Saturday, August 1, 2009
The Aviation Mess
Vijay Mallya is on every TV station whining about aviation regulations and taxes, all of which existed in exactly the same form when he decided to launch the vanity project that is Kingfisher Airlines. At the time, he brushed aside concerns about profitability, boasted about providing lavish service at reasonable prices, and looked forward to flying Airbus A380s to distant countries. Then he gobbled up AirDeccan, briefly changed it to plain Deccan, then to Kingfisher Red. None of it worked. The firm's been bleeding money at a rate of 1 million dollars a day for the past 18 months. Now he's going to the Centre hat in hand. He wants the government to get involved in private airlines while most frequent fliers wait for the day when Air India is privatised.
Meanwhile, an airline called Indigo, set up by promoters who prefer stay in the background, an airline run efficiently with clean, new planes, punctual service and budget fares , has managed to turn a profit in the harshest of times.
Here's the funny thing. We have, in India, an industry that suffers dreadfully from over-regulation and over-taxation: liquor manufacturing. Prices are extortionately high at the shop in most states and, in Bombay, the VAT on any glass of beer, wine or spirits sold in a restaurant just went up to a ridiculous 25%. Yet, alcohol manufacturers make good money, and Mallya makes more of it than anybody else. Enough to fund an F1 team that is stuck perpetually at the back of the grid.
So, rather than coming up with absurd ideas like a day-long strike, or asking for a state bailout, he ought to reflect on his own ill-advised business plan and, if he can't find a way to rectify matters, declare the airline bankrupt. It's been done before, you know. Remember Modiluft, Damania, East West?