French air traffic controllers strike affects flights

Update on June 11th, 08h00 Paris local time

Several different unions representing French Air Traffic Control (ATC) under the French Civil Aviation Authority have called for industrial dispute from June 11 up to June 13, 2013. Controllers are striking over a plan to unify European airspace which will ensure greater efficiency and cope with the projected increase in traffic.

As a consequence, on request of French Civil Aviation, all airlines operating within or to France have to reduce their flight schedules by 50% for this period. This has caused a ripple impact across flights. Greater on medium and short haul flights (domestic France, intra-Europe, North Africa, etc.), and less on long haul flights.

Bangalore Aviation recommends passengers travelling to or from or within France to contact your airline immediately to determine the level of impact, if any. Many airlines are permitting changes to itineraries without fees.

Air France update page
SWISS update page
Lufthansa update page

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Ground crew strike cripples Lufthansa

by Devesh Agarwal

German carrier Deutsche Lufthansa underwent an almost total shut-down when its ground crew went on strike early Monday over working conditions, causing the cancellation of almost all of the airline’s flights.

In a statement on its website, the carrier said "nearly all Lufthansa flights within Germany and Europe will be cancelled" and "massive flight cancellations and delays are to be expected for long-haul flights". The airline indicates that only about 32 of a total planned 1,720 flights are expected to operate.

The 24 hour strike, which was announced in advance, started around 04:00 CET (02:00 UTC) in Stuttgart and an hour later in other airports around Germany. This is the second wave of strikes by the Ver.di union over wages and working conditions for about 33,000 employees. In the first strike action about a month back, over 700 flights were affected.

One has to feel sorry, at least in part, for the European carriers. They are just about coping with the ferocious competition from global carriers, and now they face industrial action.

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Opinion: A date of ignominy in the Kingfisher Airline calendar

2010 Kingfisher Calendar. Copyright KingfisherWorld

Kingfisher is known for its super-sexy swimsuit calendar, featuring some of the most beautiful women in the world, and Kingfisher Airline's Chairman Dr. Vijay Mallya's son, Sidhartha, may love cavorting on the beach with them, but yesterday, October 4, 2012, witnessed a tragedy, and was, to borrow the words of FDR, a date that will live in infamy for the financially imploding airline.

The wife of one its employees committed suicide due to non-payment of her husband's salary for over six months.

Sushmita Chakraborti was not a model on a fancy calendar, nor would either of the Mallya father or son, like to cavort on the beach with her; she was the poor, 45 year old wife of a retired Indian Air Force officer, Manas Chakraborti, who is working, salary unpaid, as an engineer with Kingfisher Airlines. Living in a LIG (low income group) housing colony in airport suburb of Dwarka, in New Delhi, where she hung herself, she was the mother of an 18 year old college going son.

CNN-IBN reports, in her suicide note, Sushmita wrote,

"My husband works with Kingfisher where they have not paid him salary for the last six months. We are in acute financial crisis and so I am committing suicide"

Mrs. Chakraborti's suicide has stained in blood the Kingfisher Airline's image, and forever damaged the already tarnished the Kingfisher brand, once valued at over Rs. 1,000 Crore. The contagion is already spreading. The Reserve Bank of India has already instructed banks not to use the brand as collateral for loans.

Her death is in stark contrast to the extravagant uber-lavish lifestyle of the Mallyas, which has been loudly condemned across the country, yet shows no sign of abating. Even as Sushmita was dying, Dr. Vijay Mallya was overseas, reportedly on a vacation, leaving the airline CEO, Sanjay Aggarwal, to meet with Government officials, Kingfisher pilots, engineers, and other employees, with the same helpless platitudes that has plagued the airline for over a year. He too, he says, has not been paid his salary.

While many Kingfisher employees held candlelight vigils around the nation, in support of the grieving family, CNN-IBN reported, the airline’s company secretary Bharath Raghavan resigned.

Yesterday too, the airline extended the lockout to October 12, 2012, blaming the employees for "illegally" striking. Talk about the pot calling the kettle black.

Last yesterday, in a clear sign of the political clout of Vijay Mallya, the Income Tax department agreed to unfreeze the airline's bank accounts containing about Rs. 60 Crore. The authorities had frozen these accounts in May this year, when Kingfisher failed to deposit the withheld income taxes, deducted from employees salaries, since March 2009. This apart from non payment of service tax to the Excise department. It is important to note, that there is no sign that either Kingfisher Airlines or Dr. Mallya have cleared this liability.

Continuing the clout, the banks, who are owned more than Rs. 8,000 Crore by Kingfisher, and who, by their own admission, do not have collateral worth more than 10% of the loans, have agreed to release this money towards payment of employee salaries. Now, whether this money will be disbursed to the unpaid employees or squandered in more fancy lifestyle displays, is not known.

