Note That Could Have Grounded King­fisher

Is the Gov­ern­ment try­ing to pro­tect King­fisher Air­lines? The avi­a­tion min­istry says no but the ev­i­dence is mount­ing.

India Today - - INSIDE - By Bhavna Vij- Aurora ( FROM LEFT) BHARAT BHUSHAN, AJIT SINGH AND VI­JAY MALLYA

Is the Gov­ern­ment try­ing to bail out King­fisher Air­lines? The avi­a­tion min­istry says no but the ev­i­dence is mount­ing.

King­fisher Air­lines, which has been on a death­watch since Novem­ber 2011, looked all set to crash and burn in early July. Un­paid and an­gry em­ploy­ees threat­ened to go on strike, and the Di­rec­tor Gen­eral of Civil Avi­a­tion ( DGCA) talked about sus­pend­ing op­er­a­tions be­cause the fi­nan­cial stress could se­ri­ously im­pinge on pas­sen­ger safety. The em­ploy­ees did go on strike on July 14, the fifth in two months, but the de­pleted air­lines sur­vived. But DGCA E. K. Bharat Bhushan did not. On July 10, he was sud­denly re­moved, less than a week af­ter the Ap­point­ments Com­mit­tee of the Cab­i­net, headed by the Prime Min­is­ter, had ap­proved his ex­ten­sion as DGCA till Novem­ber 30, 2012.

On July 9, Bhushan wrote a note rec­om­mend­ing that a notice be is­sued to King­fisher, ask­ing them to im­me­di­ately ar­range pay­ment to its em­ploy­ees and cred­i­tors, if not full at least a sub­stan­tial part. “It may be in­di­cated that we may be con­strained to sus­pend their op­er­a­tions if funds are not made avail­able and li­a­bil­i­ties re­duced sig­nif­i­cantly within 15 days of re­ceipt of this notice,” he wrote. He added that King­fisher had not paid salaries to its em­ploy­ees from Fe­bru­ary 2012, which was a cause of con­cern. “Spe­cial safety over­sight con­tin­ues over the op­er­a­tions. In the course of its au­dit, sev­eral engi­neer­ing is­sues are emerg­ing which have a di­rect bear­ing on safety,” he wrote.

Was Bhushan re­moved to give a breather to King­fisher? Civil Avi­a­tion Min­is­ter Ajit Singh says the per­cep­tion is mis­placed. “We made it very clear at the be­gin­ning the Gov­ern­ment will not bail out any pri­vate air­line,” he told IN­DIA TO­DAY. That, how­ever, is not the is­sue. The ques­tion that Bhushan raised was on pas­sen­ger safety. Ac­cord­ing to sources, Bhushan had flagged the safety is­sue sev­eral times. With main­te­nance of air­craft car­ried out by en­gi­neers at 2 a. m. and pi­lots fly­ing at odd hours, fi­nan­cial and men­tal stress could have a di­rect bear­ing on safety.

The min­is­ter does not make too much of it. He says no ( air) ac­ci­dents have taken place in the coun­try in the last six months. “As far as stress of pi­lots and en­gi­neers is con­cerned, how can you mea­sure it? I am sure the King­fisher man­age­ment will even­tu­ally clear their dues,” he said. Such op­ti­mism is not al­ways shared by an­a­lysts and avi­a­tion ex­perts.

King­fisher Air­lines, mean­while, says that it is oper­at­ing with ut­most safety un­der DGCA’s close su­per­vi­sion. On Bhushan’s sud­den re­moval, UB Group Vice- Pres­i­dent ( cor­po­rate com­mu­ni­ca­tions) Prakash Mir­puri said it is “highly in­cor­rect and mis­chievous to sug­gest that it is in any way con­nected to King­fisher Air­lines”.

Ajit Singh and the act­ing DGCA Prashant Sukul in­sist that the con­tro­ver­sial July 9 note did not ex­ist. The dis­ap­pear­ance of Bhushan’s note is a shock­ing mys­tery, since it im­plies that it was ex­cised out of the records— a crim­i­nal of­fence.

