Journal of Case Research vol: 1 issue: i

Federation of Indian : The Strike That Was Not

S.S. Ganesh1

“We have been appealing to the government for a long time but have received no response, even when most other sectors have received assistance. Our losses are no longer sustainable” – , Chairman of FIA

“Would the private airlines allow the government control in their organizations in case of a bailout as happened in other countries?” – One Senior Official from Ministry of Civil Aviation

“Huge sums of money on cricket teams, buying more planes than needed, buying other airlines. Is the public to pay for bad management practices?” – D Raja, CPI Leader

*******

Federation of (FIA) gave an ultimatum to the Government of to bail out the airlines lest they may stop their operations on 18th August 2009 as a token strike. This decision was communicated to the Government by the private airlines after a long meeting of the members of Federation of Indian Airlines except and Paramount Airlines. After the meeting, the members of FIA said that they would request other airlines including Air India, although Air India being the public sector and not party to the decision, to join the strike as it was natural for all airlines which suffer huge losses to seek Government support.

Speaking to the media on the Government support to airlines, Chairman of the Federation of Indian Airlines and Chairman of Airlines, Vijay Mallya said “We have been appealing to the government for a long time but have received no response, even when most other sectors have received assistance. Our losses are no longer sustainable.1”

Further, it was reportedly said that Chairman Vijay Mallya had even threatened to suspend flights "indefinitely" and close down Kingfisher Airlines if the demands of the aviation industry were not met by the government during the meeting held by FIA. However, Vijay Mallya, Chairman of Kingfisher Airlines, and Naresh Goyal, Chairman

1 Associate Professor, OB/HR Area, Xavier Institute of Management, Bhubaneswar, India – 751013 Email: [email protected]

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Journal of Case Research vol: 1 issue: i of , had said the suspension on August 18 was not a strike or ultimatum to the government.

Federation of Indian Airlines – An Introduction

Federation of Indian Airlines, as an apex body of airline industry comprising members in the full service and low-cost-carriers, took place during October 2006. The members of FIA are Kingfisher Airlines, Jet Airways, Air India, Go Air, Indigo, JetLite, Kingfisher Red, and SpiceJet. It acts as the voice of airline industry in India by providing platform to member airlines for consensus building in order to identify the core issues of the industry and to advocate its interests with regulatory bodies, government departments and other key stakeholders. The chief of all member airlines form the executive council of FIA which guides the affairs of the association through a full time permanent secretariat to carry out the varied activities of the association which will facilitate the growth in Indian aviation industry.

Key Issues Facing Indian Aviation Industry

According to FIA, the private airlines had incurred the cumulative losses of Rupees 10,000 crores (around $2 billion) in the year 2008-2009 (See Exhibit 01). The Indian carriers cumulative loss of $2billion dollar accounts for about 22% of the losses of global airlines which was estimated to be $9 billion by the IATA for the year 2008-20092. The $2 billion dollar cumulative losses of Indian carriers is also a magical sum considering the fact that passengers traffic in India during 2008-09 was estimated to be 122 million compared to 2341 million the world passenger traffic project by ACEXE3.

One of the key issues affecting airline industry in India is excessive price of Air Turbine Fuel (ATF) which caused the cumulative losses for domestic airlines since ATF accounts for nearly 40% of the operating costs of airlines. A position paper by FIA indicated that ATF price in India for domestic airlines shot up as high as 60% to 91% during the period between 2004 and 2007 compared to international ATF prices (See Exhibit 02) and the price of ATF for international flights in India was as high as 73% at during April 2007 compared to international price. In the position paper, FIA estimated that reduction in ATF price by 65% would result in higher operating profits to the extent of 25% and the annual saving for the

2 “Global Airline Losses to Hit $9 Billion in 2009,” Businessworld, 8th June, 2009. 3 “Air Traffic Trends: World Vs India,” Aviation Centre for Excellence (ACEXE), 2009.