As this tumultuous week comes to a close, we offer our sincerest condolences to the Chakraborti family, and condemn the actions of the airline, its leader, and all his political benefactors who have allowed circumstances to degrade in to an abyss, resulting in this tragic act of desperation. Yesterday was a day of ignominy for you Dr. Mallya.

Comments are welcome. Messages of support are welcome. Any defence of Kingfisher or Dr. Vijay Mallya is very welcome. And last but not the least, please do cast your vote in our survey whether Kingfisher Airlines should be allowed to continue or be closed.

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Share your view: Strikers manhandle fellow employees at Kingfisher Airlines disrupting flights across the network

Our topic of this week comes thanks to the financial troubles at Kingfisher Airlines.

The flights of the financially ailing carrier have been disrupted across its India network due to striking engineers.

As per media reports, striking employees, after hearing that some employees received salaries, manhandled fellow employees, beat up a management executive, held passengers hostage aboard a flight for over three and half hours by refusing to connect aero-bridges or ladders to the arriving aircraft.

A statement issued by Prakash Mirpuri, Vice President-Corporate Communications, Kingfisher Airlines Limited, said

A section of employees of Kingfisher Airlines has not been reporting to work over the last fortnight and over the past 2 days, they have been threatening and even manhandling the other employees who are reporting to work as usual. We are anticipating disruptions and/or delays of flights across our network on October 1, 2012 as it is likely that a section of employees of Kingfisher Airlines may not report to work due to such threats. With a view to mitigating the impact of these anticipated disruptions, we are proactively cancelling several flights across our network for October 1, 2012.

As per the Press Trust of India, pilots from Mumbai have joined the striking engineers, adding to the disruptions. Mirpuri went on to say

We are monitoring the situation and continue to engage with this section of employees to see reason as such action is not only detrimental to the company but directly impacts the travelling public and it will be our endeavour to resolve the situation and restore normal operations at the earliest.

Unfortunately, it appears that non-payment of salaries have frayed the patience of the employees to breaking point. This does not appear to be a one or two wildcat strike. This is serious and appears long term.

The attack on an executive is a milder shade of one of the worst and recent industrial unrest in India, at Maruti's Manesar plant, which resulted in death, as is the holding of passengers hostage.

The country's civil aviation regulator the DGCA has indicated it will review the situation.

The platitudes offered by Mirpuri, though genuine, may not be enough to placate irate customers

We deeply regret any inconvenience that may be caused to our valued guests on account of this unprecedented action by a small section of employees and we are doing our best to minimise the impact of these anticipated disruptions.

Your thoughts please? What should Kingfisher Airlines now do? Share your thoughts via a comment.

Please remember, our DISQUS comment system also allows you to share your comments via Twitter and Facebook too. In case you want the airline to hear your comment via Twitter (we cannot guarantee they will read them), use their tag @flykingfisher in the start of your comment and share via Twitter. You can also tag the Chairman of the airline, @TheVijayMallya.

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Lufthansa faces cabin crew strikes and flight disruptions after talks fail

[Note: Most of the links are to web pages in German. Use a translation tool or a web browser with built in translation like Google Chrome.]

German national carrier Deutsche Lufthansa AG faces multiple flight disruptions after talks with the union representing over 18,000 cabin crew failed. The failure of the 13 month old talks has been acknowledged by both the airline and the UFO union.

The UFO union said it will resort to strikes with only a few hours' notice, which will have significant disruptions to the airline's over 1,850 daily flights. The strike actions can commence as early as Wednesday.

With a worsening of the economies in Europe, sky-rocketing prices of fuel, and intense competition from the Gulf carriers, Lufthansa is pressing ahead with a broad-based cost-saving program, which includes eliminating about 3,500 administrative positions (about 3% of the airline's 117,000 workforce), hiring of temporary staff, leasing of staff, and outsourcing some positions.

The union is pressing for a 5% pay increase after a three year wage freeze, against which Lufthansa has reportedly offered 3.5%. The union is has also demanded that there will be no leasing of personnel, ever, while the airline has reportedly offered a moratorium for now.

As per German media, both the main hub airports of Frankfurt and Munich have geared up for potential disruptions which could cost the carrier millions of euros each day. The airline is also reportedly examining its legal options while still trying to negotiate a deal.

For more information on potential flight disruptions visit this page on Lufthansa's web-site.

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Topic of the week: Vijay Mallya threatens to stop supporting Kingfisher Airlines

Yesterday, Kingfisher Airlines chairman Vijay Mallya sent out a letter to his employees, ostensibly in response to the industrial action by its employees earlier this week that led to the cancellation of more than 30 flights out of Mumbai and Delhi.

Unlike earlier letters which were much softer, this time, Dr. Mallya did not mince words. He informs employees of his efforts and commitment to re-capitalise the airline

As you may have read in the media, I have said that our Company will be re-capitalised whether the Government changes the current FDI policy or not.

If I was not confident about the future of our Airline, I would not make public statements nor arrangements to raise funds.

