India’s aviation regulator has cautioned airlines about finance-related safety concerns, but ruled out closing down any carrier.
A financial surveillance report by India’s Directorate General of Civil Aviation [DGCA] released Jan. 5 points to widespread financial distress in the sector and asked all airlines to take immediate measures to prevent safety lapses.
“A reasonable case exists for the withdrawal of Kingfisher Airlines’ operator permit as its financial stress is likely to impinge on safety,” the report says.
The report, finalized on Dec. 28, suggests a similar step forExpress, the budget arm of state-run carrier Air India, and also found issues with other airlines.
Representatives of Kingfisher and Air India Express were summoned before DGCA chief E. K. Bharat Bhushan Jan. 5 to detail the measures they plan to take to deal with the problem.
Both Kingfisher and Air India have denied that safety is being compromised in their operations.
The report also found “major financial distress issues” with SpiceJet, GoAir and, including its unit JetLite, and highlighted “some rapid growth issues” at IndiGo.
The safety issues center on discrepancies related to training and crew shortages, aircraft maintenance and operational deficiencies.
“All airlines are going through a critical patch. We are getting [the] opportunity to find out what the status of these finding are, what is the plan for rectifying these problems, and we are asking airlines to remove these problems in [a] time-bound manner,” Bhushan says. “It is our duty to ensure that nobody takes the shortcut on the safety front.”
The aviation regulator, however, has denied plans to cancel any carrier’s license or immediately shut down the operations of any airline.
“Please let there be no panic. The skies are safe,” Bhushan says, expressing confidence that the problems will be resolved soon.
India’s newly appointed civil aviation minister, Ajit Singh, also stood by the airlines, saying the government could suggest ways to ensure safety.
“There is no case to let airlines shut down for financial or safety reasons. We will not cancel licenses because even one airline winding up has repercussions for the entire industry,” Singh told local media.
Most Indian airlines have registered huge losses in the past few months because of high jet fuel prices, unprofitable operations and unpaid bills.
According to the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the country’s aviation industry suffered a debt burden of about $19 billion in 2000-2010 and $3.8 billion in the past three years.
Kingfisher, controlled by billionaire Vijay Mallya, has been among the hardest-hit as it canceled hundreds of flights late last year and grounded aircraft to preserve cash. It had $1.25 billion in debt at the end of June, and its auditors recently said it would need to raise funds immediately to continue operating.
On Jan. 6, two of its 13 lenders said that the company had defaulted on loan payments and that its debt had been classified as “substandard.” Money-losing national carrier Air India also is in the process of restructuring $3.4 billion of more than $7.6 billion in total debt.