Posts Tagged ‘Regulation’
Estimated reading time for this article: 4 – 5 minutes
I know that every reader of the blog is fully aware that Kingfisher Airlines is having serious financial problems. It is nearly a weekly headline. Back in early January, I took the bold step of making what was a very controversial prediction at the time. I said,
Kingfisher Airlines will not exist in July 2012.
Liquor Baron (Read: Drunkard) Vijay Mallya, the Guy Behind Kingfisher
At the time, some people thought my prediction was crazy. People argued that Vijay Mallya will save the airline somehow, that it will get a bailout, that it will join oneworld and everything will be alright, that that British Airways will invest once FDI gets passed.
Well, none of those things happened. Vijay Mallya hasn’t done anything. The government has (thankfully) decided not to bail the airline out. Its oneworld alliance membership was suspended, and British Airways has shown no inclination whatsoever to help the airline. Not that it matters – the FDI proposal is sitting in some desk gathering dust anyway.
In the meantime, more planes have been grounded and repossessed, staff still haven’t been paid, many staff have decided to leave the airline, the airline has closed more routes, and the income tax department has frozen their bank accounts due to non-payment of taxes.
So, now I’m here thinking that maybe I was too generous. I wouldn’t be surprised if Kingfisher isn’t around in March, forget July.
Anyway, let me bring you guys up to date.
Last week, Kingfisher announced that it had made a 435 crore (almost $100,000) operating loss for last quarter. Not a surprise – their loads factors have been dismal, their yields at all time lows, and their schedule took a major haircut. They’ve also been cancelling a lot of flights. With all these problems, there is no way in hell that they could have made any money. So this announcement is not a surprise in any way. Regardless, it hasn’t exactly been the kind of announcement which inspires confidence in investors or the banks.
Over the weekend, Kingfisher closed operations at Kolkota, the third largest metro area in India. Flights were zeroed out on GDS, and cancelled at the airport. Reportedly, Kingfisher declined to give refunds, instead instructing people to dispute the charges on their credit cards. Those who paid through cash? They’re SOL.
In addition to Kolkota, it appears that Kingfisher is winding down Lucknow, Bhubaneswar, Patna, Srinagar, Pune, and Hyderabad. These are major cities. Kingfisher shutting them down is not good at all.
More Kingfisher aircraft have been repossessed and grounded. It appears that their operating fleet is down to 20 Airbuses and 8 ATRs. That’s out of what was a fleet of 64 aircraft just a few months ago…
More Kingfisher employees have walked off their jobs. While Kingfisher maintains that they have enough crew to fly their current schedule, the massive number of cancellations indicates otherwise. I suppose those cancellations could be for reasons other than crew shortage, but either way, it’s not good.
Finally, the biggest problem for Kingfisher: the income tax department has frozen their bank accounts because they haven’t paid their taxes. Unlike other airlines, they are forced to pay for fuel upfront because the fuel suppliers don’t trust them. They are also forced to pay landing fees up front at some airports. Not having access to their bank accounts means that they can’t operate their schedule. As you can imagine, this has wreaked havoc at airports around the country.
Today, some executives have been called to the office of India’s aviation regulator, the DGCA to explain what is going on with the carrier.
Hopefully, they will be arrested there and sent to jail where they belong. Tax evasion, not paying employees, looting the government’s loan money is all criminal conduct. Sadly, that is unlikely to happen. However, I suppose it is more likely that Kingfisher surviving much longer…
Oh, and there is a bright side to this mess as well: Air India’s revenue is up over 30%, their load factors are up 5%, and their yields have increased by almost 20%. While the government will likely never get their loan money back from Kingfisher, at least they might get it back in the form of Air India. Even with this, we taxpayers are still going to get ourselves stuck with a nice large bill.
Posted in Rohit Rao | 
Tags: Air India, bankrupcy, DGCA, Kingfisher, Oneworld, Regulation, vijay mallya | 
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Estimated reading time for this article: 3 – 5 minutes
The Directorate General of Civil Aviation (DGCA) ordered the removal of Jet Airways (India) Ltd’s chief of flight safety Vishesh Oberoi for failing to perform his duty as the airline’s top safety manager, a first in recent times.
The regulator took the action against Jet Airways for allowing a trainee pilot to land a packed flight on 14 October in Mumbai, violating safety norms. DGCA had summoned Jet officials for an explanation on Monday.
The airline was also found to have violated rules, including not informing the regulator about the incident, Mint reported on 13 February.