He is correct when he goes on to state that industrial action is destroying investor and passenger confidence, erasing existing razor thin margins.

In the letter, finally, Dr. Mallya, in effect, serves an ultimatum to Kingfisher employees

Why should I spend everyday to keep our Airline afloat if the actions of our own colleagues lead to loss of guest confidence and lower income by cancellation of flights or low load factors that result from uncertainty ?

What is the confidence that I can give to investors who I am in dialogue with ?

If some colleagues feel that I will be pressurised by flight cancellations, they are wrong. Instead, I will stop my own support as a few are effectively holding the entire Company to ransom.

He goes on to say, those employees who are unsatisfied are welcome to leave the company. Well, Dr. Mallya, those who could, already have.

Is your threat of "stopping support" for real? Will the Government of India, whose public sector banks have lent the airline thousands of crores let you walk away scot free? How will your other companies, and you, walk away from your guarantees.

Share your thoughts on the tone of this letter, and the Kingfisher Airlines in general, via the comment system below.

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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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Air India pilot's strike: Same old story. Taxpayers left holding the bag

Air India and members of the striking Indian Pilots Guild (IPG) appear to have reached an "agreement". For more than 58 days, the pilots have defied the courts and struck work.

After causing hundred of crores (billions) worth of additional losses to the national carrier, that is already on life support with taxpayer money, the pilots decided to call off their strike after airline management assured the court that it would consider the grievances of the pilots "sympathetically".

Through the strike, the airline management, backed by the civil aviation minister Mr. Ajit Singh took a hard stand and sacked 101 pilots. The IPG, led by a political lackey Jitendra Awadh of the NCP, had lost all public sympathy and support. Even a desperate move of a "fast undo death" did not produce any results.

Justifying the calls of analysts for the airline to truncate and re-jig its network, Air India reported performance improvements during the strike.

The strikers were all but beaten into submission, but they insisted on the sacked 101 pilots being taken back before calling off the strike.

Now comes the politics. The NCP of which Mr. Awadh is a member, is a very strong component of the ruling UPA coalition with former civil aviation minister Praful Patel and the formidable Maharashtra strong-man Sharad Pawar as its stalwarts. Mr. Ajit Singh with his small RLD party are but minnows, in a pool full of sharks. You do not need to be experienced in skullduggery to see how public money is being squandered with the political influences at work in support of the labour aristocracy that rules Air India.

The Air India management needs plausible deniability. As per news reports

The pilots decided to call off their strike after AI management assured the court that it would consider the grievances of the pilots "sympathetically". "Serious efforts have been made to settle dispute and the counsel for the parties have assured the court that their respective clients would be extending full cooperation in this regard."

"The AI management shall sympathetically consider the grievances of the pilots including the aspect of reinstatement of those pilots who were terminated as a consequence to their strike," Justice Khetrapal said while disposing of the pilots' plea for a direction to the management to take back the 101 sacked pilots, including the 10 office-bearers of the Indian Pilots Guild.

After 58 days of misery to everyone, and billions of rupees being lost, where are we?

The airline will take back all the pilots including the sacked ones. The politicians and their labour aristocracy will remain emboldened and will hold the airline, and through it, we, the taxpayers, to ransom at their whim and fancy. The management will remain emasculated. Our money will continue to be ploughed and squandered.

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Opinion Poll: The on-going pilot's strike at Air India; share your views

The topic of the week is the on-going pilot's strike at national carrier Air India by members of the Indian Pilots Guild (IPG) which began last month on the 7th making this strike almost a month old.

The strike has caused estimated losses exceeding Rs.350 Crore ($64 million) to airline. This at a time when the airline is on life support, receiving a desperately needed equity infusion of Rs. 1,200 Crore ($219 million) just to pay long pending salaries and critical vendor dues (oil companies, airports, etc.)

In a bold move the airline has sacked over 100 striking pilots and even the courts have ruled the strike illegal. The civil aviation minister Ajit Singh has held out an olive branch saying pilots concerns will be addressed. Now the IPG is continuing the strike demanding that all sacked pilots be re-instated by the airline before they stop striking. To read the view of the IPG, please see this article by Aeroblogger Rohit Rao.

In addition to requesting your comments, this week we have an opinion poll, allowing you to share your views. Please vote in the survey. The other option is provided with a text box to explain your choice, if other than yes or no.

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Air Canada in talks to lease 5 Air India Boeing 777-200LRs... Huh?

Late last week, reports emerged that beleaguered Indian national carrier Air India, which is in the midst of a crippling strike by its international pilots union, was in discussions with Canadian airline Air Canada to lease out 5 of Air India's Boeing 777-200LRs to the Toronto based airline. The news broke as Air India continues to operate less than half of its international network due to the strike by the IPG, but it is actually just the logical extension of continuous Air India efforts since 2009 to lease out 5 777s as well as 2 Boeing 747-400s.

