DGCA seeks independence of AI Express -Governance Now

DGCA seeks independence of AI Express

Aviation regulator suggested this after finding lack of understanding between Air India Express and Air India.

Sweta Ranjan | January 31, 2012

The Directorate General of Civil Aviation (DGCA) in its audit report has recommended that the Air India Charters Ltd (AICL), the company which runs Air India Express, be made an “independent airline without any interference from Air India (AI)."

The aviation regulator suggested this after finding lack of understanding between the two airlines -- Air India Express and Air India.

The report suggests, “Increasing interference by AI in affairs of AICL is proving detrimental in the overall growth of the airline. Also, dual control is neither in the interest of air safety nor allows independence.”
The regulator has suggested giving financial autonomy to the low-cost brand of AI operating in the international sector, Air India Express.

“From safety perspective, it is imperative that M/s AICL be given financial autonomy,” the financial audit report said.
According to the agreement the airline shares 25 percent of the revenue with AI, the parent company.
An official from the airline said, “The reason for this financial mess in AI Express is mainly due to the interference of the parent company. Due to AI Express dependence on its parent company for pilots and other administrative staff, the airline is suffering.

For good health of the Express, regulator has made various recommendations. “Airline should not be used as a training academy but as a commercial venture. There should be fixed tenure in cases of deputation from parent airline. Minimum period in respect of the training captains to serve the airline should also be defined.”
AI Express operates in West Asian and Southeast Asian countries with its base in central Kerala’s Kochi. The airline operates 204 flights a week connecting 14 international destinations.
AI Express has an equity base of Rs 30 crore. It operates 21 Boeing 737-800 aircraft (17 owned by the company and the rest on lease)

AI Express is also cash-strapped and has incurred losses of Rs 1,105 crore. The airline is likely to incur losses of Rs 430 crore in the current financial year and is burdened with a debt of over Rs 3,687 crore.

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