This
is a tale of two airlines — privately-owned Kingfisher and state-owned Air
India. In the space of one year the fortunes of both have swung from one
extreme to the other. While Kingfisher’s licence has been revoked and it has
not been operating for the last three months, Air India has seen its fortunes
soaring.
A year ago, in January 2012, the Directorate General of Civil
Aviation (DGCA) carried out an audit of the domestic airline sector. Going by
the findings of the audit, it rapped the entire industry on the issue of
neglecting safety due to financial constraints.
Too little, too late
The DGCA’s financial surveillance found widespread sickness in
the sector and asked all the airlines to take measures to resolve the issue. It
also recommended stringent action, including cancellation of Kingfisher’s
flying permit and restrictions on the operations of Air India Express, the
low-cost wing of Air India. The surveillance had indicated that Kingfisher had
been forced to ground a number of aircraft for want of engines and spares, due
to which its operations were truncated.
Of course, no action was taken and today there is a question
whether Kingfisher would be in the hangar if its promoters had taken action
when the audit was first done.
Over the year, Kingfisher also faced a host of other problems.
Its staff members, including pilots and engineers, went on strike on more than
one occasion and till date they have not been paid eight months’ salaries. The
management gave repeated assurances to the DGCA that it was getting funds to
pump into the airline but nothing happened. The situation went from bad to
worse and finally the airline’s operating licence expired on December 31 2012.
In effect, this makes it that much more difficult for the airline, which
suspended operations on October 1 last year, to take to the skies again.
Officials admit that it will take the airline at least six to eight weeks from
the time that its revival plan is approved by the DGCA for it to restart
limited operations. As yet no one is talking about when an acceptable revival
plan will be in the DGCA’s hands.
The turnaround
On the other hand, the story of Air India is just the opposite.
From being written off by the market about a year ago, the airline has managed
to bounce back. The year was not very good for the public image of Air India,
which also saw a section of its workers striking work. Its pilots went on
strike for 58 days, the longest strike in the history of the airline. The
strike forced the airline to cancel flights and affected its market fortunes as
the industrial action took place during the peak summer holiday season.
But then, its fortunes turned and the airline saw a seven to
eight per cent increase in passenger carriage since last year and this in a
market that has been seeing a decline in capacity since May 2012. Critics of
the state-owned airline of course say that it has the financial backing of the
Government, while Kingfisher’s owner Vijay Mallya is trying to convince banks
and foreign investors that despite outstanding of over Rs 7,500 crore with a
consortium of 17 banks, it is still a good investment.
Adherence to procedure
Others cite Air India getting business from the Government,
which has led to its improved performance in terms of the number of passengers
carried. Officials, however, deny these allegations. “It will be incorrect to
say that the increase in passenger carriage is due to the business that Air
India gets from the Government. On an average the airline carries about 40,000
passengers a day and Government business accounts for eight to 10 per cent of
the daily carriage,” a senior airline official said.
Observers say that the change in Air India’s fortunes has to do
with much better adherence to procedures and improvement in the utilisation of
aircraft — with the narrow body fleet, which is largely used to operate
domestic flights, now being utilised for 11 and a half hours a day as against
10 and a half hours earlier.
Further, the airline also got a positive impact after it
introduced the Boeing 787 on regular flights to Bangalore, Chennai and Kolkata,
reconfigured its 14 Airbus A-320 aircraft to an all economy class, thereby
offering 23 additional seats per aircraft. It also rearranged the fare ladder
so as to close the gap between the various fare levels, thus, offering
passengers the choice of getting fares at lower levels rather than offering
more seats at the higher level.
In short, what Air India has shown is that while funds are
necessary to run any airline, how these are utilised and how effectively the
management manages to incorporate efficiency in its operations is equally
important. This is perhaps a lesson that Kingfisher did not learn.
ashwini.phadnis@thehindu.co.in
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