 In the previous instances, it was reported that Air India was looking to lease out these aircraft for 8-10 years. However, given their inability to place these aircraft with any carrier for 3 years, perhaps Air India has realized that it must be more flexible. As Air India continues to take delivery of the all-new Boeing 787s, the necessity for the 777-200LR in Air India's fleet, which has almost been miscast by Air India as a regional widebody to and from Asia, all but evaporates. Air India currently operates 8 777-200LRs, most of which are grounded due to the strike.

Air Canada on the other hand, operates a fleet of 6 777-200LRs, primarily on long range routes between Canada and Asia. The carrier recently moved to convert 5 options for the larger Boeing 777-300ER into firm orders for delivery in 2013 and 2014, ahead of the first delivery of its own Boeing 787s. As Air Canada continues to hemorrhage money on its short haul network in the face of heavy competition from more nimble domestic rivals like low cost carrier WestJet, it appears to be doubling down on its more profitable long haul network; especially important given that Air Canada is having labor struggles of its own.

Even with this rationale, it's hard to see the merits of the deal for Air Canada. The Boeing 777-200LR is a hard aircraft to make money with, though Delta and Emirates appear to have made a go of it. Moreover, while they do need additional international capacity, Air India's 777-200LR might not be the best choice. There are a number of differences between Air India's 777-200LR and Air Canada's that will increase the costs of such a long term acquisition. Firstly, Air India's 777-200LRs are equipped with the General Electric GE-115B engines, which deliver 115,540 pounds of thrust whereas Air Canada's 777-200LRs are equipped with the GE-110B engines that deliver 110,100 pounds of thrust. While this difference might seem irrelevant, having two different engines on the same aircraft increases operational complexity (due to slight differences in operating performance) and makes scheduling more complex. It also increases maintenance costs as an airline's MRO workers must now be trained to handle both types of engines, or separate workers brought in to handle each. These costs are not insignificant; American Airlines famously sold off many of TWA's 757s due to engine incompatibility earlier this decade. Air Canada would also be forced to retrofit Air India's 777-200LRS, which are configured in a 238 seat (8F/35J/195Y), 3-class configuration, into their own 2-class 270 seat (42J/228Y)configuration. The cost of retrofitting 5 aircraft would likely run into the millions of dollars, increasing the true cost of acquisition.

So it makes little sense to me that Air Canada would be actively seeking to lease Air India's 777-200LRs, unless Air India was practically giving these birds away with super-low lease rates. And if that is in fact the case, then even leasing out these 777s would do little good for Air India's abysmal finances.

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Editorial: Time to Eliminate Unions at Air India

When the Indian Pilots Guild, one of two pilot unions at national carrier Air India, began a strike around 2 weeks ago, it once again illustrated the deep fallacy of the employee situation at Air India. Coming on the heels of a $5.8 bailout package over 8 years offered by the Indian government, IPG’s industrial action marks just the latest in a series of missteps from India’s beleaguered national carrier, which lost Rs. 7,853 Crore in 2011-12, or more than Rs. 20 crore per day. However, the situation had improved (it went from being a gigantic financial black hole, to a smaller financial black hole) since private carrier Kingfisher shrank by more than 50% earlier this year, with Air India losing just Rs. 10 Crore per day. But this strike by IPG has once again cast doubt on Air India’s ability to move forward.

For such petty grievances as non-exclusivity on 787s and marginally different work rules between the IPG and their former Indian Airlines counterparts the IPCA, 10-12 of Air India’s 20 Boeing 777 aircraft have been grounded, and the carrier has been forced to all but cancel most of its international network. As of right now, 7 European and North American services are mostly cancelled (Delhi-Paris-New York JFK, and Delhi-Frankfurt-Chicago are still quasi-operational), while 12 routes to the Gulf and 6 Asian routes are cancelled as well. These international cancellations and the general strike have cost the already near-bankrupt airline more than Rs. 230 Crore over the first 13 days of the strike, with no apparent respite in sight.

The new civil aviation minister Mr. Ajay Singh, who is apparently far more pragmatic and sensible than his predecessors, has threatened to withdraw Air India’s bailout package. "This is bailout is not without strings. They have to meet strict standards. If they meet these standards, then we will release public money. We can't keep pouring public money. This is the last chance for them to perform." He also urged the pilots to return to work, even offering an olive branch to downplay fears of reprisal, "Strike is not an answer to solve your grievances,” he said, “All the grievances will be heard unconditionally. [Pilots] must come to talks unconditionally ... please go back to work….Air India management will in no way be vindictive towards any employee .... a lot of young people have just joined (as pilots). But the first priority should be that passengers are not inconvenienced."

