Note That Could Have Grounded Kingfisher
Is the Government trying to protect Kingfisher Airlines? The aviation ministry says no but the evidence is mounting.
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-