In what could be a major setback to Gurgaon-based market leader IndiGo airlines, the Bureau of Civil Aviation Security (BCAS) has suspended the licence of the aviation security training centre operated by IndiGo’s parent company InterGlobe Aviation. BCAS has accused the training centre of “complete breach of trust” on behalf of the training centre for having moved from computer-based system to pen and paper mode for the examinations without informing BCAS.
This means, till the time the training centre license of IndiGo remains suspended, the airline will have to outsource the training programme of its employees, an extra cost for the airlines. Civil aviation rules and regulations make it mandatory for all scheduled airlines to impart aviation security training to its security staff, cockpit and cabin crew either through their own BCAS-approved facility or any other similar authorised centre.
BCAS, which is the aviation security watchdog, has also issued a show cause notice to the centre seeking an explanation. BCAS found that having moved from a computer based examination to pen-and-paper examinations, the same set of question papers were repeated for many months by the centre while conducting the examinations.
According to an IndiGo spokesperson, the airline is already in contact with the BCAS and is confident of demonstrating "sufficient compliance to the satisfaction of the BCAS”. IndiGo spokesperson also said all other trainings are continuing, as scheduled, and there has been no change in the airline’s operations.
BCAS Order Warning that the licence could be suspended indefinitely unless there is complete compliance, BCAS chief Kumar Rajesh Chandra said this centre is barred from conducting any further security training programme for its employees. The BCAS order reportedly came in last week.
According to an agency report, BCAS examined the examination results conducted by the centre and found that for as many as eight batches, all the candidates got over 95 per cent marks. "As this aroused suspicion, an inspection was conducted and it was found that the centre was repeating the same set of question papers and so there was a leak of questions...Naturally, there was no training. This is what they were doing. That is why their licence has been suspended,” Chandra was quoted as telling PTI.
Why is the security examination important for airlines? The examinations allow the successful airline employees to act as airline security staff, a second line of defence required for screening the passengers and cargo getting into or offloaded from an aircraft.
Rough Weather
The suspension of training centre licence comes at a time when IndiGo is reportedly facing glitches and delay in its flights resulting in inconvenience to the passengers. On January 31, IndiGo reported 25 per cent decline in its net profit (year on year) at Rs 487 crore for the October-December 2016 quarter (Q3FY17), due to lower yield and increase in fuel cost. The company had profit of Rs 650 crore in the same quarter last fiscal.
While its total revenue for Q3FY17 did record 16.8 per cent growth to Rs 5,158 crore, its yields fell due to demonetisation. The company’s yield dropped to Rs 3.48 per kilometre in Q3 this fiscal, down from Rs 4 in same period a year ago, it said. Earnings before interest, taxes, depreciation, amortisation, aircraft and engine rent costs (EBITDAR) stood at 29.3 per cent in the reporting period against 39% in the year ago, same period. IndiGo said the operational performance impacted during the quarter primarily due to challenges faced by adverse weather conditions, ATC congestion at key airports and A320neo issues.
OTP Woes Having consistently being ranked poorly on the key parameter of On Time Performance (OTP), especially at the Mumbai airport, IndiGo has recently lodged a complaint with the Directorate General of Civil Aviation (DGCA), the sectoral regulator. IndiGo was ranked at third spot on OTP parameters for the month of October, 2016 and at fourth rank for the month of November, 2016 among the six domestic carriers. DGCA has already formed a committee to examine the entire calculation procedure used for calculating the OTP, particularly in Mumbai.
BW Reporters
Ashish Sinha is an experienced business journalist who has covered FMCG, auto, infrastructure, tourism, telecom among several other beats. Ashish has keen interest in the regulatory scenario impacting different sectors. He writes on aviation, railways, post and telegraph, infrastructure, defence, media & entertainment, among a wide variety of other subjects.