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Journal of Case Research vol: 1 issue: i aviation industry would be $ 624 million if the government could rationalize the ATF price in India for domestic operations in line with the international prices.

According to FIA, the reasons for high ATF price in India are high customs duty (effective duty of approximately 20%), high excise duty at 8.24% and the absence of uniform sales tax on Air Turbine Fuel (ATF) across several states in India hover around 33% which not only adversely affect the financial health of the airlines and making airlines in India uncompetitive but also unattractive for equity capital and debt financing. For instance, during 2007, while Andhra Pradesh was charging the highest sales tax on ATF at 33%, majority of the states were charging sales tax on ATF ranging from 20% to 30% with few exceptions like Andaman and Mizoram having 0% sales tax on ATF.

FIA has been demanding a uniform sales tax rate of 4% across the country by notifying ATF under declared good category. The Ministry of Civil Aviation could not address the demand of uniform sales tax rate on ATF by FIA as it was under the purview of state governments. FIA recommended that the government should rationalize the tax structure; regulate the ATF base price, pricing mechanism, and competition; and also improve the ATF distribution infrastructure in order to improve the financial health of airline industry.

Besides the ATF tax issue, FIA had also voiced its concern regarding parking and airport usage charges in India and the new ground handling policy by the Government. FIA has reason to be apprehensive about the parking and airport charges which, according to FIA, are as high as 60% compared to the international airports and airlines industry has been losing money to the tune of $250 million every year.

Further, the proposed new ground handling policy for the Metropolitan and Greenfield Airports made the airlines to view the proposal as the last nail in the coffin of loss making Indian carriers as it would escalate the cost of the carriers by 30% to 40%.

Assistance or Bailout?

Private airlines’ demand for a bailout citing the examples of such moves in other countries during the global meltdown did not find any favour with the Ministry of Civil Aviation. For instance, one of the senior officials of Ministry of Civil Aviation argued “would the private airlines allow the government control in their organizations in case of a bailout as happened in other countries?4”

4 BS Reporters, “Pvt airlines to halt flights on Aug 18,” Business Standard, 1st August, 2009.

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While Jet Airways and Kingfisher Airlines incurred losses Quarter on Quarter basis, no-frills airlines like SpiceJet and Indigo5 made significant profit during the first quarter of the fiscal year 2009 (See Exhibit 03).

Ajay Singh, the director of SpiceJet, denied media’s claim on private airlines seeking bail out by declaring that “What we want is to get inputs and the various services for which we pay at international levels. These include aviation turbine fuel (ATF), ground-handling charges and landing and parking charges. We are not asking for a bailout at all.6”

The New Ground-Handling Policy

Ground-handling refers to all the work at airport premises relating to passengers, cargo and aircraft, except the engineering functions and catering, such as passenger check-in, baggage handling, boarding and disembarking passengers i.e. attaching the aero-bridge or ladder, aircraft cleaning, aircraft handling, fuelling, cargo handling etc. At present, many airlines carry out the ground-handling work for their airlines on their own, while some airlines have either outsourced it to Air India or private companies like Cambata Aviation.

The new ground handling policy was approved by the Government in February, 2007, which prevented the private airlines from undertaking the ground handling by self or through third parties in all the Metropolitan Greenfield Airports from 1st January 2009. The policy envisaged that ground handing in these airports with effect from the above date would be solely carried out by the airport operator Airports Authority of India (AAI) or its joint venture like International Airport Limited (DIAL) which is a joint venture consortium of GMR group, AAI and Fraport Eraman Malaysia. The subsidiary companies of national carriers such as Air India or their joint ventures specialized in ground handing will be allowed to carry out ground handling on the basis of revenue sharing with the airport operator like AAI or DIAL.

