The penal action against IndiGo for precipitating the aviation crisis last year in December, which left thousands of fliers stranded by multiple flight cancellations and extended delays, turned out to be a mere slap on the wrist. After a detailed investigation into the episode — caused by IndiGo’s failure to be ready in time for the new flight duty time limitations (FDTL) regime — the directorate general of civil aviation (DGCA) last week announced a penalty of just ₹22 crore and merely issued warnings to a few key airline personnel.
The DGCA report should stoke concern in the airline’s boardroom and top management — it rules out any kind of systemic, procedural, or process failure or any acute shortage of personnel and almost entirely blames human negligence or incompetence, and indicts specific members of the airline’s top management, even ordering the removal of one. The IndiGo board is conducting its own investigation to determine and address the factors that caused the meltdown, and some tough decisions are expected, given the financial and reputational hit to the airline.
Some airline personnel believe the credibility of the board and the promoters now hinges on the actions taken; this alone can secure the future of IndiGo’s carefully built business. Failing to do this, they say, will lend credence to the airline’s estranged co-founder Rakesh Gangwal’s allegations of misgovernance; Gangwal had earlier said that the airline was being run like a paan (betel) shop.
The fact that IndiGo’s management and board are under scrutiny is confirmed by the DGCA’s order, which requires the airline to furnish a bank guarantee of ₹50 crore to ensure the implementation of reforms across four areas: Leadership and governance, manpower planning, digital systems, and board oversight. The regulator will release the guarantee in phases after verification of compliance. The guarantee is unprecedented in the sector.
There are three key areas where the airline and the authorities fell short of broader expectations. To begin with, the quantum of the fine amounts to barely three hours of revenue for the airline (back-of-the-envelope calculations). The airline’s share price rose on the day of the announcement, likely reflecting a market perception that IndiGo had got off lightly. There is a strong belief that airline management only understands the language of profit, leading many — aggrieved passengers and commanders included — to say that it should have been made to pay a fine that actually hurt. The official explanation, however, is that the airline has been fined the maximum prescribed penalty that the regulator is authorized to impose. A revision of prescribed limits is clearly needed. Furthermore, if exemptions are possible, exceptions (larger than prescribed penalties) should be too.
Next comes the airline’s choice of redress. After the flight cancellations, IndiGo offered a voucher of ₹10,000 to affected fliers, which stated that if accepted, the passengers would forfeit their right to any further claims against the airline for its failure to deliver as promised. Instead of mollifying passengers, this “gesture of care” raised the hackles of many since the sums that fliers lost exceeded the paltry amount offered by many multiples. The cascading effect of canceled weddings, holidays, and hotel bookings with no viable alternative flights or hotels available may be quantifiable to an extent, but missed funerals of loved ones and other such losses aren’t. And, those who did find alternatives paid ridiculously inflated amounts to reach their destinations.
Within days of the cancellations, the matter reached the Delhi High Court, which dismissed a petition to compensate all fliers four times the amount spent by them on full-price tickets that stood cancelled. The Supreme Court also refused to entertain PILs, arguing that the matter was already under adjudication at the high court level. Some aggrieved passengers, in the absence of an ombudsman for the sector, are planning to claim appropriate compensation in consumer courts, citing deficiency in service, harassment, and even unfair settlement terms. A class-action suit framework in litigation would have helped.
Finally, the question of when DGCA will lift the exemptions granted to IndiGo in the aftermath of the crisis and the FDTL norms will be implemented. in total still remains. On paper, this is February 10, and earlier this week, IndiGo told DGCA that it will not see the kind of disruption it did in December when that happens, but this writer learns that the airline will only be in a position to implement all clauses by April.
Still, the absurdity of the regulator being forced to over-extend its reach into the airline’s internal business cannot be lost on anyone. The episode also spotlights a monopoly’s confidence in its ability to game the system and not comply with norms. How far will this go? The regulator, to retain its credibility, must ensure the court’s directives on the enforcement of FDTL norms are complied with at the earliest.
While this crisis, orchestrated by the country’s civil aviation market leader, might have abated for now, it has revealed many inadequacies in the sector. It has reinforced the assertion that unless systemic problems are tackled, such crises shall recur. Almost like an aircraft flying into turbulence, India’s aviation ecosystem appears to have flown into a cloud of absurdity.
Anjuli Bhargava writes about governance, infrastructure, and the social sector. The views expressed are personal
