KINGFISHER AIRLINES
Kingfisher Airlines, a subsidiary of the United Breweries (UB) Group, was an Indian airline under the leadership of Mr. Vijay Mallya as its chairman. Commencing its commercial operations on May 9, 2005, with an initial fleet of four aircraft, the airline’s motto was “Fly the Good Times.” Its inaugural flight operated on the Mumbai-Delhi route, marking the beginning of its efforts to revolutionize the flying experience for its passengers. Kingfisher Airlines made history by being the first airline in India to introduce in-flight entertainment systems on its domestic flights.
KINGFISHER AIRLINES EMPLOYEES’ UNION (KAIEU)
The Kingfisher Airlines Employees Union (KAIEU) was a trade union that represented the workers of Kingfisher Airlines. The union was formed in 2006 and was affiliated with the All India Trade Union Congress (AITUC).
The KAIEU was active in representing the workers’ interests on a number of issues, including wages, working conditions, and benefits. The union also played a role in negotiating collective bargaining agreements with the airline. Also involved in several incidents of employee unrest, including flight cancellations due to strikes and employees approaching the Labour Commissioner for unpaid wages. The operation of the union ceased in 2012.
WHERE IT WENT WRONG
Before Kingfisher Airlines even started, the airline industry was in trouble because the cost of fuel (like crude oil) was going up a lot, making it expensive to run airlines. Despite this, Vijay Mallya, the person in charge of Kingfisher, said it would be a top-quality airline. In the beginning, they offered really good service, which made them stand out from other airlines. But as fuel prices kept going up (imagine gas for your car getting really expensive), it was tough for all airlines around the world. In India, things were even harder because of strict rules and high taxes, even when fuel was expensive. This was also around the time when the world economy was not doing well, so fewer people were flying.
To solve some of these problems, Mallya bought a struggling airline called Air Deccan in 2007 (the deal finished in 2008). He did this so Kingfisher could start flying internationally because Air Deccan already did. Indian rules said airlines had to be around for at least 5 years and have at least 20 planes before they could fly internationally. So, Kingfisher started international flights in September 2008, just three years after they began. But the problem was that Air Deccan had lost a lot of money, and Kingfisher had to deal with those losses.
Experts said that before flying internationally, Kingfisher should have focused more on its flights within India and gotten stronger. Going up against big international airlines when they were already struggling wasn’t a good idea. As fuel and other costs went up, Kingfisher couldn’t make enough money, and they had to cancel a lot of flights. They owed a lot of money, about Rs. 7000 crore.
In early 2012, banks like SBI said Kingfisher wasn’t paying back its loans on time. So, many flights got canceled, and most of their planes couldn’t fly. By February 2012, out of 64 planes they owned, only 22 were working. Kingfisher’s share of the airline market dropped a lot.
Because they couldn’t pay their debts, the Income Tax department started freezing their bank accounts in March 2012. A group of travel agents was told not to sell Kingfisher tickets anymore by the International Air Transport Association (IATA). To stop losing more money, Kingfisher stopped all international flights. Pilots and engineers went on strike many times because they weren’t getting paid. The airline got smaller because they didn’t have enough money and their employees were unhappy.
They lost even more money in the June quarter because of planes they couldn’t use. They asked banks for a loan of Rs. 200 crore, but the banks said no. Their total debt was Rs. 7,500 crore owed to 17 banks, led by the State Bank of India.
Things got really bad when the aviation regulator DGCA took away Kingfisher’s license to operate on October 20, 2012. After that, they stopped flying completely. In February 2013, the Indian government took away their right to fly in India and internationally.
Kingfisher Airlines was done. They reported a loss of Rs. 754 crore for the quarter ending in September 2012. By March 2013, they had lost a total of Rs. 16,023.46 crore, which means their worth was in the negative. In the last quarter of 2013, they reported a loss of Rs. 822.42 crore.
It was clear that Kingfisher didn’t get enough attention from its leaders. Vijay Mallya had a big company with many different businesses, and it seemed like he wasn’t focused enough on running the airline. In the beginning, Kingfisher had a great brand, loyal customers, and a big network, but Mallya’s way of doing business, his planning, and lack of direction were all big problems.
PROBLEM FACES BY EMPLOYEES
The signs of trouble at Kingfisher Airlines began when, in November 2009, the company decided not to renew the contracts of about 100 pilots who had completed their probation. This was due to financial losses and a reduction in the airline’s operations. They also started cutting jobs gradually.
The situation worsened when the airline started missing salary payments to its employees. In March 2012, things came to a head when many pilots and staff members refused to work because they hadn’t been paid since the previous December. This led to flight cancellations and disruptions in operations. The airline blamed the tax authorities for freezing its bank accounts.
