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Business News/ Companies / News/  Akasa vs pilots: The inside story
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Akasa vs pilots: The inside story

43 pilots quit the airline in recent months, disrupting operations for a while. What was behind this exodus?

Vinay Dube, founder and chief executive officer, Akasa Air. In a recent email to employees, Dube wrote that the abrupt pilot resignations “have caused disruption and disrespect to the great work done by our current employees”. Premium
Vinay Dube, founder and chief executive officer, Akasa Air. In a recent email to employees, Dube wrote that the abrupt pilot resignations “have caused disruption and disrespect to the great work done by our current employees”.

New Delhi: In August, Akasa Air completed a year of flying. Ever since the pandemic, airline companies and engine makers have been grappling with supply-chain headwinds, globally. But Akasa Air flew past these troubles with ease.

Riding on strong demand for air travel, the airline grew to a fleet size of 20 aircraft by August and commanded a market share of 4.2% of the domestic skies. That’s a remarkable achievement—other entrants in the past decade, such as AirAsia India and Vistara, which had stronger promoter support, were able to garner a market share of under 2% in the first 12 month of operations.

Just as everything was working to a plan, Akasa started running into problems it perhaps did not anticipate. The airline had over 450 pilots. In July and August, about 43 of them, or nearly 10% of its pilot strength, resigned. Worse, they refused to serve the notice period, demanding to be relieved from service within two to three days. This created an operational headache for the airline. Without a pilot, a plane can’t be flown. Flight cancellations and passenger angst followed.

In July, Akasa’s flight cancellation rate rose to 0.45% after being nil since March. It spiked to 1.17% in August, the highest for the month among all scheduled commercial passenger Indian airlines, data from the Directorate General of Civil Aviation (DGCA), Indian aviation’s regulatory body, showed. With a fleet of 19 aircraft, the airline was operating 900 weekly flights back then. A back-of-the-envelope calculation shows that around 65 flights were cancelled by the airline in these two months. The resignations were so sudden, the airline found it difficult to redeploy other pilots in time.

Social media platform X, formerly Twitter, was flooded with complaints. All of a sudden, all the good work of the last one year appeared to be going down the drain.

“@AkasaAir repeated flight cancellation reports is making me sceptical about booking an upcoming journey from Pune to Bhubaneswar. It’s festival time and last minute cancellation will cause humongous trouble reaching home," one X user recently posted.

Every professional has a right to quit and join a rival company. In this case, pilots from Akasa reportedly have offers from Air India Express, the Tata group’s low-cost airline. But not serving a notice period as per the contract signed with an employer borders on being unethical. That is Akasa’s principle grouse and the airline wanted to send across a strong message.

Earlier this month, the company filed cases against some of the pilots in the high court of Bombay. It filed a second case in the high court of Delhi.

“A small set of pilots abandoned their duties and left the organization without serving their mandatory contractual notice period, therefore forcing a disruption of flights between July and September 2023. This necessitated last-minute cancellations that stranded customers and caused inconvenience to the travelling public," the company said in a statement on 22 September. “In the interest of passenger convenience, and an attempt to stop this unethical and illegal practice by this set of pilots, Akasa Air has sought relief from the Delhi high court," it added.

On 27 September, Akasa got partial relief from both the courts but like most of us know, legal cases can take years to close.

The cases, however, have not gone down well with many in the aviation industry. And some believe that this could do more harm than good—dissuade good talent from joining Akasa.

“Probably, Akasa overreacted. Whatever their reasons are, this is set to impact the image of the airline in a market that is moving towards a duopoly," a former airline executive, who did not want to be identified, said. “Hiring critical talent such as pilots will become increasingly difficult for the smaller players," the executive added.

The Indian aviation airscape is currently dominated by InterGlobe Aviation, which operates IndiGo (market share of 63.3% in August) and the Air India group (26.7%). These two groups are expected to consolidate the market further. While Akasa has only 56 aircraft on order till date, IndiGo has ordered for 980 and Air India has ordered 470 aircraft.

At the moment, the bigger question is why did the pilots leave in a way they did? Sure, the Air India group is aggressively expanding. But pilots have a different story to tell. Read on.

Quick exit

The idea of Akasa Air, the youngest major airline in India’s aviation market, took birth during the pandemic, in 2020. Industry veteran Vinay Dube approached the late Rakesh Jhunjhunwala, a billionaire stock market investor, with the idea to start an affordable airline. Jhunjhunwala then roped in the former president of IndiGo, Aditya Ghosh, and invested in Akasa—his family has 46% shareholding today. The airline operated its first flight between Mumbai and Ahmedabad on 7 August 2022.

Where did Akasa hire its pilots from? From budget airlines SpiceJet and Air India Express. Akasa’s fleet is made up of Boeing 737, a narrow-body aircraft—both SpiceJet and Air India Express also operate the same aircraft.

Meanwhile, discontent grew among a section of Akasa’s pilots. They didn’t like how the company’s middle management treated them. The middle management consists of senior vice presidents and vice presidents or the heads of different verticals.

“The problem was clearly due to the middle management. The top management was initially not aware (of the grouse the pilots had). Later, they chose to ignore the problem," said one of the pilots who quit recently. He did not want to be identified.

Many executives in the company’s middle management layer, the pilots alleged, indulged in favouritism. This had to do with selected pilots being allowed to fly 70 hours a month, the industry standard.

The salary of pilots, across the industry, is linked to the number of hours a pilot flies—a pilot gets full pay once the mandatory number of hours are flown. In Akasa’s case, those who could fly 70 hours or more became eligible for their full salary and also bonuses. The problem? Right now, Akasa has more pilots and fewer flights. So, not all pilots can meet the 70-hour benchmark.