The new ground handling policy also permits the airport operators to choose any other ground handling service through competitive bidding on revenue sharing basis provided the ground handling agencies obtain security clearance from the government. The policy allows only domestic airlines to handle the ground services at the other airports i.e., non-metro

5 Being a unlisted company Indigo need not divulge its financial results to public. However, According to Centre for Asia Pacific Aviation, an aviation consulting firm, Indigo had made a net profit of 40 to 60 crore at the end of first quarter of the fiscal year 2009. 6BS Reporters, “Pvt airlines to halt flights on Aug 18,” Business Standard, 1st August, 2009.

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Journal of Case Research vol: 1 issue: i airports but prevent foreign carriers from deploying their own manpower or agencies for that purpose in any Indian airport.

Opposition to New Ground Handling Policy

The private carriers opposed the new ground handling policy not only for financial reasons but also for including passenger or terminal services like check-in services, arrivals, lost baggage, airlines lounges and transfers among various other services in ground handling policy. The airlines viewed these services as core customer care functions which act as the product / service differentiator to gain the competitive edge over the rival airlines. For instance, the full service carriers objected the above proposal as they are offering first, business and services for varying range of customer segments whereas the low cost carriers were up against the proposal as it is critical for them to use their own manpower to achieve quick turnaround time for their aircrafts.

On the other hand, the employees unions of both foreign and national carriers opposed the new ground handling policy due to apprehensions over likely job losses for around 50000 employees. The concerned unions of foreign carriers represented , and Saudi Arabian Airlines, while the national carrier’s employees formed an umbrella organization Civil Aviation Joint Action Force (CAJAF), comprising representatives from Air Corporation Employees Union and Aviation Industry Employees Guild, to fight against the new ground handling policy.

The Legal Challenge for New Ground Handling Policy

The foreign carriers’ employees union challenged the circular of Director General of Civil Aviation (DGCA) and Airports Authority of India (AAI), which prevented the foreign carriers from self ground handling, before the Bombay High Court as it would leave thousands of employees jobless.

In reply, DGCA clarified its stand through an affidavit in Bombay High Court that the decision to evolve a new ground handling policy was taken by the Government after careful deliberations in order to provide ground-handling services of international standards in a competitive environment, balanced by the paramount considerations of aviation safety and security.

It also argued that “upkeep, development and upgradation of the airport infrastructure require financial resources, which are to be raised from airport-related services such as ground

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Journal of Case Research vol: 1 issue: i handling. This ensures generation of income not only for the airport operator to maintain the infrastructure, but to ensure orderly growth and development of the airports. The airlines will have to select one of the ground-handling agencies selected through bidding by the airport operator. Competitive bidding ensures that the best-equipped ground handling agency is selected. This has been recognized all over as legitimate and efficient system of selecting the agency as the reduction in number of agencies doing ground-handling work will reduce “chaos and congestion” at the airports as currently, more than 50 ground handling agencies operate in India7”.

Is Security a Concern? Airport Security Vs. Job Security

The airport operators argued that allowing each airline to handle their ground handling separately gives raise to the security concerns at the Indian airports and the airport operators may incur huge losses in future if the charges are fixed at the current level of Rupees 8500 as the cost of providing ground handling service per aircraft may raise between Rupees 10000 and Rupees 12000 in the future. They also proposed a middle path to alleviate the concerns of airlines and their staff that they would absorb 80% of ground handling staff and buy out the airlines equipment which are three years old so that the jobs of ground handling staff are protected and airlines don’t lose money on their investment made in equipments to provide ground handling services.

However, the private airlines brushed aside the security concerns raised by the airport operators. They argued that the ground clearing staff members go through the regular security clearances and hence they would not pose any risk to the safety and the security of passengers or airlines. They also cited that there was no reason why India should not allow airlines to manage ground handling on their own as in US and many countries in Europe.

Similarly, CAJAF did not buy the idea of absorption of 80% of ground handling staff as they feared that even if they were absorbed by the airport operators, the terms and conditions of their employment may not be the same as the operators formed joint ventures as “private company” which does not require government approval in important areas like selection, wages, working conditions, assessing employee redundancy etc., besides demanding higher productivity from employees. For example, the proposed joint venture between Air India

7 ET Bureau, “Foreign airlines’ staff challenge new ground handling policy,” The Economic Times, 26th December, 2008.

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(NACIL) and Singapore Airport Terminal Services (SATS) was a private company with each company holding 50:50 stakes.

