Opinion: Kingfisher Airlines' license suspension actually helps Vijay Mallya

On Saturday India's civil aviation minister Ajit Singh, announced that aviation regulator, the DGCA had suspended the operating permit of Kingfisher Airlines, after the carrier failed to respond to their show-cause notice.

With mountains of unpaid debts, the airline has been on life-support for some time now. Unpaid employees have been striking since October 1, resulting in a suspension of all flight operations by the Dr. Vijay Mallya promoted airline.

While many proclaimed their eulogies, the PR folks at the airline, called the suspension temporary

"We would like to clarify that this is not a cancellation but a temporary suspension which is valid only till such time that we submit a concrete and reliable revival plan to the satisfaction of DGCA."

The alcoholic beverages (alcobev) business in India is at the intersection of public relations, sexually aspirational marketing, board-room machinations, manoeuvring around the hundreds of contradicting laws, gratification and slush funds of administrators and politicians.

Call me a conspiracy theorist, but I refuse to accept that a man who made his billions in this tricky business, will just fold up his airline, risking his personal assets and those of the UB Group, which have been given as surety on the loans to the airline.

Going out on a limb, I suspect, this suspension may be one last, desperate move by team Mallya, to scare the stakeholders, employees, banks, vendors, and government, into saving the airline.

The striking employees who have been unpaid for seven months have been taking a hard line. With the management offering only one month salary, reconciliation meetings till now have proved futile. Ahead of their meeting with the management on Monday, the suspension suddenly gave the employees a preview of cold, hard reality. If the airline goes under, not only will they not get their unpaid salaries, but they will have to look for new jobs in a shrinking Indian aviation market.

The banks which are refusing to lend any more funds, demanding the Mallya bring in about $500 million (Rs. 2,500 Crore) to re-capitalise the airline, were given a preview of Kingfisher going under. Banks have collateral for only about 10% of their loan exposure. A lengthy, expensive, legal recovery process is not a desirable situation for them. Recovery proceedings may also bring to the surface undesirable information and questions, about potential political influence in these government owned banks granting loans to the airline.

The vendors, especially the airports, the fuel companies, and lessors, who will have to commence lengthy and expensive litigation to recover their dues if Kingfisher goes under. The mess will get further complicated due to cross litigation between the various vendors. For example the lessors who own the aircraft will have to pay the dues of airports before they can take away their aircraft.

The Government, by ordering the suspension or cancellation of Kingfisher's permit, has given Mallya the perfect escape route. He can now dump the entire problem in to the government's lap, saying "What can I do? I did my utmost to save the airline, but the government cancelled the permit. Now they must deal with the consequences."

The spin doctors are UB Group are masters in PR. We recently experienced how well they diverted the media's attention away from the Rs. 60 Cr. humanitarian loan extended by banks. Get a Kingfisher stewardess out in protest saying she is out on the streets, and all the TV news channels will cover it from head to toe. In no time, public opinion will be turned, that the government must be humane and take care of those poor unpaid employees who are now out on the streets.

Last, but not the least, is us passengers and tax payers. Thanks to capacity reductions, fares are already up 20% in the last few months, and over 50% compared to last year. With the Dussera festival this week, kicking off the peak travel season till mid January, and Kingfisher out of the picture, fares will rise to astronomical levels. There will be a public outcry and the government will be forced to defend the situation with the Kingfisher spin doctors saying "See, we tried to save the airline. The government closed us down. These fare increases are due to that."

The situation is being unfolded exactly how the King of Good Times wants it.

What are your thoughts on the suspension of Kingfisher's permit? On my conspirator theory? Your thoughts and comments are always welcome.

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Kingfisher Airlines' strikes lead to flight cancellations and disruptions

The Press Trust of India is reporting that disgruntled employees of the financially ailing Kingfisher Airlines went on a wildcat strike at Mumbai and Delhi earlier today which led to the cancellation of over 30 flights, with ripple disruptions across the airline's national network.

The protesters were mostly pilots and engineers who are protesting non-payment of their salaries for many months now.

Today also happens to be the first day of the monsoon session of the Parliament of India, and coincidence is too strong to ignore. The strike will surely attract the attention of law-makers. Whether it results in something positive, only time will tell.

