Bad miscalculation by India’s private carriers

Jet Airways A330-200.jpg

India’s privately owned carriers miscalculated when they threatened to go on strike on 18 August.

After announcing bravely on Friday that they would stop operations in protest against the lack of aid from the government, several of their members got cold feet and started to break ranks over the weekend. The civil aviation ministry also took a firm stand and the Indian public was clearly against the move. That left Kingfisher Airlines and Jet Airways the only ones standing, and they unsurprisingly decided to call it off the plan.

The man who probably gave the best perspective on the issue was G.R. Gopinath, founder of low-cost carrier Deccan, which was sold to Kingfisher last year. Yes, his airline was bleeding money and possibly did not have the best model either. But he sure makes a lot of sense.

“Airlines are doing this as a gimmick or as a tactic to attract the Government’s attention but they are to be blamed for a large extent,” he told India’s CNN-IBN station (see video below). “They know the reality: airport infrastructure is costly, oil prices are high. But they started a business and took a risk.”

He also had hard words for the state, saying: “The Government, in the interest of a vibrant airline industry and in the interest of passengers, must come up with a long-term strategic vision for the industry. The airports have been privatised and become a monopoly. Airport infrastructure is insufficient, aviation fuel price is highest in the world.”

At the end of the day, the Indian airlines have to realise that they have to come up with a sustainable business model. The reality is that few of them have one. Yes, the government can help. But until the airlines help themselves, very little can be done to save them.

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2 Responses to Bad miscalculation by India’s private carriers

  1. Kinbin 4 August, 2009 at 10:09 am #

    Any national reserve of funds would probably be used to arrest any bleeding at AI, given its status as national carrier. Ain’t that a common thread of national lifelines limited only to national airlines?

    Obviously, Goyal has loads of accumulated air ticketing agency commissions remaining, while Mallya possesses a gross over-stock of bio-fuels that he doesn’t know how to better utilize as well.

    The current business climate remains a great natural shakeout, and an aphrodisiac for separating “the boys from the men”.

  2. Siva Govindasamy 4 August, 2009 at 10:24 am #

    Some of the big boys in the Indian airline industry might object to being called, well, boys!

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