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Kingfisher debate

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Such an airline (Kingfisher) deserves not just to succeed, but to be appreciated. No doubt, the high costs generated by government policies adversely affected all airlines; Naresh Goyal of Jet Airways is said to have lost his billionaire status and become a mere millionaire. Perhaps all the billionaires have learned their lessons, and perhaps the government has learnt, that killing a golden goose is no way to get eggs. If Kingfisher goes under, it will hit not only several hundred employees, but also a corner of India’s newfound self-esteem.

For the full essay by Sri T J S George in the New Indian Express, click here.

I have come across enough people taking potshots at Kingfisher and Mallya, and about how Mallya is desperately seeking a government bail out. This is inspite of Mallya, as well as other airline chiefs (as also many experts from the field of civil aviation), pointing out from long that, when they have to operate at over 85% average load factor to just break-even, there are many things wrong with the very fundamentals in the industry, and that all they are asking for is for the government to step in to effect the necessary correctives. And, if at all Mr Mallya was seeking a bail out, it is from investors across the world, to whom he is perhaps even prepared to hand over the management.

However, daunted by the constant propaganda of the corporate bashing pseudo-Socialists, the government's actions (like allowing foreign airlines to hold 49% equity, and import of aviation fuel), when they finally came, appear too late and too tentative, to be of much help, and it looks like an airline, which set altogether new standards, is sadly going to be going under.

This has been my stance on the issue all the while. Now that it is reiterated by a renowned Mallu (who are generally unfavourably disposed to the corporate sectorsmiley), I find myself validated.

Governmental bail-outs are what you see repeatedly in the case of Air-India; and there seem to be no end in sight to them, ever.

Muralidhar Rao

PS: I am also reminded of the times when similarly the then civil aviation minister almost single-handedly killed another good airline - Damania.

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murali772's picture

the cause of the distortion

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A recent study highlights the sea change in Indian aviation since 2000. Time was when only one airline went overseas; seven do today. The low-cost segment now hogs 70% of the market. Passenger traffic has more than trebled - from 42 million to 150 million. If that's small in light of a one billion-plus population, it's forecast that 452 million passengers will fly each year by 2020 and the country's fleet will have 1,030 aircraft. India, in short, will become the world's third largest aviation market - in less than a decade. - - - - Should we rejoice? Not if we consider debt-strapped Kingfisher Airlines's predicament.

To attract investors, aviation most of all needs a level playing field, supported by a transparent regulatory and tax regime. If AI can't do without coddling, it should be privatised. As for private players, a competitive churn should leave financially sound, professionally run and safety-conscious carriers standing, to the benefit of customers.


For the full text of the editorial in the ToI, click here.

Clearly a case of distortion of the rules of the game and consequent damage to the entire sector because of the presence of a PSU in the picture. This once again emphasises the need for the government to pull itself out of the role of a player, and concentrate totally on the more important role of the facilitator and regulator, that only it can play.
 

Muralidhar Rao

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