Dr. Mallya's over-riding hope of saving his beleaguered airline is foreign direct investment (FDI), which has been stalled in political circles. If one has to believe the rumour mills, airlines from Mumbai and Gurgaon near Delhi, are putting political spokes in the veritable wrench, to ensure a decision on this policy issue is delayed for a long time, This would cause the implosion of Kingfisher and the elimination of a competitor that will surely rise like a Phoenix from the ashes if FDI is approved.

What are your thoughts? Should Kingfisher continue to limp along, not giving up the fight, and resurrect once FDI is approved? Or should Dr. Mallya recognise the writing on the wall, admit defeat, and gracefully exit the airline business?

Share your views via a comment in the section below.

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Indian airlines should implement United's 'flat tire' rule and put late-coming passengers on next flight

Photo copyright Weltenbummler. Licensed under CC.

It is a well known business fact, that satisfaction and trust are created when contracts are balanced. Yet, globally, airline ticket contracts are extremely one-sided in favour of airlines, especially when it comes to flight delays and cancellations. In India, while the aviation regulator DGCA has rules on facilities to be provided to a passenger in the event of a delay or cancellation of a flight, it also has a provision of "circumstances beyond an airline's control". With peak hour demands at major airports, outstripping runway capacity, the unfortunate reality, is, that airlines in India, do delay or cancel a reasonable number of flights. The almost universal reason given, is, "circumstances beyond our control".

Yet, if a passenger cannot reach the airport in time, due to reasons beyond their control, a traffic jam, a procession, an accident, or even a tyre puncture, they stand to lose the entire ticket cost, due to being a "no-show". The fear of this loss results in late passengers risking their life and limb, along with those of fellow road users, in a crazed rush to the airport, or even the few ultra-stupid ones who decide to call in a bomb-threat.

Why this double standard? If an airline can have its flight delayed by "ATC delays" (read air or airport traffic jam), then why cannot a passenger be held up by road traffic jam? Both situations are unintentional, caused by "circumstances beyond control". In the world's largest democracy, what is stopping us from practicing this fundamental tenet of equality? This thought has been vexing me for many years.

I am not advocating a blanket refund policy for "no-shows". Such a policy would be instantly abused into oblivion, and will be unfair to airlines. However, there surely must be some middle ground?

The solution comes from United Airlines via consumer rights activist Christopher Elliot's article. It is called the 'flat tire' (tyre puncture) rule.

In essence the rule says, if you have a flat tire on your way to the airport, or are otherwise delayed because of circumstances beyond your control, United will put you on the wait-list for the NEXT flight to your destination at no extra charge. Yes, no extra charges!! No change fee, no fare differential, no "no-show" fee, nothing. If there is a spare seat of the next flight, after clearing that flight's confirmed and previously wait-listed passengers, United will put you on that flight.

To qualify for the 'flat tire' rule, the passenger must arrive at the airport within two hours of the original scheduled departure.

It is an ethical policy that treats the customer with fairness and a modicum of humanity. By accepting the fact the passenger was delayed by uncontrollable circumstances, over a period of time, customers to will reciprocate that acceptance of delays by the airline.

Will such a policy be beneficial for the aviation industry in India? Yes. Is it required? Again Yes.

When faced with doubts and questions, Rotarians apply the "Four-Way Test" asking these questions :

• Is it the TRUTH?
• Is it FAIR to all concerned?
• Will it build GOODWILL and BETTER FRIENDSHIPS?
• Will it be BENEFICIAL to all concerned?

United's 'flat tire' rule meets the test in all ways.

• The rule is based on trust and truthfulness between the passenger and airline.
• It creates a level of equality in the contract, which makes it fair to both, the passenger and the airline.
• By putting the passenger on a wait-list for the next flight, the airline is not losing any money, while by accepting the customer on his/her word it builds goodwill for the airline and improves customer loyalty (friendship).
• This creates a beneficial win-win-win situation for the passenger, the airline, and those on the road, who lives are not risked in the mad dash to the airport.

Is there a potential for abuse if such a rule is offered in India? Sure there is. Any privilege can be abused, and not just in India.

One must ask these questions though. In today's hectic schedule driven world, would a passenger knowingly disrupt their schedule? It is important to note, the rule can call for the airline to put the passenger on the wait-list for the next flight, not some flight in the future, and it does not guarantee a seat on the next flight. If the next flight is full or the passenger cannot be accommodated, then he/she gets wait-listed on the next flight after that. The passenger has to be present at the counter when the waiting-list of each flight is cleared. Will a passenger knowingly be late and want to endure such uncertainty? I doubt it.

What are your thoughts? Share them via a comment.

