Turbulence in Indian skies

Amid all the gloom and doom in global financial markets, the Indian skies witnessed a major strategic deal, with Jet Airways and Kingfisher Airlines joining forces to survive the turbulent business environment. However, the alliance came under pressure, with Air Deccan founder Capt. Gopinath slamming the move and expressed the desire to buy back his low-cost carrier from Vijay Mallya. Though later Mallya pacified Gopinath and assured him that Kingfisher Red (erstwhile Air Deccan) will not be scrapped. Even government regulators started scrutinising the alliance for any anti-competitive elements despite receiving Civil Aviation Minister Praful Patel's blessings. Jet and Kingfisher invited Air India to join the alliance, but the latter termed the deal as cartelisation.

Separately, Jet announced that it was laying off 800 cabin crew employees as it tries to fight off the crippling downturn in the local aviation industry. The company also announced that it was planning to axe 1,100 more people from its rolls over the next few days, sparking widespread public outrage. Political parties like Mumbai-based Maharashtra Navnirman Sena and West Bengal's CPI too asked Jet to rollback the retrenchments and threatened to disrupt the companies operations. Petroleum Minister Murli Deora too lambasted Jet's move, saying it was a wrong call as it came just before Diwali. Jet management said the job cuts were necessary to cut losses and enable the airline to become more efficient. But, under pressure from several quarters, Jet chairman Naresh Goyal finally reversed the 800 job cuts and asked the sacked employees to rejoin the company.

There were reports that Air India was planning to send 15,000 non-operations employees on unpaid leave for up to five years. However, the Civil Aviation Minister denied such a move. Separately, Oil Minister Deora accused Jet, Kingfisher and Air India of defaulting on payments of over rs9bn towards the purchase of ATF from public sector oil marketing companies. The Ministry even threatened to stop fuel supply to these airlines if the dues were not paid up.

Separately, reports said that India's struggling airlines may cancel orders for new Airbus and Boeing planes as banks refuse to lend to unprofitable carriers amid the global tightening of credit. At risk are about 300 aircraft due to arrive in India in the next five years from Airbus and Boeing. Jet has already held talks about delaying Boeing planes, while Kingfishers Airlines has scrapped three Airbus o