The Confrontation

CAJAF threatened an indefinite strike from 1st January 2009 if the Government went ahead with its plan of outsourcing of ground handling services. During December 2008, the CAJAF members gathered outside airport to protest against the new ground-handling policy when they learned about a meeting between civil aviation ministry officials, Air India executives and SATS executives. The protesters requested the SATS executives to leave the place and most of the SATS executives left the premises sensing the fury of the CAJAF members gathering, except its Chief Operating Officer (COO), Mr. Karmjit Singh. Consequently, there were some altercations between him and the protesters which led to the protestors manhandling Mr. Karamjit Singh and one of the executive directors of Air India before they were safely escorted to their vehicle by some sensible members of the CAJAF.

Delay or No Delay?

Mounting opposition from both the private players and the employees union, the new ground handling policy missed its first operational deadline and it was extended to July 2009 from the original 1st January 2009 deadline. On clarifying the reason for the delay, Praful Patel, the Civil Aviation Minister, told the media that multiple issues that needed to be resolved before implementing the new policy since the delay is due to National Aviation Company of India Limited (NACIL) which had not formalized the joint venture agreement (JV) with ’ ground-handling firm Singapore Airport Terminal Services (SATS). He also brushed aside the allegations related to major job losses to employees in ground- handling services as they would be mitigated by the new jobs that would be created.

However, the Civil Aviation Ministry could not implement the new ground-handling policy in July 2009 as the Ministry once again extended the deadline to December 31, 20098. Speaking to the media, the Civil Aviation Secretary defended the postponement of new ground-handling policy as he categorically denied any delay in implementing the new ground-handling policy and he also attributed the extension of deadline to abeyance in the

8 On the Dec 30, 2009, the Civil Aviation Ministry set off the deadline for implementing the new ground handling policy for the third time without mentioning a future date. Praful Patel, the Civil Aviation Minister, said, ““The implementation of the new ground-handling policy would be deferred for now. We will review the policy after inter-ministerial consultations shortly.” Source: “Policy on Ground Handling Being Deferred Again,” live mint, 30th December, 2009.

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Journal of Case Research vol: 1 issue: i exit of the private airlines from ground-handling due to their huge investments in ground handling equipments and the hired services of around 31,000 employees to provide such ground handling services.

Even as the civil aviation ministry extended the deadline of new ground handling policy, the Federation of Indian Airlines announced the token strike on 18th August 2009 to protest against the government.

Interventions from Finance Ministry and Civil Aviation Ministry

On being asked by the media to comment on the strike call given by the FIA over the ATF tax issue among various other issues including the new ground-handling policy, Pranab Mukherjee, the Finance Minister, said, “I will talk to the Civil Aviation Minister”.

The Civil Aviation Minister said that while the government understands the problems of the aviation sector which is an important sector for the overall development of the Indian economy, it cannot be a mute spectator to any inconvenience to the passengers caused by the private airlines. He also warned of appropriate actions by the DGCA to protect the interests of the public if the flight schedules of private airlines are disrupted due to the strike. While asked about bailout to private airlines, the Finance Minister categorically ruled out the possibility of government providing any financial help to loss making private carriers but announced that the ministry is open for dialogues with them to discuss and resolve any grievance which is reasonable and fair.

The Opposition from the Left

The government’s invitation to private players to engage in peaceful dialogue without taking a confrontative stand was profoundly criticized by the Left party especially by the senior CPI Leader D. Raja. He said that “it was alarming that private airlines issued a strike threat and puzzled to see the way the government has succumbed to the threat immediately and requesting them to come for talks.9”

D Raja described the bailout demand from the private airlines as unreasonable since the private airlines continue to incur losses due to their bad management practices as they spend huge money on cricket teams, buying more planes than needed, acquiring other airlines and paying high salaries to their owners and senior management personnel. He also questioned

9 “CPI leader seeks enquiry into pvt airlines’ demand for bailout,” Press Trust of India, 19th August, 2009.

