch international operations last week and had planned to fly international by year-end.
It’s in midst of a fund-raise with reports suggesting the airline is tapping the market to raise $400 million and the Jhunjhunwala family likely to dilute stake. It also is caught on the wrong side of supply-chain challenges and its deliveries might not flow as expected. Akasa planned adding an aircraft every month to its fleet with a waiting in wings three-digit aircraft order that it alluded to during the Paris Air Show in June this year.
It can hope that either the pilots who have completed type-rating for Boeing aircraft can fly with them soon or as Dube said, Akasa will curtail certain flights, operate a curtailed schedule till things come back on track.
As of now, Akasa seems to be the lone wolf fighting a battle which it might have do a rethink about . It’s a ‘walk through fire moment’ for the airline. The pilots might fly out of this turbulence. But has Akasa lost on the trust and goodwill that it hunted for?
ENDS
Planes. Talks. Travels. 