BackAir India exit leaves lobby FIA in jeopardy
CMD Rohit Nandan writes to FIA saying airline wants to quit, highlighting differences in country's aviation industry
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New Delhi: State-owned Air India Ltd has decided to pull out of the industry lobby Federation of Indian Airlines (FIA) that it helped found, leaving the group in trouble and reflecting differences over the re-organization of the country’s aviation space.
Formed in 2006 to push for reforms as more private sector airlines were granted airline licences, FIA counted Air India, Jet Airways (India) Ltd, IndiGo, SpiceJet Ltd and GoAir among its members.
Now, Air India chairman and managing director Rohit Nandan has written to FIA associate director Ujjwal Dey saying the airline wishes to withdraw.
“We have been a member of FIA since its inception," said an Air India official aware of the matter who declined to be named. “But why do we need to take the platform of FIA to convey our views to the government? We can just walk up to them. We have resigned with immediate effect." A second official aware of the situation confirmed the development.
The FIA has taken the Centre to court over many of its policies, including allowing foreign airlines to invest in new Indian airlines and ground handling of flights. The second official, also seeking anonymity, said Air India was pulling out not because it thought the FIA was turning into a cartel—as former Air Deccan chief G.R. Gopinath has alleged—but because the national carrier did not want to participate in anti-government moves.
Air India has, in legal parlance, recused itself from these cases. “There have been several occasions when we have not agreed with their approach. We were not party to any of those FIA decisions," the second official said.
FIA’s Dey has not responded yet to emails, calls and text messages sent on Thursday seeking comment on the matter.
FIA was formed after a meeting in Mumbai of chief executive officers (CEOs) of nearly all major carriers to highlight issues related to aviation infrastructure and taxes, especially those levied on jet fuel.
The industry’s losses for 2006-07 stood at ₹ 1,600 crore, which swelled to ₹ 10,900 crore in 2013-14, according to the Centre for Asia Pacific Aviation (Capa). Airlines including Vijay Mallya’s Kingfisher Airlines Ltd and M. Thiagarajan’s Paramount Airways were grounded during this period.
Mint reported on 2 September that many airlines were not in a condition to even pay the annual membership fees to FIA.
“Further to the FIA’s repeated requests conveyed to the member, we still haven’t received the desired response for holding FIA meeting. FIA financial health needs urgent intervention from the members," FIA wrote in an email on 30 July to Nandan, Jet Airways chairman Naresh Goyal, IndiGo president Aditya Ghosh, GoAir CEO Girogio De Roni and SpiceJet chief operating officer Sanjiv Kapoor.
FIA has not yet admitted AirAsia (India) Pvt. Ltd, the Malaysian-owned airline which began operations this year. AirAsia India CEO Mittu Chandilya, who had applied for membership, said he hasn’t heard from FIA despite repeated requests.
“None," Chandilya said in a text message. “No word from them."
Tata SIA Airlines Ltd’s Vistara and Air Costa, two other recent entrants into the Indian aviation space, have not said whether they want to join FIA.
FIA members, led by IndiGo, Jet Airways, GoAir and SpiceJet have filed cases against a policy allowing the entry of both AirAsia and Vistara. After Air India’s exit, which, among other things, provided office space to host FIA meetings, the legality of the group may also come into question, including in court cases on whether they represent the views of the airline industry.
“There is some minimum number required for you to be a lobby group under rules," said the second Air India official. “They may have to take Vistara or someone." But having launched legal cases over foreign airline start-ups such as AirAsia India and Vistara, FIA may find it embarrassing now to ask the same airlines to be its members—at least till the case is allowed—the official said.
An analyst welcomed Air India’s move, saying it was long overdue. “There are certain pertinent aspects relating to FIA which can’t be ignored," said Jitender Bhargava, author and former executive director of Air India.
“One, FIA was constituted at a time when most airlines heads/promoters were beneficiaries of crony capitalism and had direct access to the incumbent minister. Second, FIA has hardly served the interests of airlines on issues like safety matters and DGCA (Directorate General of Civil Aviation); ATF (aviation turbine fuel) pricing and sales tax; and defending airlines in the media by presenting airlines’ perspectives on critical issues. Finally, Air India, as a government airline, had no business to join FIA in the first place under the then management. The present management therefore deserves compliments for its decision to quit FIA, even though belatedly."
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