Kingfisher woes may risk safety; must not fly now: Experts

Kingfisher Airlines on Monday evening was forced to declare a temporary lockout till October 4 as the civil aviation minister Ajit Singh warned the ailing carrier that it would not be allowed to fly if safety norms are flouted.

In a situation like this, Kingfisher has found some respite in the Karnataka high court's order which has asked for all accounts of the beleaguered airline to be defreeze immediately. The judgment that was delivered yesterday comes after the Bangalore IT department had ordered a freeze on all the airline's bank accounts on May 29 over part payment of outstanding TDS dues. Also read: KFA will fly again by Oct 5; DGCA wants safety assurance
In an interview with CNBC-TV18, former Director General of DGCA, Kanu Gohain reiterated the fact that the poor financial health of the company is bound to affect its operational credibility and this could compromise on safety. Therefore, the civil aviation minister's warning stands justified, said Gohain. He further added that the DGCA has so far given a lot of opportunity to Kingfisher for improving its financial health but, it has not been able to find a way out of its problems.
The former secretary of Planning Commission Sudha Pillai believes the writing was on the wall for a long time. She believes, the lockout was a well though out move. Moreover, if a company's employee morale is at an all time low, it cannot assure the safety of passengers and therefore, feels Kingfisher's operations should not resume now. Here is the edited transcript of the interview on CNBC-TV18. Q: Problems at Kingfisher airlines are not new, these problems have been going on for over a year now and that is when first the company was asked to put a holding plan in place. We have seen strikes happen within the airline. We have seen strike threats by the employees on account of non payment of salaries, this situation continues and the response from the Directorate General of Civil Aviation and the aviation ministry has been that till an airline company actually has five planes which is flying in certain amount of capitalization we cannot revoke its licence, do you believe Kingfisher airline should continue to fly today? Gohain: As far as the rules are concerned, if an airline which has got an operating permit can prove that it can run its schedule notified to the DGCA and has minimum 5 aeroplanes it can continue to operate on its permit. But, the issue here is Kingfisher is in a bad financial health and one cannot deny that the financial health of an airline is linked with the operational credibility where safety is a primary concern. Certainly in aviation there is no compromise with safety. If the financial health is not good, they will have to cut some corner and that is detrimental for the cause of safety.
Paying the wages to its employees is a relationship between an employer and an employee. If you cannot pay the wages you can certainly curtail your manpower, you can curtail you fleet strength and also curtail your operational credibility. Q: As I have pointed out they went in for a whole linked plan in September of 2011, they went in for route rationalisation. They shut down their foreign routes, they have gone in for a significant manpower restructuring exercise but, this company has debts over Rs 7,000 crore, lenders are not willing to pump any more money into it. Yet, every time the management meets with the DGCA, the DGCA comes out and says they will come back to us with a credible plan and yet we have no details of that credible plan? Last night they finally declared a lockout and employees are unwilling to get back to work on account of non-payment of salaries from March. If you were in DGCA's position today, what would you do? Gohain: If the financial health is not recovering and I understand till this quarter ending June they had already accumulated a loss of about Rs 260 crore, the airline cannot certainly maintain its operational capability in a safe manner. But, it is very easy to shut down an airline. The rules say that as long as you have five airplanes and as long as you can operate the schedule which you are notifying to the regulator, you can continue.
So DGCA per se has given a lot of opportunity to Kingfisher Airlines to come up with some plan, walkout in a positive manner and to regain its financial help. Only after these exercises are concluded, we will see what comes next.
_PAGEBREAK_ Q: KFA put out a statement saying that following a series of protracted and unabated incidence of violence, criminal intimidation, assault, wrongful restraint and other illegal acts including refraining from attending work by small section of recalcitrant employees which were all unnecessary and unprovoked. The management has declared a partial lockout of the airline effective immediately. How do you respond to this? This is an airline company that has not paid its employees since the month of March? Promises have been made to employees, the last promise that we know about was made in the end of August. It said their dues will be cleared and yet the management almost is threatening employees to come back to work for former obligations and duties but we cannot guarantee you your salaries? Pillai: This partial lockout seems like a well thought out move and the employees who have been managing without any salary for last so many months must be in dire states. Some of them are beginning to get a sense of desperation that things will never improve.