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Journal of Case Research vol: 1 issue: i the logic of government funding the private airlines using the public money instead of advising the latter to cut the callous extravaganza and streamline their management.

However, the only area where he agreed with private airlines demand was the airport charges in Delhi, Mumbai, and Hyderabad airports, which account for nearly 80% of the passenger traffic in India. He said that the airport charges in these airports were higher than European airports since the private airport operators were charging monopolistic rates and were interested mainly in real estate operations. He also advocated that Airports Authority of India (AAI) should be allowed to build low cost airports in major cities to make air travel cheaper since the passengers have become the victim of both private airlines and private airport operators.

Is It The Business Model or The Apathy of Government?

Aviation industry experts would partially agree with the reasoning of the Left party as why the government should not bail out the loss making airlines as result of bad management practices. Albeit the demands of FIA for rationalizing the ATF prices, its tax structure and the opposition to government’s restrictive new ground-handling policy are seen as legitimate, the reasons as to why most of the airlines are in the red are to do with their business model, claim the experts. Over-optimistic projections of growth in aviation industry in India led to over capacity in many airlines at the cost of servicing multibillion dollar loans for buying or leasing out new aircrafts. As one CEO of a low cost airline put it, “many airlines were augmenting capacity through ordering hundreds of aircraft as if there is no tomorrow.10”

Further, the losses of full service carriers like Jet Airways and Kingfisher could be attributed to their acquisition of low cost carriers Sahara Airline and Deccan Aviation and rechristened them as JetLite and Kingfisher Red respectively. The acquisition of Air Sahara by Jet Airways was originally proposed in the year 2006 for $ 500 million (Rupees 2,300 crores) and went through rough weather before the deal actually materialized in the year 2007 when Jet Airways acquired the loss making low cost carrier Sahara Airlines for $ 450 million (Rupees 1,980 crores). Similarly, Kingfisher Airlines acquired 26% share for $ 135.5 million (Rupees 550 crores) in the loss making low cost carrier Deccan Aviation in May 2007 based on the advice of Accenture, which also drew the road map for the Air India and Indian merger. Later, Deccan Aviation was eventually merged with Kingfisher Airlines by increasing its share to 51% by the end of 2007.

10 Anjuli Bhargava, “Reconfiguring Jet Airways,” Business World, 31st August, 2009.

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Both Jet Airways and Kingfisher deals were not considered to be very successful at least in the short run. It was expected that the market share of Jet Airways would rise to more than 50% after the deal. The combined market share of Jet Airways and Air Sahara at the time of acquisition was 38% with Jet Airways having 30.4% market share. However, the Jet Airways and Air Sahara deal was not well received by the market as the market reacted negatively to the extent that Jet Airways share price fell by 30% after the announcement of the deal. The deal was considered to be a very expensive one and not worth the amount of money, management time, and effort it took to acquire the loss making carrier given the controversies generated by the deal as anti competitive before it was scrutinized and finally cleared by Director General (Investigation and Registration) of Monopolies and Restrictive Trade Practices Commission (MRTPC). Similarly, the market share of Kingfisher Airlines dropped to 10% in August 2008 (nearly 50% less) from the 18% in June 2007 after its acquisition of stake in Deccan Aviation and subsequent merger.

Industry experts are of the view that the acquisition of low cost carriers by the full service carriers was an attempt to monopolize the Indian aviation industry and the full service carriers did not believe in low cost aviation business model as they altered the nature of low cost carriers to mini full service carriers after acquisition rather than running them on the models of low cost carriers. For Example, when Go Air, the low cost airline, added to its flights during October 2008, the chairman of Kingfisher airlines Vijay Mallya ascertained that “If GoAir, which is the recent champion of low-cost carriers, is changing its model, it only proves what I have been saying for so long, that the budget carrier model cannot survive in India11.”