There is a hint of legitimacy to IPG’s claims and grievances. After all, the Aviation Ministry made a remarkable hash of things by failing to properly integrate Indian Airlines and Air India pilots on basis of seniority. By keeping the two unions separate, Air India has created an environment in which the pilots of the respective unions are continually thinking in terms of an “us versus them” sort of mentality; each seeking to enrich itself as opposed to the company as a whole. To be sure, it is unlikely that IPCA members would have ever operated 787s or any widebody aircraft for that matter, had Indian Airlines remained a standalone carrier. And the disparities in work rules are tangible for IPG’s pilots. The following two graphics (from the Economic Times) will give a good overview of the issue.
But in a broader sense, most of what IPG is asking for amounts to nothing more than holding Air India and the Ministry of Civil Aviation ransom. Notice in the first graphic above that ex-Air India (IPG) commanders make a whopping 8-9 lakhs per month. This is roughly $190,000-$210,000 per year; levels not reached at most (profitable) Western and Asian airlines until 15-20 years of service. Meanwhile, they also have the audacity to ask to be shuttled in first class. Forget pilots, most executives at private airlines don’t get to fly first class, yet IPG insists on forcing its pilots into taking up such seats which could instead be sold as upgrades or used to improve frequent flyer loyalty (through free upgrades). These pilots are, by some measure, the highest paid in the world, yet they keep asking for more and more pay and benefits. Clearly, there is a disconnect between how IPG views the Indian airline scene and the current market reality.

To be fair to the IPG, they alone are not at fault here; as in most cases of labor strife, the blame is shared between management and the unions. But the continual labor strife at Air India brings up another question… Why does the IPG exist in the first place, and should it? Generally speaking, government-run corporations (especially prestige projects like an airline) have dismal financial performance, because there is no incentive to be profitable. Company leaders (and employees) know that even if the airline is poorly run, bloated, and offers horrid service quality, they will keep their jobs (the government will fund their operations and debt).

The thing is, public sector unions understand this as well; they know that even if their demands would bankrupt a normal carrier, the Sugar Daddy (Government of India) will pay for it anyway. Secondly, public sector unions play a large role in choosing who their bosses will be (both by directly voting and manipulating public opinion); when you can pick your bosses, the quality of your work tends to decrease. What this creates is a perverse scenario where unionized Air India workers can get cushy pay and benefits, yet have almost no incentive to do their jobs – to provide good service, be productive, or even do their jobs properly. They are also able to throw out any boss who dares to challenge their demands. Thus the combination of a public sector company and unions creates a toxic cocktail of reverse incentives that prevent Air India from becoming a successful company.

While the profit motive may not appear at Air India for some time, at least the unionization scourge can be removed. This strike not only affects Air India, but each and every Indian as well (at least those that pay taxes). And every time Air India’s unions ask for wages and benefits above the market rate or go on strike, they are robbing you, the taxpayer, of your hard earned money. When pilots at Jet Airways strike (as at Air India), they ultimately harm the shareholders of the company (private citizens for the former, the taxpayers of India for the latter). But the difference is that Jet Airways’ shareholders voluntarily invested in that the company; they went in knowing the risks. Meanwhile, you pay taxes that support Air India regardless of whether you want to or not. Stop allowing Air India’s unions to rob taxpayer money… ban unions at Air India.

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Opinion: Bold admissions Mr. Singh. Now please free Air India

The newly travelling youngsters may not have the pathos, but the Maharaja of national carrier Air India is a brand cherished by most persons of my age, with ties to India. We remember, with pride, the fact that Air India was the first all jet airline in the world; one of the earliest adopters of the Boeing 747 jumbo jet and the Airbus A300. We cherish the warmth and grace of days gone by, and then we are dragged in to the present and land, with a thud, on the dismal state of affairs at the airline today.

Sloth rules the daily operations, political interference is the mantra, petty factionalism hollows the foundations like termites sucking the resources of the airline without a care for the consequences.

Every so often, one puts aside rational thinking and tries to feel some sympathy for Air India, hoping against hope, for some optimistic future for the beleaguered airline, and then Air India delivers, with amazing regularity, a dose of bad news; and it is almost always, self-inflicted.

Over the last few days the airline is being blackmailed by the striking Indian Pilots Guild (IPG) representing erstwhile Air India pilots, who want exclusive access to the Boeing 787 Dreamliner, blocking the re-training of their pilot "colleagues" from the pre-merger Indian Airlines, despite a Supreme court ruling to the contrary.

It borders on criminal, that such petty issues are being used to justify the cancellation of almost the entire international schedule of Air India, causing it daily losses already in the hundreds of crores, less than a month after the government has committed a whopping Rs. 30,000 Crore ($6 billion), taxpayer funded, bailout of the airline, an amount greater than the central government's outlay for the health department this year.

The IPG is a perfect example of the political and labour aristocracy nexus that plagues Air India. This pilot's union's is led by Jitendra Awadh, who is not a pilot, but a career politician from the same party of former civil aviation minister Mr. Praful Patel, during whose tenure, Air India went from profit, to annual losses topping $1.5 billion.

