Reasons why Akasa Air is in a 'state of crisis'
Akasa Air has recently found itself facing a storm of challenges. The low-budget airline has been plagued by a mass exodus of pilots, resulting in the cancellation of 700 flights in August and 24 flights daily in September. It also revealed that it may have to cancel 700 more flights in September alone. However, the company recently said that they are prepared for "unforeseen circumstances and have contingency management strategies."
Reasons behind the mass resignation
The troubles at Akasa Air, founded by billionaire trader and investor Rakesh Jhunjhunwala, CEO Vinay Dube, and former IndiGo president Aditya Ghosh in 2022, began when a staggering 43 pilots abruptly resigned from their positions. What compounds the issue is that these pilots left without serving their contractual notice periods, which are six months for first officers and a year for captains.
Allegations and rivalry
Reports suggest that the departing pilots have joined rival airlines, deepening the crisis at Akasa Air. The airline's executives have expressed concerns over the ethical implications of these abrupt exits. Some pilots have claimed that Akasa Air violated their contracts by altering their salary structures. Additionally, the airline has pointed fingers at Air India Express, accusing it of luring away its pilots. The combination of these factors has created a challenging environment for Akasa Air.
Legal battles and financial woes
Akasa Air has initiated legal action against the pilots who left without serving their notice periods, seeking Rs. 22 crore in compensation. The airline has told the Delhi High Court that it is in a "state of crisis," raising the possibility of shutting its doors. This crisis threatens not only the airline's immediate operations but also its ambitious expansion plans. The airline's market share has already slipped from 5.2% to 4.2% in a month, according to DGCA data.
CEO remains optimistic
Despite the challenges, CEO Vinay Dube remains upbeat about the company's future. He assured employees in an email that the airline is on track to announce a three-digit aircraft order before the end of the year and urged them not to be alarmed by media headlines. Dube also highlighted that the Ministry of Civil Aviation has designated Akasa as an International Scheduled operator, allowing it to begin international flights.