It is true that low cost carriers were going through a tough time in 2008 with mounting losses even as the chief executives of Spicejet, Indigo, and Go Air were leaving the airlines. However, despite the economic slowdown and high fuel prices, the low-cost airlines like Indigo and SpiceJet turned around under the new leadership and reported profit during the first quarter of the fiscal year 2009. The profitability of Indigo, SpiceJet and Paramount was attributed to their business model with a strong focus on cutting costs, optimizing operations by deploying aircrafts effectively with increased the passenger load per aircraft and maintaining high on-time performance while Jet Airways and Kingfisher where steadily losing their market share to low cost airlines like Indigo and SpiceJet (See Exhibit 04).

11 Aniban Chowdhury, “The flight of low-cost airlines,” Business Standard, 4th November, 2008.

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Considering that a smaller airline like Paramount Airways12 made profit during this economic slowdown makes a strong case to examine the business model of the loss making airlines to find an answer for recovery rather than attributing exogenous factors like high fuel prices and airport parking charges to their losses.

The Strike that Was Not

Even though the FIA had given the strike notice to the government that they would stop their operations on 18th August 2009, the airlines continued ticket booking through the travel agents which the travel agents associations confirmed as to none of the airlines asking them to stop booking tickets for the flights on the proposed strike day. More interestingly, the airlines too continued ticket booking for the day on their web portals and through their call centres.

On the very next day after the strike call by FIA, the Directorate General of Civil Aviation issued a notification asking the airlines to ensure that passengers get their money refunded if flights were suspended on August 18 and threatened legal action if they disobeyed. The release from DGCA said, “If the airlines do not confirm compliance within 48 hours, they may attract legal action as provided in the Aircraft Act/Rules and relevant regulations.13” The strike call did not receive support from any quarter like CAJAF, the trade associations of travel agents like Travel Agents Association of India (TAAI) and The Air Passengers Association of India (APAI). APAI appealed to the Prime Minister Manmohan Singh to declare air travel as essential service. It also planned to file a Public Interest Litigation (PIL) in the Madras High Court to force the government to take action against the airlines under the Essential Services Maintenance Act (ESMA).

Facing opposition from various quarters, the low cost airlines started announcing that they were not part of the strike. Indigo was the first airline to announce their decision to withdraw from strike followed by SpiceJet and Paramount Airways on the next two days. It was speculated that low cost carriers were upset with the full service carriers for giving the impression that the airlines wanted bailout package from the government that was never discussed during the FIA meeting. Ajay Singh, the director of SpiceJet, said, “We told the

12 Paramount offers only business class and operates with a fleet of just 5 Embraer aircrafts of 80 seat capacity which are spared from landing and parking airport charges as they are less than 40 tonnes in weight and entitles just 4% sales tax on ATF across the states. 13 BS Reporters, “Domestic airlines call off strike,” Business Standard, 3rd August, 2009.

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FIA that we will not be party to the strike. We want rationalisation of tax and made our point to the government.14”

Finally, the FIA was forced to announce that the strike was called off through a press release which read, “the strike is being withdrawn in view of the agitated public sentiment and potential inconvenience to thousands of passengers and the government’s willingness to enter into dialogue.15”

The Afterthought

Having called off the strike, Vijay Mallya, might be thinking along these as the Chairman of the prestigious Federation of Indian Airlines, the Indian Airline Employers’ Association.

· As the Chairman of FIA, could he have adopted some other strategy to bring all the airlines in India to support the strike on account of ATF and new ground handling policy issues irrespective of airlines category such as large-established Vs small-low- cost carriers, private Vs public carriers, national Vs regional players?

· Could FIA have forced all the member airlines as not to book tickets for 18th August 2009 in order to back up their strike call and send a strong signal to government?

