Why Rakesh Jhunjhunwala-Backed Akasa Air May Shutdown - Here's What You Need To Know

Just 13 months after it launched in August last year, the Rakesh Jhunjhunwala family-backed Akasa Air seems to be heading towards a shutdown.

What's Happening With Akasa Air?

Akasa Air

The airline is in a ¡°state of crisis¡± and it ¡°may shut down¡± due to the abrupt resignations of 43 pilots to join rival airlines, Akasa Air has told the Delhi High Court on Tuesday.

The sudden exits of these pilots, who did not serve their mandatory notice period of six months (for first officers) or one year (for captains), have forced the carrier to cancel 24 flights per day in September (to date), its counsel told Justice Manmeet Pritam Singh Arora.

Where Are Akasa Air's Pilots Going?

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Akasa Air's pilots have joined rival airlines, primarily Tata Group-run Air India Express, as per a Business Standard report. Sources in the know said that a senior Akasa executive had, in a recent communication to top representatives of a rival group, expressed his concern over the pilots' exit without sufficient notice, calling it unethical.

Akasa, which operates about 120 flights a day, is expecting to cancel 600-700 flights in September if resignations continue.

¡°We cancelled 600 flights in August,¡± counsel said, requesting the court to empower the Directorate General of Civil Aviation (DGCA) to enforce the rules regarding the mandatory notice period.

Counsel for the DGCA expressed helplessness, stating that the regulator could not take action on this because the rules regarding the mandatory notice period had been challenged by the pilot unions in a court case.

The unions, whose representatives were also present in the court, opposed Akasa Air¡¯s petition, stating that the matter regarding the notice period was not a regulatory one but a contractual issue between the pilots and the airline.

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Akasa Air¡¯s counsel said the entire ¡°contractual gamut¡± between the pilots and the airline was not the subject matter of its petition.

¡°It is only the notice period that is implicated in this (petition) and nothing else. We are seeking to enforce only the notice period. No one is denying that there is a state of crisis today and there needs to be a solution. The DGCA fairly agrees that there is a crisis and is saying that if this honourable court gives direction and guidance, they (DGCA) will comply with it,¡± the airline¡¯s counsel said.

¡°It takes seven-eight months to train pilots. Pilots cannot be replaced easily and quickly,¡± counsel told the court.

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Why Akasa Air May Have To Shutdown

akasa air/twitter

¡°The DGCA does not respond. Our suggestion is not being considered. What do we do? We, privately, have taken action against individual pilots in the Bombay High Court, which we have disclosed. In the Bombay High Court, the pilots come and say that ¡®we (pilots) have already joined another airline¡¯ so there can be no interim relief passed. Very well. That route has also been exhausted. But this situation can¡¯t continue because the public is being inconvenienced. It can have a cascading effect across the industry. The airline may shut down,¡± counsel said.

While the petition in the Delhi High Court is against the DGCA, in the Bombay High Court case it is against the 43 pilots. In that case, the airline is seeking significant compensation from each pilot, reaching crores of rupees, citing ¡°operational losses¡± and damage to the airline¡¯s reputation due to the flight cancellations resulting from their premature departures.

The judge told the DGCA to file its submissions before Friday. It has also allowed two pilot unions - the Indian Pilots Guild and Federation of Indian Pilots - to file their replies before the next hearing.

At present, Akasa Air maintains a fleet comprising 20 B737 Max aircraft, while Air India Express possesses 26 B737 planes.

Also Read: Anand Mahindra Tweets About Rakesh Jhunjhunwala's 'Most Valuable & Profitable' Investment Advice

How Much Have Jhunjhunwalas Invested In Akasa?

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Late investor Rakesh Jhunjhunwala had invested $50 million in Akasa Air in 2021. The Jhunjhunwala family has a 40 per cent stake in Akasa Air, as per various media reports. In July this year, the airline¡¯s founder and CEO Vinay Dube said that Akasa Air is a long-term investment for the Rakesh Jhunjhunwala family and his asset management firm Rare Enterprises.

Also Read: Remembering Rakesh Jhunjhunwala On His First Death Anniversary

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