Jet Airways chief executive Nikos Kardasis, along with other officials, had an hour-long meeting with Bharat Bhushan, the director general of civil aviation, on Monday, said a government official who declined to be named.
“The head of flight safety has been ordered to be removed immediately for failing to perform his duties,” the official said. A second government official confirmed the move and added that the airline has to inform the regulator on the appointment of a new chief of flight safety.
A Jet spokesperson declined to respond to an email. Phone calls and text messages seeking comment remained unanswered.
DGCA approves the chief of flight safety for each airline. The official is directly responsible to the regulator and is required to make regular reports about matters of safety. An airline is expected to voluntarily report safety issues to the regulator, including minor snags.
DGCA came to know of the incident through a complaint on 5 February.
“About four months back, Jet Airways captain Sheikh Ahmed was operating a flight into Mumbai along with F/O (flight officer) Khajuria (co-pilot). There was a supernumerary pilot on board. I understand that the captain asked the first officer to vacate his seat and he permitted the supernumerary pilot to occupy the right seat for the landing,” the complaint said. “This is a very serious violation and endangers the lives of all on board. I understand Khajuria gave a written complaint. There appears to be an intervention from someone to soften the action against the captain, who was merely suspended for three months and is now back to flying as a captain.”
The complaint asked if “the airline inform(ed) the DGCA of this serious violation? If they did, what action did DGCA take and was this recorded in the list of violations in the safety audit conducted? If they did not report this, what action will DGCA take against the pilot and the airline?”
The licence of the commander has been suspended, according to DGCA.
It, however, remains to be seen if his flying license will be cancelled too as DGCA has done in past cases, said Mohan Ranganathan, an air safety expert and member of the government-appointed Civil Aviation Safety Advisory Council. “DGCA should not stop with action against the flight safety head. A clear message has to go to all airlines that such violations will not be tolerated. A strong action against the airline is also warranted for hiding this incident,” he said.
Now, this is a big deal. It’s not common to see the DGCA take such drastic action and order the removal of anyone…
However, allowing a supernumerary pilot to land an aircraft is very dangerous. A supernumerary pilot is a pilot who has just finished training school. You can think of this incident as a captain allowed a trainee pilot to land the aircraft, and then the chief of safety covered it up. Serious business…
While some people might pass this off as a “one-time incident,” it raises serious flags about the safety culture at Jet Airways. Firstly, allowing a trainee pilot to land an aircraft is incredibly irresponsible for a captain. But more importantly, the coverup than ensued is what is really worrying. An airline which covers up safety issues to avoid getting in trouble is not an airline which I would be confident in the safety practices of. If they are ok with covering up this incident, where will they stop? Falsified maintenance logs? Flying over maximum weights? Cutting corners of training procedures? Nobody knows…
It is important to keep in mind that I still fully convinced that the airlines in India are safe to fly. Vinay Bhaskara wrote a great essay on the topic about a month ago, and I wholeheartedly agree with it. However, it this truly is a disturbing incident…
Estimated reading time for this article: 2 minutes or less
American Airlines is having problems with the new Department of Transportation disclosure rules that came into effect yesterday. A warning on its website says that the airline is having technical difficulties and the initial fares don’t include taxes and fees.
Given the DOT’s recent streak of fining airlines for violations, I’d guess that a fine will be American’s fate too. Whether they will ever pay it is a different question – bankruptcy protection will make it very hard for the DOT to collect any fine…
Estimated reading time for this article: 2 minutes or less
The US Department of Transportation (DoT) has been talking tough about consumer regulation as it relates to the aviation industry recently. However, a couple of recent fines show that the DoT is serious about enforcing regulation. This is a very good message to send to airlines. At the same time, the size of the fines are miniscule, and likely will have a negligible impact to the airline.
The DoT’s fines were for a multitude of reasons. The most common reason for fines was violations of internet advertising rules – which will be strengthened in the new rules that take effect this week. Asiana Airlines, Icelandair, and LOT Polish all were fined $70,000, $50,000, and $60,000 respectively for not disclosing taxes and fees properly. Alitalia Airlines was also fined $80,000 for underpaying compensation for lost or delayed baggage.
The thing to note is that these fines are tiny. These fines are less than the cost of fueling an aircraft, an expense airlines deal with many times daily.
If the DoT wants to be serious and “get tough” about airlines flaunting these rules, they need to make the penalties tougher. Hopefully that will happen soon.