· Could FIA have sought the support of associations and unions such as TAAI, CAJAF, APAI etc., to make the strike successful?

· Could FIA have executed their threat by actually carrying out the strike by defying the ESMA so as to make a strong case for regulating the issues related to aviation industry with immediate effect?

· Notwithstanding the failed strike, what should he do to establish FIA as an united and integrated airlines association in India which could turn around the loss making Indian airlines industry?

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14 BS Reporters, “Domestic airlines call off strike,” Business Standard, 3rd August, 2009. 15 BS Reporters, “Domestic airlines call off strike,” Business Standard, 3rd August, 2009.

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Case Review Questions:

1. Do you think the private airlines call for a strike is justified? Why do you think so?

2. Do you agree with FIA's argument that the absence of uniform tax on ATF across several states not only adversely affect the financial health of airlines and making airlines in India uncompetitive but also unattractive for equity capital and debt financing? Explain your reasons.

3. Do you think the Government should do or have done something to "bailout" or "assist" the private airlines in India? Give Your Reasons

4. How would you evaluate the efficacy of New Ground Handling Policy proposed by the Government from different stakeholders’ perspectives?

5. Do you agree with Mr. D. Raja's statement that the government has succumbed to the threat by private airlines and requested them to come for talks? Justify your reasons.

6. Do you agree with Mr. D. Raja's statement that the demand for bailout from private airlines as unreasonable since they continue to incur losses due their bad (inefficient) management practices? Justify your reasons.

7. What would you attribute as the reasons for the failed strike of FIA?

8. How would you rate the approach and efficiency of FIA, as an employer's organization, in regulating the affairs concerning airlines industry in India?

9. Since the interests of small, low-cost carriers seem to be different from the large- established airlines, do you think there is a possibility that the small and low-cost carriers may form a separate employers’ association to express their interests and regulate the affairs concerning their carriers? If it is possible, would it serve the purpose? Analyze the pros-and-cons of the need for a separate association for small, low-cost carriers in India.

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Exhibit 1 Profit & Loss Account of Key Private Airlines in India from 2006 to 2009 (All Figures in Billion Indian Rupees)

Kingfisher Airlines Jun '06 Jun '07 Mar '08 Mar '09 Sales Turnover 12.8542 18.0021 14.5628 52.6917 Other Income 0.5964 3.421 1.1362 5.989 Total Income 13.4506 21.4231 15.699 58.6807 Total Expenses 13.9886 20.6261 17.8146 58.2237

Operating Profit -1.1344 -2.624 -3.2518 -5.532 Reported Net Profit -3.4055 -4.1958 -1.8814 -16.0883

Jet Airways Mar '06 Mar '07 Mar '08 Mar '09 Sales Turnover 56.9373 70.5778 88.111 115.7115 Other Income 3.6674 3.1561 6.3724 4.4375 Total Income 60.6047 73.7339 94.4834 120.149 Total Expenses 42.6209 60.2066 80.56 109.6932

Operating Profit 14.3164 10.3712 7.551 6.0183 Reported Net Profit 4.5204 0.2794 -2.5306 -4.0234

SpiceJet May '06 Mar '07 Mar '08 Mar '09 Sales Turnover 4.1965 6.4044 12.9499 16.8945 Other Income 0.335 1.0784 1.4359 1.2409 Total Income 4.5315 7.4828 14.3858 18.1354 Total Expenses 4.8784 8.0608 15.5171 21.1278 Operating Profit -0.6819 -1.6564 -2.5672 -4.2333 Gross Profit -0.3469 -0.578 -1.1313 -2.9924 Reported Net Profit -0.4729 -0.6738 -1.3351 -3.5257 Source: Compiled from www.moneycontrol.com (as on 5th December, 2009)

Exhibit 2

Comparative Air Turbine Fuel Price between 2004 and 2007

(Figures in Indian Rupees)