For operating the narrow-body aircraft domestically, the ideal pilot-aircraft ratio is about 6-8 pilots per aircraft. The Akasa ratio today is more than double this number. Remember, the airline has 20 aircraft. Pilots in its roles, however, total over 400. The company had hired more pilots to aggressively expand but the move backfired when it came to employee relations.

After the management got wind of the brewing dissatisfaction, it raised pilot salaries by 40% from July to 6.25 lakh a month. In August, the airline announced monthly loyalty rewards of 1 lakh and long-term incentives (retention bonus) of 25 lakh.

Pilot salaries in India range between 4 lakh and 6.5 lakh a month for 70 hours of flying.

“Money is not the reason why we are leaving. The airline that we are joining is paying all of us a lesser salary ( 1 lakh to 2 lakh lower) than Akasa. Favouritism by the middle management is the problem. And that has not been addressed," said a second pilot Mint spoke to. He also did not want to be identified. The dispute is sub judice and the pilots have been advised by their lawyers from speaking out publicly.

Akasa, too, is maintaining a silence on the developments, right now.

An executive from the company who didn’t want to be identified said that almost all the pilots who resigned did not serve even 24 hours of notice period. “It was almost as if they got a ‘take it or leave it deal’ (from a rival company). In one of the cases, a pilot called at 10 pm and said he wouldn’t be available for an 8 am flight the next day. It was a different level of extremity in these resignations," the person said.

“This mass exodus took place in three batches, across July and August. In fact, it perplexed the top officials at the company—most of these pilots had spent 9-10 months at the airline and received multiple opportunities of a salary raise," the executive added. “Even if some of these pilots felt a sense of differentiation, there were no complaints received at any level of management," he said.

Tale of two cases

Let’s circle back to the two cases Akasa filed and its outcome, thus far.

Last week, Akasa approached the high court of Bombay seeking compensation of 21.6 crore each from five pilots—they were the first to quit without serving the notice period. The compensation demanded comprises 14.28 crore for damages to the airline’s reputation due to flight disruptions and grounding, 6.96 crore for operational profit loss and 36 lakh for pilots’ training agreements.

Current aviation norms require Indian pilots to serve a notice period ranging from 6 to 12 months for co-pilots and captains. However, the notice period norm set by the aviation regulator is not sacrosanct. The contract between a pilot and an airline has provisions for compensation in case pilots do not want to serve out the entire notice period. In the case of Akasa, contracts state that a pilot has to pay the entire money the airline spent on their training.

Some pilots who quit said that they are willing to pay up. But the airline’s management appears keen to press ahead with the legal cases. In an email to employees, during the third week of September, Akasa’s CEO Vinay Dube wrote: “Some people have questioned whether it is employee centric to seek legal remedy against former employees. Since these acts have caused disruption and disrespect to the great work done by our current employees, the most employee centric thing we can do is to remain fiercely protective of your future and the promise that we have made."

At the Bombay high court, the pilots contested if the court had the jurisdiction to hear the case—since the pilots are not based in the city. The airline, however, is registered in Mumbai. The court said that it had the jurisdiction.

At the Delhi high court, Akasa sought a direction on whether the DGCA could take action against pilots in breach of employment agreements with airlines. The court said that the DGCA can act against such pilots but did not order any action against the Akasa pilots who quit abruptly.

The ruling, therefore, will be more relevant in future cases when employee-employer contracts are breached.

“The airline had petitioned to the court to provide some clarity on the issue of notice period for pilots.The Delhi high court order provides a good basis for the DGCA to look into these issues as a regulator," said Ashish Bhan, a partner at Trilegal, the law firm representing Akasa. “Such mass exits of pilots, without adhering to the notice period in the future, may be detrimental for India’s aviation industry at large," he added.

The coming battle

Apart from work ethics, the Akasa incident underlines a coming battle for talent among aviation companies.

India, today, has 9,000 pilots who fly about 700 planes. The industry is already short of about 1,000 senior pilots called commanders, experts estimated. However, this shortage only concerns airlines flying the smaller aircraft, manufactured by ATR, a Franco-Italian company, and Embraer, a Brazilian aerospace manufacturer.

Nonetheless, the shortages will widen as airlines press ahead with their expansion strategies—overall, 1,500 aircraft are on order.

“We have to invest a lot in building the talent pipeline. We’re spending more than $200 million in establishing this and all the simulator capabilities," Campbell Wilson, the CEO of Air India, told Mint recently. “Not just pilots—cabin crew, ground staff, engineers—they are part of the talent development for our own needs, but ultimately for the country. In the short term, there are some constraints," he added.

Right now, there is more demand for pilots who can fly the Boeing 737s. Only 13% of the total fleet, across airline companies, consists of this aircraft type. Among the current Boeing 737 operators, Air India Express is seen to be the most aggressive—it plans to induct 50 aircraft by the end of 2024. The company needs a lot of pilots, and airlines such as Akasa will be a happy head hunting ground, even going ahead.

“This is nothing extraordinary. It is a cyclical matter. In fact, when Akasa commenced operations, it had also acquired talent from other domestic carriers, especially in the category of senior pilots or captains," a senior executive at an airline, who didn’t want to be identified, said.

Akasa, as of now, has no shortage of pilots. Like we mentioned earlier, the company has over 400 pilots and only 20 aircraft. The exodus of 43 pilots was only a very short-term hit. But India’s youngest airline, the executive quoted above added, now has the tougher job of working on its image, of establishing itself as a workplace that can be a magnet of good talent in the future.

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Updated: 23 Oct 2023, 05:09 PM IST
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