I think the writing has been on the wall for a very long time. Kingfisher is a grossly managed company and passenger safety should not be compromised with. Also employee morale is an equally important aspect of passenger safety. How do you run a company if you don't pay salaries for several months and you don't repay your loans? I understand that the company is on a slippery slope and several chances that have been given to them by DGCA are unwarranted. We have more or less come to the end of the road. Q: What recourse is there for employees because as far as a lockout is concerned, the company does not need to pay them salaries which they were anyway not being paid. Is there no recourse as far as employees are concerned who have been waiting patiently for this management to deliver on the commitments and promises it made to them? Pillai: I understand that at the time of induction, at the time when the employees are hired they are made to promise that they will not join any union and so there are no unions in the company. There is nobody there who can intervene on behalf of the employees. Q: Can the government not intervene as the former labour secretary, is there no role for the government to play in this? Pillai: Normally the government should have been playing a role. The central labour commissioner should have been negotiating and coming to a settlement, a firm settlement on behalf of the employees, interceding on behalf of the employees, negotiating settlement with the company. Apparently, they have been kept at bay and they have been told that they do not need to come anywhere near Kingfisher.
I suppose at this point of time, one is reminded of what happened some years back when Jet Airways laid off employees without notice and finally, they took them back. I think more or less, it's either the courts or people take to the street, that's the situation right now with Kingfisher.
_PAGEBREAK_ Q: To your mind this seems like a well thought through strategy to declare a partial lock out but, we understand that the DGCA is going to be meeting with the management of Kingfisher Airlines and has asked the management of Kingfisher Airlines to come forward with a credible map in terms of how they intend to pay salaries. The management has promised to pay salaries in four weeks but, this promise was made several months ago and they still haven't come good on that. What could be the possible solution because they are not in violation of the law but, what can the DGCA do in this situation? Gohain: DGCA can best monitor the airline operation, whatever small fleet they are operating now. They can monitor whether the safety standards as prescribed in the book are being followed rigidly or not to ensure safety. Second, before the start of this debate I heard that the Karnataka High Court has de-frozen about Rs 60 crore of seized bank accounts of Kingfisher. Maybe with this action, Kingfisher will be in a better position at least to pay off the wages because the issue here is between employer and employee, whether payment of wage is there or not.
I also heard that some employees are still working without any pay and some employees are preventing the others to come in. That’s a different aspect, totally law and order aspect. But, the issue is from the civil aviation perspective, whether the airline can operate with its limited fleet and limited manpower and infrastructure safely or not. The DGCA is going to monitor that I suppose. Q: That is the role and responsibility of the DGCA and beyond a point the DGCA cannot do very much as long as Kingfisher manages to meet the extant law but, the government has taken a fairly hands-off approach because it’s a private company and as if they cannot interfere? Pillai: The law applies to all the companies, whether they are public sector companies or private companies. So long as they are Indian companies and are registered in India the laws do apply. But, it seems to me that there has been a very clever avoidance of the normal conciliation proceedings or the normal settlement proceedings because there is nobody in the company who has been allowed to form or join a union, nor has the company ever asked the central labour commissioner to intervene.
Actually it is the ministry of labour, central labour commissioner who has been very effective in the early parts of this particular decade. I would say in the later parts of the last decade they were keeping the industrial relations on very even footing. But, now we see more and more problems cropping up because people are trying to cut corners on labour loss and because the extant rules of DGCA are very permissive, they are very enabling for a company to continue to operate.
But, how do you ensure employee morale if they are heavily in debt or if they have liquidated the savings? How do you ensure that mid-air they are fully attentive to the needs of the passengers?