Unlike Mr. Patel who ducked last year's scathing indictment by the Comptroller and Auditor General (CAG) of his ministry's operations, the current minister Mr. Ajit Singh made some refreshingly candid admissions during his interview with Karan Thapar on CNN-IBN. (Watch the 22 minute video here.)

He accepted that government should not be in the service industry, especially a specialised one like an airline. He accepted that the days of a government owned national carrier are long gone. He accepted that the merger of Air India and Indian Airlines, forced through by Mr. Patel, and considered one of key reasons for the ills of Air India, is still only on paper, far from complete, and receiving only lip service at best.

Undeniably true statements Mr. Minister, but then, when you admit government's inability to run an airline, why keep perpetuating the folly by insisting on government control of Air India's operations? When you admit that government owned national carriers are extinct like dinosaurs, why pretend to try and revive Air India, that too, under government interference?

Sir, if you truly believe in your admissions, and I believe you do, you need to abandon all this pretence that is at the heart of Air India's problems. Stop throwing good money after bad. Stop this criminal waste of taxpayer money, which is on the surface ostensibly committed to revive the airline. Stop protecting "past managements".

Air India has still has some capable people, but they are drowned out by the hordes of political lackeys that have infected the airline over the years. Unlike your many predecessors, you have shown your resolve by not bowing to the blackmail of strikers, now you need to raise the sense of responsibility up a notch. You have to isolate and remove all the causes of failure, in all quarters, right from the ministry to the doorman at Air India's office.

Air India can be revived, but never while its operations are under government control. Yes, it will be a herculean effort to loosen the stranglehold of the vested interests, but it can be done. If not full privatisation, take a leaf out of Mumbai, Delhi, Bangalore, and Hyderabad airports and commence with PPP (Public Private Partnership).

Use the PPP route to transparently auction and place Air India's operations under private control. Give that private management the freedom to run the airline, and deliver the benchmarks, goals, and results you have already demanded from and agreed to with Air India.

It is time to free Air India Mr. Singh.

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Employee Relations, Payment Defaults Hinder Kingfisher's re-structuring

The damning evidence against Kingfisher continues to mount, as a new report from the UK High Court claims that the embattled airline owes $21.6 million (Rs. 109.06 Crore) to the Bank of Scotland for overdue lease payments on 10 ATR 72-500 aircraft. The action was brought by Bank of Scotland on behalf of a consortium of lenders against Kingfisher parent UB Holdings, who had guaranteed Kingfisher's obligations. The judgment, brought by Justice Eder, paves the way for potential action in India or elsewhere, and enables Bank of Scotland to pursue United Breweries Holdings' assets to recover the outstanding sum.

Bank of Scotland is owed money because it helped fund KF Turbo Leasing, a special purpose vehicle incorporated in the Cayman Islands that purchased the ATR aircraft to lease to Kingfisher. Each ATR aircraft was then leased by KF Turbo Leasing to Kingfisher for a period of 10 years, dating from an agreement signed on 29 March, 2007.

The troubles with the Bank of Scotland represent only the latest credit issue for Kingfisher, who has been grappling with lessors off and on since the carrier first entered a state of crisis back in November. Since that point, Kingfisher has shrunk its operations at a rapid pace, operating around 175 flights per day (versus 340 at the same time last year). However, the decline in revenues has further eroded Kingfisher's cash flow, making it difficult for the carrier to pay for contracts entered into when its operations were more than two times their current size. Adding to this is the fact that Kingfisher is almost Rs. 7,000 Crore in debt (US $1.26 billion), and interest payments are now an astronomical 25.9% of nominal revenues. At this point, Kingfisher has defaulted on most of its interest and supplier obligations, and is essentially operating on a cash-and-carry system for critical charges such as landing fees and fuel. Thus it was not surprising that Kingfisher had its bank accounts seized by the income tax department; though the question of whether Kingfisher should even be taxed at all given its gargantuan losses and refusal to pay employees is a valid one?

India's aviation regulator DGCA (Directorate General of Civil Aviation) too has continued to repeat its concerns over potential safety violations in the face of Kingfisher's financial difficulties. Late last week, the DGCA threatened to de-register another Kingfisher plane as the carriers maintenance technicians went on strike from Thursday onwards. As of now, the strike has not yet caused major operational disruptions, but as time goes on, the situation will continue to worsen. The DGCA has already de-registered 3 Kingfisher A320s (VT-KFA, VT-KFD and VT-KFE), according to a report in The Live Mint.

More seriously, Civil Aviation Minister Ajit Singh threatened Sunday that a suspension of Kingfisher's operating license might be in order as the ministry continues to worry that non-payment of dues and employee salaries will compromise safety. "Closing an airline will impact passengers, employees," said Singh, "So cancellation of license won't happen. Suspension, however, gives a chance to restart operations once the issues have been sorted out,"

Employees indeed may be the most immediate threat facing Kingfisher. As we mentioned above, Kingfisher's technicians have been on strike at Delhi Airport since Wednesday. MRO service technicians perform routine and scheduled maintenance on aircraft engines, air conditioning systems, brakes, cockpit instruments, valves and other components. They also replace worn-out or defective parts, rebuild engines maintain service records, and perform aircraft inspections. While this maintenance work can be performed by technicians at other airports for the time being, Kingfisher's large Delhi operational base will eventually necessitate a resolution.