Bhushan’s “non- ex­is­tent” note is not the only thing that the min­istry has had to re­fute. On July 21, IndiGo Air­lines pro­moter Rahul Bha­tia claimed the “Gov­ern­ment is tin­ker­ing with avi­a­tion poli­cies for a se­lect few in the in­dus­try”. He added, “We prob­a­bly are a zero- debt com­pany, and

pitched against com­pe­ti­tion which gets sop af­ter sop.” With­out nam­ing King­fisher Air­lines, Bha­tia said he knew about “ar­ti­fi­cial com­pe­ti­tion” from state- owned Air In­dia but re­gret­ted “Gov­ern­ment’s re­lent­less ef­fort to keep in­ef­fi­cient pri­vate op­er­a­tors in busi­ness”. He claimed re­verse dis­crim­i­na­tion, and said it was frus­trat­ing. On Bhushan’s re­moval, Bha­tia said, again with­out nam­ing any air­line, that “in the US, the Fed­eral Avi­a­tion Ad­min­is­tra­tion is equiv­a­lent to the DGCA. If they were con­fronted with a sit­u­a­tion where the crew of an air­line has not been paid for months, be it pi­lots or tech­ni­cal staff, I guar­an­tee they would shut the air­line on safety grounds”.

Caught on the wrong foot again over pref­er­en­tial treat­ment to King­fisher Air­lines, the civil avi­a­tion min­istry on July 25 had to is­sue a de­tailed clar­i­fi­ca­tion: “The pri­vate oper- ators are not be­ing pro­vided any fi­nan­cial sup­port di­rectly or in­di­rectly but have been al­lowed to per­form as per mar­ket forces.” It went on to say that there is “no reg­u­la­tory frame­work any­where in the world which al­low can­cel­la­tion of the air­line’s li­cence merely for fail­ing to pay salaries to the staff”.

Ajit Singh in­sisted there was no case for can­cel­la­tion of King­fisher’s li­cence. “If a sched­uled air­line has five op­er­a­tional air­craft and a cer­tain amount of eq­uity, its li­cence can­not be can­celled un­less there are safety is­sues,” the min­is­ter said.

But Bhushan did raise safety is­sues. While the min­istry does not see any link be­tween poor fi­nan­cial health of King­fisher, non- pay­ment of salaries and safety, this is one of the main is­sues flagged by Bhushan time and again. In a note on March 23, Bhushan men­tions a meet­ing he had with King­fisher owner Vi­jay Mallya on March 20 where Mallya re­port­edly claimed that “his em­ploy­ees have no griev­ance de­spite not be­ing paid for a sub­stan­tial pe­riod”.

How­ever, Bhushan ob­served: “Ac­cord­ing to my in­ter­ac­tion with var­i­ous seg­ments of em­ploy­ees of the air­line, I am of the view that dis­af­fec­tion among them is at its peak. Ac­cord­ing to my con­sid­ered view, the sit­u­a­tion raises sev­eral ques­tions about safety of their ser­vices. The un­cer­tainty and stress and above all the fact that there is no res­o­lu­tion in sight could lead to de­lib­er­ate or in­ad­ver­tent in­ci­dents that could have cat­a­strophic con­se­quences.”

Bhushan raised sim­i­lar con­cerns in the con­tro­ver­sial July 9 note which could not be found in the min­istry records. Bhushan at­tached a copy of the King­fisher note with the let­ter he sent to his suc­ces­sor Sukul on July 20, ask­ing for an in­quiry into its dis­ap­pear­ance. The note, ac­cord­ing to sources close to Bhushan, was part of the King­fisher fi­nan­cial sur­veil­lance file ( Num­ber 23- 11). The note was pre­pared by DGCA’s Deputy Di­rec­tor Amit Gupta and for­warded to Bhushan by Deputy Di­rec­tor Gen­eral ( Air Safety) Lalit Gupta. The move­ment file shows the file com­ing to the DGCA’s of­fice on July 9 and go­ing back to Lalit Gupta the same day.

The note said that the fi­nan­cial con­di­tion ( of King­fisher) con­tin­ues to be pre­car­i­ous: “There are large out­stand­ings due to air­port op­er­a­tors, oil com­pa­nies and ven­dors.” Bhushan also noted that op­er­a­tions of the air­line were be­ing closely mon­i­tored since Novem­ber 2011 and there has been sig­nif­i­cant re­duc­tion in its fleet. The sched­ules had been re­stricted to nearly one- fourth of the orig­i­nal win­ter sched­ule. The In­ter­na­tional Air Trans­port As­so­ci­a­tion ( IATA) had im-

SIPRA DAS/ www. in­di­a­to­day­im­ages. com

PRAVEEN NEGI/ www. in­di­a­to­day­im­ages. com

REUBEN SINGH/ www. in­di­a­to­day­im­ages. com

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