Bangkok Singapore Kuala Lumpur Sharjah India 11,499 / kl 11,272 / kl 11,044 / kl 11,697 / kl 21,200 / kl April 2004 84% 88% 91% 81% % Differential 16,069 / kl 15,816 / kl 15,589/ kl 16,349 / kl 27,400 / kl March 2005 70% 73% 75% 67% % Differential 22,383 / kl 22,111 / kl 21,427 / kl 23,017 / kl 37,000 / kl March 2006 65% 67% 72% 60% % Differential 21,272 / kl 20,779 / kl 20,874 / kl 21,700 / kl 36,100 / kl March 2007 69% 73% 72% 66% % Differential Source: www.fiaindia.in (as on 5th December 2009)

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Exhibit 3

Quarterly Profit & Loss Results of Key Private Airlines in India from 2008 to June 2009

(All Figures in Billion Indian Rupees)

Kingfisher Jun '08 Sep '08 Dec '08 Mar '09 Jun '09

Sales Turnover 13.9766 13.2264 14.4783 11.0103 13.1354 Other Income 0.0698 0.3509 0.0428 2.6196 0.1077 Total Income 14.0464 13.5773 14.5211 13.6299 13.2431 Total Expenses 14.5195 19.0991 18.5608 14.4777 14.3113 Operating Profit -0.5429 -5.8727 -4.0825 -3.4674 -1.1759 Reported Net Profit -1.5787 -4.8325 -4.1339 -5.5431 -2.4271

Jet Airways Jun '08 Sep '08 Dec '08 Mar '09 Jun '09

Sales Turnover 28.6716 31.2134 30.2283 24.6565 23.7121 Other Income 0.3199 1.367 0.4024 1.0056 0.5715 Total Income 28.9915 32.5804 30.6307 25.6621 24.2836 Total Expenses 32.623 34.7187 28.5814 21.5838 21.8942 Operating Profit -3.9514 -3.5053 1.6469 3.0727 1.8179 Reported Net Profit 1.4338 -3.8453 -2.1418 0.5299 -2.2533

SpiceJet Jun '08 Sep '08 Dec '08 Mar '09 Jun '09 Sales Turnover 4.5719 3.4018 4.7235 4.1972 5.2469

Other Income -0.0104 0.2322 0.5566 0.4625 0.0973 Total Income 4.5615 3.634 5.2801 4.6597 5.3442 Total Expenses 5.7949 5.5492 5.1686 4.6151 5.0362 Operating Profit -1.223 -2.1474 -0.4451 -0.4179 0.2107 Reported Net Profit -1.2923 -1.9755 -0.1796 -0.0783 0.2634 Source: Compiled from www.moneycontrol.com (as on 5th December 2009)

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Exhibit 4

Performance Statistics of Key Domestic Airlines in India

During August 2009 Market Share (%) During April 2006

16 Indian Airlines 23.9 16.6 Jet Airways 34.9 18.7

Sahara 9.7 7.717

Deccan 15.2 --- 18 Kingfisher 8.3 22.6 SpiceJet 6 13.9 Go Air 1.6 5.7 Paramount 0.3 2.0

Passenger Load Factor (%) During August 2009 NACIL 59.8 Jet Airways 70 JetLite 72.9 Kingfisher (Kingfisher + Kingfisher Red) 68.7 Indigo 79.2 SpeciJet 73 Go Air 80.1 Paramount 84

On-Time Performance (%) During August 2009 NACIL + Alliance 81.5 Jet Airways 85.2 JetLite 78.9 Kingfisher (Kingfisher + Kingfisher Red) 85.8 Indigo 88.3 SpeciJet 81.3 Go Air 85.5 Paramount 87 Source: Compiled from www.dgca.nic.in (as on 5th December 2009)

16 Combined market share of NACIL after the merger of Air India and Indian 17 Combined market share of Jet Airways and Jetlite 18 Combined market share of Kingfisher Airlines after its merger with

79