What's Really Derailing Akasa's Lift-Off?

On Aug. 7, Akasa celebrated its first anniversary. In a world where airlines have died for being too slow or too fast, Akasa turned up with 20 aircraft and the eligibility to start international operations within the first year.

The airline came up during Covid-19 and used the pandemic to its advantage by negotiating its aircraft deal to include those initially manufactured for other airlines but not delivered to them.

Boeing continued to assemble the 737 MAX during the grounding imposed on the aircraft and had an enormous stockpile to deliver. The long-drawn timeline for the ungrounding of the aircraft allowed some airlines to pull out of their commitment to the aircraft, and some airlines closed before or during the pandemic (such as Jet Airways).

In both of these cases, Boeing still had some aircraft to sell to other customers. Akasa took delivery of one aircraft every fortnight and scaled up operations to 19 aircraft by March 2023, adding the 20 aircraft to their fleet a few days before they turned one. The first 19 were designated for other carriers and perhaps came for a song.

But soon, tailwinds also came for Akasa on other frontiers. Akasa had an easy pick when they started hiring 737 pilots. The airline could hire from Air India Express, SpiceJet, and even Jet Airways. Some pilots crossed to Akasa without serving their mandatory six-month to one-year notice period with the earlier airline, as set by Civil Aviation Requirement 7 issued by India’s Aviation Regulator, the DGCA. Confident in its expansion, Akasa hired over 400 pilots to operate its (relatively) small fleet of 20 aircraft.

Covid-19, the troubles of other airlines (such as Go First), the pedigree of Akasa’s founding team, and its financial backers, such as Rakesh Jhunjhunwala, all came together to attract all the right resources to lift Akasa off the ground.

Akasa reached a high of 5.2% market share as it closed July 2023, and everything seemed like it was going to plan. And then the airline hit an air pocket. In July and August, the airline saw the exit of 43 pilots, or about 10% of its pilot strength. And unlike what the airline would have expected, none of these pilots waited to serve their six- to 12 month notice periods, leaving within days of informing the airline.

The sudden departure of the pilots caused Akasa to cancel these flights rather than find new pilots to operate the flights. The pilots who left their jobs at Akasa reportedly headed to another Indian carrier, which has started inducting 737 MAX aircraft only recently.

As per DGCA data, Akasa cancelled 0.65% of its monthly scheduled flights in July and 1.17% in August 2023. This after reporting nil cancellations for many months. As per DGCA filings, 2,114 passengers were affected by these cancellations in this period, and they were either provided refunds, alternate flights, or accommodation necessary at a cost of Rs 88.8 lakh.

There were many reasons that these Akasa pilots wanted to move on. Key among them was the pay. A pilot’s salary is primarily linked to the number of hours they fly, apart from a base salary. Akasa had set the salary structure for their pilots at a minimum of 70 hours per month. However, given its small fleet and a large number of pilots, it could not provide pilots with the opportunity to do 70 hours of flying.

Akasa also reduced the flying allowance per hour for its captains from Rs 10,000 to Rs 7,500 per hour along the way. Akasa management tried to nip the dissatisfaction by raising pilot salaries in the second half of 2023, but the ship had already sailed. Additionally, pilots seemingly did not have a choice of bases with Akasa, having to rent out accommodation in cities where they are not based to get these jobs.

Akasa eventually approached the Bombay High Court, filing cases against the pilots who left in the first wave of resignations that came through in July 2023, asking each of them to pay over Rs 21 crore to the airline in damages, which included Rs 14.28 crore for damages to the airline's reputation, Rs 6.96 crore for operational profit loss, and Rs 36 lakh for the pilots’ training agreements.

Akasa also filed a case in the High Court of Delhi, seeking to determine if the DGCA, India’s aviation regulator, could take action against the pilots who left without their mandatory notice period. While DGCA had submitted that it had no power to intervene as it was a matter between the employer and employees, the court stated that there are no restrictions on DGCA’s ability to take action in case of the non-compliance of pilots.

Akasa wants to set the record straight with the issues at hand and, as per reports by Mint, intends to pursue the cases even though some pilots have expressed a willingness to pay up. This is the first time these regulations, set in 2017, could be tested in a court of law, and it might be beneficial for precedent. Pilots maintain that they don’t like these long notice periods. This might be their turn to speak and hope for a change in the regulations. Pilot unions had challenged these regulations earlier, but the case is pending in the Supreme Court.

Akasa, on the other hand, has a new problem at hand: its image. It might be a short-term one, but the airline might have to convince prospective employees that it is as employee-centric as it makes itself out to be. Is it just a blip on the radar or a step too far? Only time will tell.

In the meantime, as the competition between Air India and its low-cost subsidiary heats up with IndiGo, and Akasa hopes to be the third prominent airline in India, announcing that it will order aircraft in triple digits in the coming days.

Will they have enough pilots? This question is left to be answered in the future.

Ajay Awtaney writes about aviation and passenger experience at LiveFromALounge.com and Tweets at @LiveFromALounge. 

The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.