BAILOUT BLACKMAIL???

airlinestrike_gfx3Economic recession is bogging the whole world and we see every other day companies coming out asking for the governments to bail them out. Many have succeeded too. The latest one to demand for a bailout is Kingfisher and Jet airways who held a press conference today and announced that they will be discontinuing their services on August 18th in an attempt to get Government’s attention.

Everyone knows that the Aviation industry has been going through rough times but it’s so absurd and shocking to see a private airliner call for a press conference and simply say that they will be suspending operations for a day. Nowhere in the world have any private airlines demanded for a Govt bailout and today we see Kingfisher and Jet holding people to ransom. To put it in simple terms they are trying to blackmail the govt. I know that they have been bleeding but there are better ways to handle the situation.

The private airliners say that they are unable to bear the high operating costs anymore and they may be justified in some sense since ATF prices in India are the highest in the world and there is huge disparity in the taxes from state to state ranging from as low as 15 % to 60
% of the operating costs. Vijay Mallaya said to be the King of Good times has no right to demand for a bailout. On one side he sponsors shows like Fast & Gorgeous and has an F1 team of his own which is not needed in times of recession and on the other hand he says that they have been facing huge losses.I know that these are 2 different businesses but still they have the same owner.

I would like to state some figures at this point. In 2003 there were 122 aircrafts and now we have 322.Thats two fold increase in just 6 years. Another figure which shocked me was that in 2009 350 flights have been ordered compared to just 2 in 2003. So the crux of the problem is that these private airliners have just gone about expanding their businesses mindlessly. The interesting point to note is that only 2 of the many private airliners have decided to go on a strike. Spice jet and Indigo have infact posted profits in the last quarter. So why is that only Kingfisher and Jet are facing problems. The ATF prices are the same for all the airlines to the best of my knowledge. Its just that some businesses are managed better than others. On 18th only domestic flights would not be operating and international flights will be running as usual because if they don’t then they will have to bear serious consequences as other countries are very strict in these issues

Kingfisher airlines has the best service in private airlines and I congratulate them for that but who asked them to have tickets priced at a much lower rate than what the market rate. At one point of time airline tickets were cheaper than train tickets which is stupidity. The key to succeed in the airline industry is how you are able to keep the operating costs to a minimum and some less known airlines have been able to do so then why not Jet and Kingfisher. Mallaya might be known for his business acumen but I am afraid he has not managed his airline business in a way it is expected to.

The sad part in India is that customers are the ones who are put to trouble. No one cares for what we go through. Passenger protection laws are not tight enough in India. That’s the reason why you see an airline come out and say we won’t operate on so and so day and we can’t do anything about that. The timing of the strike is also very important. It is right after a long Independence Day weekend and many people might have already made plans which now have to be looked into after this announcement. More than a bailout what the Private airlines are trying to do is to defer the payments that they have to make to the oil companies. 1 year back Praful Patel, honourable minister for aviation had to meet the oil minister to request the oil companies to give these airlines a 1 year period to pay out their dues. That deadline is coming to an end soon and I see this as a tactic to extend that period further. Kingfisher owes 950 crores to oil companies. The important question to be put here is why should the tax payer’s money be used to bail out an airliner which has not managed its business well enough. The government needs to step in and resolve the problem as soon as problem so that consumers don’t have any problem at the end of it and not succumb to these tactics of private airlines.

2 thoughts on “BAILOUT BLACKMAIL???

  1. It is a clear thing that if government won’t cut taxes private airlines providing a cheap air journey is impossible.It is not blackmail.They are asking for their rights.

  2. They clearly told in the press conference that they wanted a bail out. Govt bailing out private airlines is completely unheard of anywhere in the world…Taxes yes u can negotiate with the government but the question to be asked is why only jet and kingfisher came out asking for help..How come Indigo and Spicejet posted profits in recent quarters..It is the management which is to be blamed .. People are used to saying that public sector companies are not managed well but for a change we see here even private companies on the same boat as PSU’s

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