India Today

Note That Could Have Grounded Kingfisher

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

- 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-

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