India's Akasa Air cuts flights as pilots quit, flags shutdown risk in court

BY Reuters | CORPORATE | 09/20/23 07:11 AM EDT

By Aditi Shah and VarunVyas Hebbalalu

NEW DELHI, Sept 20 (Reuters) - Indian budget carrier Akasa Air has been forced to cut flights in the short-term after many of its pilots quit abruptly, sparking a legal dispute in court where the company has warned that further resignations may even force it to shut down.

A small set of pilots "abandoned their duties" and left without serving their mandatory contractual notice period, causing a disruption of flights, but the airline is on course to invest in growing its operations and ordering more planes, CEO Vinay Dube told employees in an email on Tuesday.

Dube's email came on a day when the airline's counsel told a Delhi court that Akasa was in "crisis" and may shut down after the abrupt resignations, said a person with direct knowledge of the hearing.

Akasa told the court it cancelled 600 flights in August and would be forced to cancel up to 700 more in September if the resignations continue, the person added.

"We have chosen to fly less and give up market share ... these are only short-term constraints," he said, adding that the airline had "strong finances" and was confident of its future.

Akasa has dragged the pilots, many of whom have joined rival Air India Express, to court and initiated legal proceedings against the aviation regulator to enforce the notice period.

The notice period ranges between 6-12 months, depending on the pilot's rank, according to the aviation regulator.

"All our actions are aimed at creating a durable and reliable airline for the long run," Akasa said in a statement.

The distress call by Akasa comes at a time of deep polarisation in India's aviation industry with IndiGo, the country's biggest carrier, and Tata-owned Air India controlling nearly two-thirds of the market, while Go Air struggles to come out of bankruptcy and SpiceJet faces a funding crunch.

Founded by Dube and former IndiGo president Aditya Ghosh in 2022, Akasa saw its market share dip to 4.2% in August from 5.2% a month earlier, government data showed.

Akasa, which has 72 Boeing (BA) planes on order, ordered four more 737 MAX jets in June to further boost its international flying plans. It is on track to announce a new three-digit aircraft order before the end of the year, Dube said.

Dube said India's civil aviation ministry last week cleared Akasa to begin international flights and the government is working on the airline's request for traffic rights after which it can firm up the destinations it flies to first.

"Akasa is a well-run airline with strong finances and a solid plan," he said. (Reporting by Aditi Shah and Varun Vyas, additional reporting by Aditya Kalra; Editing by Louise Heavens, Christian Schmollinger, Kim Coghill and Bernadette Baum)

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