What’s Wrong with Akasa Air: Uncovering the Airline in Crisis

After a stellar year of rapid expansion, Akasa Air is now facing turbulence! This budget airline achieved a remarkable milestone by growing its fleet to 20 aircraft, setting the stage for international flights at an astonishing pace.

However, despite initial success with the late billionaire investor Rakesh Jhunjhunwala’s support, Akasa Air is currently grappling with numerous crises, impacting its operations. The question that looms is- What’s wrong with Akasa Air? 

Join us as we unveil the airline’s crisis.

(A) Synopsis: Crisis in Akasa Air

After nearly a year of soaring success, Akasa Air is now grappling with a stormy patch. 

The ambitious budget carrier had rapidly expanded its reach, setting a record by amassing a fleet of 20 aircraft in record time, a key milestone for international flights. However, despite its impressive growth and the patronage of the late billionaire investor Rakesh Jhunjhunwala, Akasa Air is now struggling to retain sufficient pilots for seamless operations.

The airline is in the midst of a pilot exodus crisis, with many pilots resigning without notice. This wave of abrupt departures has led to flight cancellations and operational headaches. Akasa Air has even resorted to legal action against some of these departing pilots.

In response, the airline has been forced to cut flights temporarily while they address the pilot shortage issue. Reports indicate that they are set to cancel approximately 700 flights in September alone due to this shortage.

This crisis not only spotlights the acute pilot shortage within India but also underscores the broader aviation industry challenges in the country. We will look at each aspect of this scenario in detail.

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(B) Effect of Pilot’s Resignation on Akasa Air

Insider reports suggest that more than 40 pilots made the decision to part ways with the airline in recent weeks, leading to the initiation of legal proceedings against a select few. The mass resignations made by Akasa Air pilots have impacted the airlines severely.

Let’s look at the data-

As you can see in the table given above, the market share of Akasa Air declined gradually with the increased number of flight cancellations.

(B.1) Flight Cancellation

In a dramatic courtroom showdown on Tuesday, Akasa Air’s legal team didn’t hold back, painting a dire picture of the airline’s current predicament before the Delhi High Court. Their words echoed with urgency as they revealed that the airline was teetering on the brink of crisis, a consequence of an exodus of pilots resigning without warning. 

The impact of these sudden resignations was palpable, with reports of nearly 600 flight cancellations in August alone, and the ominous prospect of an even more staggering 700 flights potentially grounded in September. As of now, Akasa Air is canceling nearly 24 flights on a daily basis in September. 

(B.2) Reduced Market Share

In a surprising turn of events, the winds of fortune shifted for Akasa Air this August. The airline saw its market share, measured by the number of passengers carried, take a noticeable dip from a robust 5.2 percent in July to a slightly less impressive 4.2 percent. 

This sudden shift in fortunes not only caught the industry’s attention but also resulted in Akasa Air relinquishing its higher perch in the hierarchy of domestic carriers, falling behind SpiceJet. It’s worth noting that just a couple of months ago, Akasa Air had triumphantly soared past SpiceJet, leading the pack in June and maintaining its lead in July. 

The dynamic nature of the airline industry certainly keeps everyone on their toes!

(B.3) Potential Losses

While Akasa Air has been tight-lipped about the precise numbers regarding their financial setbacks amidst the ongoing crisis, there’s an intriguing breadcrumb in the form of their demand for compensation. 

The airline has boldly sought Rs.22 crore per pilot in damages. While this doesn’t give us the full financial picture, it certainly provides a curious clue to begin piecing together the puzzle of Akasa Air’s economic woes. It’s a bit like deciphering a complex code, isn’t it?

(B.4) Vulnerable to the shortage of experienced Indian Pilots

In the high-flying world of Indian air travel, the future looks set to take off on an even grander scale. With more and more people taking to the skies, the demand for pilots, especially those with seasoned skills, is poised to go through the roof. 

Experts in the field are painting a picture of an impending crisis – a severe shortage of experienced Indian pilots in the years ahead. And when it comes to weathering this storm, it seems the smaller and newer players like Akasa Air might find themselves on shakier ground compared to the big airline giants. It’s a challenging journey ahead in the skies!

(B.5) Captain Crunch

In a landscape dominated by IndiGo and the Air India group, a duopoly with substantial financial support and extensive networks, emerging airlines like Akasa Air may encounter difficulties in attracting and retaining the skilled workforce needed for expansion in the world’s third-largest and rapidly growing aviation market. This challenge becomes even more pronounced in the context of an industry where signs of a pilot shortage are emerging, placing smaller carriers at heightened vulnerability against the competitive pressures exerted by established industry giants.

(C) Why are Pilots quitting Akasa Air?

Pilots are quitting Akasa Air for several reasons. A major factor is the airline’s recent spate of cancellations and operational issues. Apart from that the other potent reasons are-

(C.1) Accepted offers from established players with deep pockets

The majority of Akasa Airlines pilots have accepted the alluring offers from Air India Express! Why? You may ask. Because the Air India Express also operates the aircraft belonging to the Boeing 737 family. 