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Infographics: April Data for the Indian Airline Market

The image above shows the load factors at each of India's airlines. Considering that Kingfisher has shrunk so much, it is surprising that their seat factor has not elevated past its pre-downsize levels.

The image above shows on-time performance for April. Two interesting things to note about the data. First, Kingfisher's OTP has come back down to earth. In earlier months after the downsizing, Kingfisher had recorded an OTP of up near 90% but this appears to have been an outlier caused by too many cancellations at Kingfisher. Also interesting to note is GoAir's superb performance. We have personally reviewed GoAir's schedule, and it is heavily concentrated on rush hours in the Metros; I wonder how they manage to outstrip their competitors who have a more balanced schedule?

Market Share data is pretty much as expected, though IndiGo continues to encroach on Jet Airways' position at #1. To give these figures a bit of color, overall domestic traffic figures were 5.1 million for the month, meaning that Jet Airways and IndiGo each carried more than 1 million passengers in April. It's also sad to see Kingfisher as a shell of its former self, stuck in last place - almost the opposite of Gordon Bethune's book "From Worst to First - Behind the Scenes of Continental's Remarkable Comeback"- at Kingfisher they went from First to Worst.

And finally, cancellations and complaints. Air India was predictably atrocious in the cancellation department (and this will only get worse with the IPG strike in May), but held up surprisingly well in the Passenger Complaints department. IndiGo and GoAir on the other hand performed the worst; one has to wonder if under-staffing has become an issue at these two frugal carriers.

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DGCA rules on facilities to be provided by airlines to passengers due to denied boarding, flight cancellation or delays

With the on-going crisis at Kingfisher Airlines, we share with you the official Government of India Civil Aviation Requirements (CAR) for facilities to be provided to passengers, by airlines, in the event of denied boarding (read over-booking), cancellation of flights, or delayed flights.

The Civil Aviation Requirements, Section 3 - Air Transport, Series M, Part IV, Issue I, dated August 6, 2010 came in to effect on August 15, 2010.

How to get help

Some simple rules to follow when dealing with the airline representative, and always keep in mind, be polite, be soft, be firm.

• Remember the person across is a human being. They are just about as stressed as you due to the flight delay or cancellation, and they are dealing with a 150 irate passengers, not just you. Screaming, name dropping, or generally being aggressive does not help.
• Empathise with the agent, be polite, be soft-spoken, and chances are you will get your request attended to faster.
• Through your conversation, let the agent you are familiar with the CAR of the DGCA (carry a copy of the CAR with you). 
• Do keep in mind that the DGCA has given the airlines an escape clause; "circumstances beyond an airline's control". This is a catch-all clause that airlines use to escape liability. Despite this, remain polite but be firm, yet reasonable in your requests.
• Airlines are also sneaky in the case of excess / over booking. They will close their counters early and claim you were late. So read your ticket rules and be at the airport on time. If the queue is excessively long and your are running late, try and go to the supervisor's station and report there, so that your presence is recorded.

Civil Aviation Requirement Section 3 Series M Part IV Facilities on Delayed Cancelled Flights


Last but not the least, if things do not go to your satisfaction, be polite, note down all the details, employee names, times, dates, etc. Photography is allowed at the terminals of all civilian airports, and in the civil conclave of defence airports.

If at one of the privately run airports (Bangalore, Delhi, Hyderabad, Kochi, Mumbai), go to the information counter and ask for the terminal manager or supervisor. Try and get their help.

Worst case, keep your head down. Get home, and unleash your lawyer on the airline.

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MAP: Kingfisher to drop service to 13 destinations, cut 20+ routes

Apparently the fallout from Kingfisher's sudden cancellation of flights a couple of weeks ago has not yet ended. A report from airlineroute.net shows that Kingfisher may be cancelling a few additional domestic flights.

The following destinations will be cancelled outright; some of these were not currently operated but rather placed into the GDS.



Destinations are spread out across India, but without exception are in most cases Tier 2 and 3 cities (with the exception of maybe Nagpur.

Additionally, the following 22 routes have been cancelled.



Maps generated by the Great Circle Mapper ---copyright © Karl L. Swartz.

The cancellations are really targeted towards Mumbai. Perhaps this is recognition that for Kingfisher and their cost level, many of these Tier 2 cities will not work? On the other hand, if Kingfisher gets its equity infusion, then some of these routes could come back, especially for connectivity purposes in Mumbai.

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