Kingfisher's pilots also feel threatened according to a recent report from the Times of India. According to the paper, Kingfisher had a confrontational meeting with its pilots Thursday, as the exodus of pilots to India's other airlines continues. Kingfisher hasn't been on-time with salary payments to pilots since early 2011, and with India's other airlines hungry for qualified pilots, many of Kingfisher's pilots have fled for greener pastures. Remaining pilots in Mumbai have reportedly begun calling in sick in droves in a form of industrial action that does not qualify as a formal strike, while up to 20% of Bangalore based employees have simply quit. If such industrial actions were to spread amongst the rest of Kingfisher's 510 odd pilots, management has claimed that Kingfisher may have to temporarily shut down as Australian carrier Qantas did back in October in response to strike threats from unhappy employees.

Kingfisher's current method of salary deferral while continuing operations (which has also shown up at Jet Airways and Air India in recent times) would not be valid in the US, where contracts (which employee salaries fall under) are absolute until a company shuts down or enters bankruptcy reorganization. But in India, the situation is not so cut and dry, and Vijay Mallya recently sent out a letter (presented at the bottom of this post) to his employees, urging them to maintain their faith in the company and accept proposed changes. However to many, Mallya's words ring hollow in the face of his huge personal wealth and possessions. All those photo shoots with statuesque models and the time spent at Formula One races and IPL matches do not mesh with Mallya's message of sacrifice by the employees, and we fear that his efforts may thus prove unsuccessful. When labor resents management, the results range from severe financial issues to full-on bankruptcy (see Qantas and American Airlines).

One of the ironic things about this entire sequence of events at Kingfisher is that the ATR aircraft adding to Kingfisher's woes are in all likelihood grounded. Kingfisher's cancellations have brought the airline closer in size to Go Air than to Jet Airways, and customer confidence and perception has continued to erode. Foreign travelers have for the most part sworn away from booking Kingfisher for their Indian flights, and we fear that the problem may no longer be easily solvable. Recognizing this issue, Kingfisher recently sent out the following letter to its travel agent partners in the United Kingdom seeking to re-assure them.

Dear Trade Partner,

On behalf of all of us at Kingfisher Airlines, I deeply regret the inconvenience many of your customers, who were booked on Kingfisher between 17th and 26th February, faced due to the unforeseen schedule disruption in our domestic network. Please do accept my sincere apologies to you and your staff for the anxiety and extra effort caused by these sudden cancellations. I totally appreciate the crucial and valuable role you and your team play between us and the guest. In order for us to be successful and bounce back on our feet, we need your support more than ever. Please be assured we are reaching out to all our valued guests who were affected during this period and personally apologizing to them. Kingfisher Airlines is on its way to normalcy. We are currently operating approximately 200 daily flights to 46 domestic and 7 international destinations. In the coming week, we will be adding more flights and our teams will keep you updated on the same. I reiterate that operating our schedule at its utmost consistent level is mine and my team’s endeavor. I request you to continue doing your valued business with Kingfisher Airlines. Your support and belief in us is something I am counting on.

Best Regards,
Sanjay Aggarwal
Chief Executive Officer

Ultimately, these issues have all arisen because Kingfisher's business fundamentals are poor; they are not a profitable carrier, or even a solid one by any stretch of the fiscal imagination. Kingfisher may be able to work its way out of this current rut, especially if either British Airways parent IAG or Etihad Airlines invests in the carrier under India's new foreign direct investment (FDI) regime. But in order to do so, it must first restore customer confidence, get its fiscal house in order, and win back the loyalty of its employees.

Vijay Mallya's Letter to Kingfisher Employees

Dear Colleagues,

I want to take this opportunity to update you on our current situation amidst all the media frenzy that is taking place. The Indian media and the "paid" media that even the Prime Minister referred to are unscrupulous and they will do whatever it takes, part fact or fiction, part true or untrue to achieve their sensationalist objectives.

I have organised funding so that we can pay your seriously overdue salaries which is a source of great personal sorrow for me. We are currently handicapped as our bank accounts are frozen by the tax authorities. I have been working tirelessly to urgently resolve this issue through negotiation and I hope that these efforts will be successful early next week. We fully intend to pay our tax dues as much as we commit to paying your salaries.

Government policies can make or break any Industry. So far it has been downhill for Civil Aviation except for one Airline that defies the odds and claims to be profitable however unlikely that may be.

Finally, there seems to be light at the end of a long dark tunnel. Government has issued a notification allowing direct import of Aviation fuel which promises to save us about 15 percent of our current fuel costs.