That’s not all…

At the core of Akasa Air’s challenges lies fierce competition for pilots in the Indian aviation landscape. This up-and-coming airline is striving to carve out its niche within India’s thriving civil aviation market. However, the plot thickens as established giants such as IndiGo and the formidable Tata group airlines set forth ambitious plans. For what? To expand their fleets and network coverage. 

And guess what? They are recruiting experienced pilots on a large scale. And Akasa Air’s pilots are the main targets of those giant airlines.

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(C.2) Alteration in the Pilot’s salary structure

Numerous aviators have claimed that, back in June, Akasa Air unilaterally modified the pilots’ compensation system i.e. salary structure. The employees perceived this move as a violation of the contract. 

Vinay Dube, the Chief Executive Officer of Akasa Air, has defended the airline’s decision. He clarified the reason for taking legal action against the pilots. He characterized this decision as being in the best interests of the current workforce. 

In an email sent to Akasa Air employees last week, Dube stated this. “Some have raised concerns about the employee-centric nature of seeking legal redress against former employees. Given that these actions have disrupted and disrespected the exceptional efforts of our current employees. Our most employee-centric action is to vigorously protect your future and the commitments we’ve made to our customers.”

(D) Akasa Air’s Retaliation against the Pilots

In a recent series of events, Akasa Air has been confronted with a sudden surge in pilot departures. This led to a significant operational challenge. The company responded by taking legal action against certain pilots. Especially those who departed without adhering to their mandated notice periods, resulting in flight disruptions and reputational damage.

(D.1) A Lawsuit in the Bombay High Court

Akasa Air initiated legal proceedings in the Bombay High Court against pilots. Mainly those who left the airline without fulfilling the required six-month notice period. The airline’s primary argument revolves around the necessity for these pilots to complete their notice period before joining another airline.

(D.2) Compensation for Operational Losses

Additionally, Akasa Air is seeking compensation from these pilots. Why? To cover the operational losses incurred as a direct result of their abrupt departures. The airline claims damages of approximately Rs.22 crore per pilot due to the flight disruptions caused by these hasty exits.

(D.3) Legal Challenge in the Delhi High Court

The airline has also filed a separate case in the Delhi High Court, challenging the validity of rules established by the Directorate General of Civil Aviation (DGCA) in 2017. These rules mandate notice periods of six months for first officers and one year for captains. The validity of these rules is currently under scrutiny as certain pilot unions have contested them in court, and these cases remain pending before the Delhi High Court.

(D.4) Regulatory Involvement

It’s worth noting that the DGCA has refrained from direct intervention in cases involving disputes over notice periods. Akasa Air has reportedly sought the intervention of both the DGCA and the aviation ministry in this matter, but regulatory action remains uncertain due to the ongoing legal challenges to the DGCA’s rules.

(E) Shortage of Pilots in India: A Humongous Crisis

The unexpected departure of 43 pilots from Akasa Air has raised concerns for the airline, indicating a potential need to cancel 700 flights in September. This highlights a more profound issue of a pilot shortage in India, which is recognized as the world’s third-largest aviation market and experiencing rapid growth.

Let’s look at the numbers/data-

The pilot shortage is particularly acute for captains with 3,000 flying hours i.e., equivalent to 4-5 years of experience. An estimated 17,000-18,000 pilots are required over the next decade, but DGCA registers only 600-750 CPL holders annually. Even a 5-10% shortage is considered a challenge, but there’s a 100% shortage risk. 

Currently, India has 9,000 pilots for 700 aircraft. CAPA (Centre for Aviation) India estimates 150-175 new planes will arrive in 2024, requiring 1,800-2,000 more pilots. Akasa Air is facing pilot resignations, leading to operational disruptions and a possible crisis.

(F) Will Akasa Air Shut Down? Future plans of Akasa Air

Vinay Dube, the Chief Executive Officer of Akasa Air, provided reassurance to the company’s workforce by confirming that the airline had no intentions of ceasing operations. He emphasized the airline’s strong financial position and its commitment to executing long-term growth strategies. 

Mr. Dube further conveyed that Akasa Air currently boasts a sufficient number of pilots at various stages of training, enabling it to operate more than 30 aircraft.

Additionally, Akasa Air has expressed its intent to place a substantial aircraft order before the year’s end. The airline has underscored the existence of a comprehensive 10-year plan encompassing pilot recruitment, training, and internal career advancement, emphasizing the availability of pilots undergoing training to support a fleet of over 30 aircraft. 

The airline also acknowledged the long-standing challenge of pilot shortages in the aviation industry, asserting its readiness to tackle unforeseen circumstances with well-defined contingency plans.

Furthermore, a spokesperson stated that the airline had received recognition from the Civil Aviation Ministry to operate international flights.

(G) Conclusion

Akasa Air faces a crisis with a surge in pilots abruptly resigning, leading to flight cancellations and operational challenges. Legal action has been taken against some of these pilots. To address the pilot shortage, the airline plans to temporarily reduce around 700 flights in September. This issue highlights India’s wider pilot shortage problem in aviation.

In summary, the crisis primarily results from numerous pilots quitting without notice, causing operational disruptions. Akasa Air’s leadership assures the company’s financial strength and its intent to continue long-term growth plans. They have an ample pool of pilots in training and are considering a significant aircraft order.

Hope the current crisis of Akasa Air will be sorted out soon!