Even before Akasa Air could celebrate its first anniversary, it faced its toughest challenge which saw curtailed flights and reduced routes. Around 40 pilots, or 10% of the pool, quit without even serving the notice period. Not perturbed by these setbacks, Vinay Dube, Founder and CEO of the low-cost airline tells Swaraj Baggonkar that Akasa Air will have a 35% bigger network by December-end. Excerpts:
What has been the impact of the flight cancellations? What’s been the monetary loss?
While we don’t put out these numbers, this is much more about the consumers who were impacted by our cancellations. That is why, we state the notice period is for the protection of the consumers. Akasa’s financial position remains strong although we have had an impact. Our investors gave us certain money to set up the airline, but we haven’t spent even one rupee of that because the airline has been cash-flow positive.
The market views the 6-month notice period for pilots as unreasonable. Your comments.
As in any company, we too have varying notice periods depending on the position of the employee in the company. So, the 6-month notice period is not general but a very specific clause for the pilots. Our view is that this is quite a reasonable thing to have. Some training takes 6 months, some may take 8 months or longer. The 6-month is from a consumer perspective so that we can take a look at our network and capability 6 months in advance and the consumer does not suffer. The airline has to publish a schedule that is stable.
Is there a DGCA-defined notice period or are companies free to put in their own?
The DGCA-defined timeline in the civil aviation regulation that was put out in 2006 and has been in place tilll 2018 was that for co-pilots, the notice period was 6 months, and for captains, it was 12 months. This is the regulation that has been been challenged in court. The ruling from the Delhi High Court is that while this is being adjudicated, an airline’s contractual notice period applies.
Are companies free to have their own notice periods or is the DGCA-defined timeline mandatory?
We had 330 pilots in April and today we are well over 450. We have an additional 125 pilots who have signed contractual commitments with us. We are able to attract pilots despite the 6-month notice period. So, we don’t believe our notice period is viewed to be onerous. This is not a pilot issue because what happened with this small number of pilots is unprecedented. I have never encountered something like this. 99.99% pilots have never done such a thing.
What was the notice period the pilots actually served before leaving?
Some pilots served 12 hours, some served 24 hours, and some 36 hours. The overwhelming majority served between 0 to 3 days. I cannot remember pilots in India or anywhere else in the world doing this.
How many destinations and flights per day do you have now compared to June?
We don’t disclose those numbers but I can say that within 30 days we will be very close to getting back to flying what we were flying. We chose to sacrifice a bit of revenue to be able to offer our customers the reliability they deserve. The long term is much more important than to squeeze out unreliable flying in the short term. You will see us adding flights and destinations very shortly and will exit December with a network that is roughly 30-35% larger than today.
What impact has this had on your remaining pool of pilots?
Our pilots, airport employees, and Akasa Care employees had to step up and bear the brunt of it in July and August. We are proud of our pilots and the entire staff who came forward.
Akasa’s market share hit a peak of 5.2% in July even before completing one year in operation. The pilot issue dragged it down to 4.2% in September. At what level will the airline end December or March?
I don’t have that forecast because we are not in the market share game. This is not an important statistic for us. Some of the most profitable airlines in the US have a market share of less than 5%. We want to grow profitably and grow with free cash flow that we have.
But despite your efforts to contain them, the fight for such highly skilled manpower will continue for many years to come. Is this the best time to become a pilot?
India’s domestic flying has exceeded pre-Covid levels but international flying has not and their combination has also not exceeded pre-Covid levels. The DGCA handed out around 5,000 commercial pilot licenses between 2019 and now. This has happened when the flying is still below pre-Covid levels which means that there are lots of young fresh pilots who are still not employed today and it is going to take 2-3 years to accommodate that pool.
How big will your fleet be by the end of the year and when do you start international operations?
We will exit March with about 25 aircrafts and we should be 40 planes by March. From the Indian government, we have received a designation as one of the international airlines and the second thing we have are the route authorities for Riyadh, Jeddah, Doha, and Kuwait but there are a few more steps required. The Indian government now needs to endorse our operating certificate for these routes before we can work with the foreign governments to get the slots and their third-party government approvals. It takes 30-90 days for the second step to happen.
Suddenly there is lots of investor interest in India’s aviation sector. Is Akasa exploring fundraising at the moment?
We are going to place a three-digit aircraft order before the end of this (financial) year and we have a sufficient amount of cash on hand to be able to place that kind of order. We don’t need any cash to sign that order.