I am hoping that the next positive move would be the formal notification permitting Foreign Airlines to invest upto 49 percent of the equity in Indian carriers. This has already been widely announced by the Minister of Civil Aviation and according to reports, has been decided upon at a Empowered Group of Ministers meeting. Recently, last week, the promoters of our airline, The UB Group and its associates acting in concert, converted its loans for an additional 5 percent equity in Kingfisher Airlines. This is the maximum permitted under law in any one financial year but clearly demonstrates the faith that I have in all of you and in our Company.

I have been overwhelmed and emotionally moved by all the widespread expressions of support and appreciation for our Company despite the turbulence we are flying through. Despite media reports, we have many many supporters, well wishers and loyal guests. And all these words of appreciation are dedicated to you. Whilst many may have left our family and many may be in the process of leaving, our family may have become smaller for now. But our family will grow with those who have the pride in their hearts of having stood by our Company through ups and downs, sometimes with great personal sacrifice. That is the true test of loyalty dedication and commitment which I am going to reward.

Please stay committed to our common cause and for good reason to smile happily when this turbulence is over. We were the biggest and best. We may not be the biggest now but we remain simply the best for our guests and our valued King Club members.

I hope to have some good news for you shortly; thannk you for your patience and understanding.

Warm Regards
Vijay Mallya
Member of Parliament
Chairman and Managing Director
KINGFISHER AIRLINES LIMITED

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Lufthansa pilots strike commences from Monday, significant disruptions expected

Update 1 - 21 February

Lufthansa is reporting the pilots have suspended their strike pending negotiations with the airline. The provisional schedule will remain for 22 and 23 February. Please check the airline website for more details.

Original post

With 93% of its pilots voting to strike work for four days starting from Monday, significant flight disruptions are expected at Lufthansa, the world's second largest international airline.

Bangalore Aviation has reported on the procedures the airline has in place to minimise disruptions and how passengers can cope with the strike.

The German carrier has already re-jigged almost two-thirds of its fight schedules and there are media reports of passengers' itineraries being thrown out of gear. Passengers are requested to visit the Lufthansa website immediately.

As reported by CNN, Monday is also the day that crews of British Airways announces the results of a strike vote.

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Preparing for the Lufthansa pilots' strike next week

Lufthansa and other German carriers face significant flight disruptions starting next week thanks to a strike call by the German pilots’ union Vereinigung Cockpit (VC) in a four-day walkout from 22 to 25 February.

Lufthansa is taking proactive action to minimise impact of flight disruptions on passengers. Passengers from India are advised to call the telephone hotline 1 800 102 5838 or visit the Lufthansa website.

Lufthansa Director South Asia Axel Hilgers told Bangalore Aviation the airline is taking proactive action to minimise disruption. From India, Lufthansa is already trying to obtain seats from not just its partner airlines, Austrian, Swiss, Air India, and Continental, but also from competitor airlines, as a precautionary move.

"Our first duty is to take inconvenience away from our passengers, even if it costs us now. Hopefully our passengers will remember us on a future travel date" "We will take care of passengers even with restricted tickets"

However, Bangalore Aviation suggests passengers to be realistic. Lufthansa operates two flights a day out of Mumbai and Delhi i.e. 600 passengers each city. Bangalore is 350. Chennai and Hyderabad 250, Pune 120. This is still peak travel season and other airlines will have at best 20~30 seats spare per flight. Bottom line -- there is simply not enough spare capacity ex-India on other airlines to handle all the passengers of a cancelled Lufthansa flight.

Discussions with other sources in the travel and airline industry indicate Lufthansa will operate its long distance inter-continental flights. Flight disruptions, if any, can be expected in the short-haul and domestic network. Passengers travelling to the United States do not face much risk of cancellation, but passengers to Europe, especially Germany do. Passengers travelling within Germany can switch to a rail journey with Deutsche Bahn, if their domestic flights have to be cancelled. For that purpose, customers can exchange their electronic ticket (etix) for a rail travel voucher at a Lufthansa automatic check-in terminal. Alternatively, customers can buy a train ticket for the route for which their flight ticket was valid. This train ticket can then be submitted along with the flight ticket to Lufthansa for a refund.

The pilots' strike is scheduled to commence only on Monday, so all flight ex-India departing till Monday morning will not be impacted. Bangalore Aviation recommends passengers who are scheduled to fly on Lufthansa to a European destination, from Tuesday 22 February till Friday 26 February should contact the airline.

If you can delay your travel by a week, please do so. In our humble opinion, it will be good de-risking.

Passengers booked on a Lufthansa flight in the period from 22~25 February can rebook once free of charge to another Lufthansa flight, if they wish to change their travel plans – provided their ticket was issued before 18th February, the new travel date is before 31st March 2010 and no change is made in their departure and arrival destination.

Should the purpose of a journey become null and void because of a flight cancellation, passengers can cancel their flight booking free of charge.

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