In April 2012, the crisis deepened as employees threatened to go on strike and demanded their salaries be paid within a day. They even asked the cricket team owned by Mr. Mallya, the Royal Challengers Bangalore (RCB), to boycott matches in support. Many employees didn’t report to work, leading to more flight cancellations.
During this time, many flight engineers quit due to unpaid salaries, and around 200 engineers protested by reporting sick in April 2012.
To address the situation, Mr. Mallya personally met with employees, including pilots and engineers, and promised to pay their pending salaries gradually. The employees, while skeptical, agreed to trust him and ended the strike. Some employees did receive their salaries after waiting for almost four months.
However, the problems resurfaced in May 2012 when some flights were canceled because pilots protested the non-payment of salaries. Allegations arose that only some pilots had received their salaries while others remained unpaid. In July 2012, more pilot strikes occurred because salaries hadn’t been paid for nearly five months. The airline claimed that more than 75 percent of employees had received their salaries and promised to pay the rest soon. This problem continued into the following month, with some employees protesting again over unpaid salaries, leading to further flight cancellations
By this point, Kingfisher Airlines had been dealing with a money problem for nearly a year, and they were facing a lot of labor issues. Things got much worse in September 2012 when pilots who worked on the most important routes in Delhi and Mumbai said they might stop working in protest because they hadn’t been paid. This was a big deal because these were key airports for the airline.
In early October 2012, a lot of Kingfisher flights from all airports got canceled because the engineers who were supposed to check the planes before they could take off refused to do their jobs. Many unpaid staff members protested at airports in Mumbai, Delhi, and other places, and because of this, the airline had to cancel more than 24 flights.
HOW THE STRIKE AFFECTED THE BUSINESS
- Operational Disruptions
The strike caused extensive operational disruptions. Pilots, engineers, and other staff members refused to work, resulting in the cancellation and delay of numerous flights. This not only inconvenienced passengers but also disrupted the airline’s flight schedules and operations.
- Revenue Loss
The strike led to a substantial loss of revenue for Kingfisher Airlines. With flights grounded or canceled, the airline was unable to generate income during the strike period. This further strained the company’s already fragile financial situation.
- Damage to Reputation
Negative media coverage of the strike, which highlighted operational issues, canceled flights, and employee unrest, had a detrimental impact on the airline’s reputation. Passengers, as well as potential customers, began to perceive the airline as unreliable and untrustworthy.
- Erosion of Customer Loyalty
Kingfisher Airlines experienced a significant erosion of customer loyalty. Frequent cancellations, uncertainty about future flights, and dissatisfaction with service quality caused passengers to seek alternative airlines for their travel needs. Rebuilding trust with these passengers proved to be a substantial challenge.
- Financial Strain
The strike exacerbated the airline’s already precarious financial situation. Kingfisher Airlines was struggling with mounting debt and financial losses even before the strike. The loss of revenue during the strike, coupled with the costs associated with addressing labor issues and fulfilling employee demands, worsened the financial strain.
- Uncertainty
The strike created an atmosphere of uncertainty that affected various stakeholders. Employees, customers, and investors faced uncertainty about the airline’s future. This uncertainty deterred potential investors and made it difficult for the company to secure the necessary funding to continue its operations.
- Operational Challenges
Resuming normal operations after the strike ended presented significant challenges. This included rebooking passengers affected by canceled flights, reestablishing flight schedules, and addressing the backlog of travelers who had been inconvenienced.
- Loss of Skilled Workforce
Many employees sought alternative employment during and after the strike due to uncertainty and non-payment of salaries. The loss of a skilled workforce, including pilots and engineers, hampered the airline’s ability to operate efficiently.
- Regulatory Scrutiny
Regulatory agencies subjected Kingfisher Airlines to heightened scrutiny due to the strike and the associated financial difficulties. These agencies closely examined the airline’s operations, financial stability, and compliance with aviation regulations.
- Cancellation of Routes
In an effort to conserve resources and address financial challenges, Kingfisher had to cancel several domestic and international routes. This contraction of its route network further reduced its revenue potential and market presence.
REPAYMENT OF SALARY BY KINGFISHER AIRLINES
After lots of talking and discussing, the pilots, engineers, and technicians decided to end their 26-day strike and go back to work. They agreed to accept the management’s offer to pay them for three months of work. The airline also promised not to punish the employees who went on strike and assured them that nobody would lose their jobs. In November 2012, Kingfisher finally paid the workers their April salaries. They started giving salaries to the employees in groups, with those who earned less getting their full pay for May.
KINGFISHER AIRLINES EMPLOYEES’ UNION (KAIEU) STRIKE
In June 2013, the employees received a shocking message from Mr. Mallya. He told a group of employees that they wouldn’t be paid. The employees asked for jobs in other parts of the UB Group, but their request was turned down. To make things worse, it came out that the airline had taken taxes from the employees’ salaries but hadn’t given that money to the tax authorities.
Left with no other options, the employees decided to take more extreme measures to get their unpaid salaries. They went on a hunger strike to get more attention from the media. They also filed a criminal complaint with the police against the management. Additionally, they reached out to the Prime Minister’s Office (PMO) to ask for help, this time seeking support from other trade unions. They even approached political parties to mediate in the matter. The union at Kingfisher Airlines was trying everything to get support from every possible direction. Women employees wrote an open letter to Mr. Mallya to express their frustration.
They also wrote an open letter to the cricket team requesting the players to distance themselves from Royal Challengers Bangalore (RCB).
The employees sought help from the Regional Labour Commissioner (RLC) in New Delhi to intervene in the issue of unpaid salaries.
It was reported that more than 75 percent of Kingfisher employees had already found other jobs by this point, but many had to accept lower salaries. Some who were still with the company had to take on part-time jobs and were struggling financially. Those with part-time jobs couldn’t get their income tax refunds because the Income Tax department was using that money to cover the taxes that Kingfisher hadn’t paid. Many employees couldn’t find any alternative jobs at all.
At the same time, according to the annual Kingfisher report, the CEO at the time, Sanjay Aggarwal, received around Rs. 3 crore in 2013. While Kingfisher employees were fighting for their basic rights, Mallya was receiving substantial salaries from the airline, totaling Rs. 33.46 crore each in 2011 and 2012, as reported in the annual reports. The investigating agency also mentioned that Vijay Mallya had taken loan amounts for his personal use, which was against the rules. The Central Bureau of Investigation, in its charge sheet against Mallya, stated that Kingfisher Airlines had allegedly used Rs. 263 crore from a Rs. 900 crore IDBI loan for personal purposes.
According to a report from March 2016, there were still approximately 900 employees technically listed as employed by Kingfisher Airlines. These employees were collectively owed around Rs 300 crore in unpaid salaries dating back to 2012. While creditors had begun the process of selling Kingfisher’s assets and brand to limit their own losses, the chances of employees recovering their overdue salaries appeared grim.
SOLUTION
In resolving labor problems in Kingfisher Airlines, they should have followed the following steps
· Open Communication
Establish open and transparent channels of communication between the management and trade unions. Regular dialogues and meetings can help in understanding and addressing the concerns of the employees.
- Collective Bargaining
Engage in collective bargaining with the trade unions to negotiate fair employment terms, including salaries, benefits, and working conditions. This can help in reaching mutually agreeable solutions.
- Mediation and Conciliation
If negotiations stall, involve a neutral third-party mediator or conciliator to help bridge the gap between labor and management. These experts can facilitate discussions and propose compromises.
- Compliance with Labor Laws
Ensure that the company complies with all labor laws, including the Trade Unions Act of 1926. Compliance will help build trust with employees and avoid legal issues.
- Conflict Resolution Mechanism
Establish a formal mechanism for resolving disputes quickly and fairly. This can include internal grievance redressal committees or an ombudsman.
- Employee Welfare
Invest in employee welfare programs, such as healthcare, insurance, and training. A satisfied workforce is less likely to engage in strikes or labor disputes.
- Financial Transparency
Provide transparency regarding the company’s financial situation. If there are financial constraints, communicate these clearly and explore options together with the unions.
- Job Security
Guarantee job security to the extent possible. Assure employees that their jobs are safe and that the company is working on a plan for long-term sustainability.
- Skill Enhancement
Offer training and skill enhancement programs to improve the employability of workers, both within and outside the organization.
- Employee Participation
Encourage employee participation in decision-making processes that affect their work and job security. This can help build a sense of ownership and commitment.
- Legal Compliance
Ensure that any actions taken by the company, such as layoffs or downsizing, comply with labor laws and regulations. Seek legal advice if necessary.
- Documentation
Keep thorough records of all interactions, negotiations, and agreements with trade unions. This documentation can be valuable in case of future disputes.
- Alternative Dispute Resolution (ADR)
Consider using ADR methods like arbitration or mediation to resolve disputes more efficiently and privately.
- Long-Term Sustainability
Develop a long-term plan for the company’s financial stability and growth. Involve employees in discussions about the future of the organization.
- Government and Regulatory Engagement
Engage with relevant government authorities and regulatory bodies to seek assistance in resolving labor issues, if necessary.
CONCLUSION
The Kingfisher Airlines saga was a tough time for its employees. They faced unpaid salaries and an uncertain future. Despite their efforts, many employees couldn’t recover the money they were owed.
This situation highlights the need for fair treatment of employees in any industry. It’s a reminder that taking care of workers and resolving labor issues promptly is crucial. In the case of Kingfisher Airlines, the employees suffered the most, and their stories should serve as a lesson for businesses and regulators to protect workers’ rights in the aviation sector and beyond.
