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Tuesday, February 21, 2012

Airlines - not flying high........

For long, flying on air, remained an elusive dream for the Indian middle class.  There were times when people were awe-struck looking at an aeroplane from not so close quarters or heard the experience of others who had had an air travel – that was life-time experience ! – in late 70s, a scene of Plane landing or taking off was a novelty and much talked about in kollywood movies…..

The dawn of this century and a decade earlier, things changed much – there was the entry of private airlines, price wars, easier rules and suddenly airports became more flowing with traffic.   Earlier there was the Air Corporation Act of 1953 which provided monopoly of operations and this Act was later repealed.     In 1991 with Madhavarao Scindia several private airlines entered the playing field and some facilitated low cost flying of lakhs of Indians.   

Does one remember Damania Airways -  headquartered in Mumbai, that operated from 1993 to 1997,  promoted by the Damania brothers Parvez and Vispi.  They  started operations in 1993 with two leased Boeing 737 aircraft, connecting its base, Bombay, with Delhi, Calcutta, Madras, Bangalore, Goa and Indore. An additional two aircraft were leased later. The airline was extremely successful and was a big draw among domestic flyers in India due to its focus on good in-flight service. The Indian Government granted scheduled domestic airline status to nine private air-taxi operators including Damania in 1994.  The Chennai based NEPC group, owned by the Khemkas, after acquiring management control in Damania Airways renamed it as Skyline NEPC in May 1995.  NEPC Airlines and its subsidiary, Skyline NEPC, were grounded in 1997. The International Air Travel Association (IATA) suspended them for non-payment of dues following which they were taken off the computerised reservation system (CRS)

They are not alone – everyday  Kingfisher Airlines  is moving closer to that.  They once said that they would treat every individual customer royally and rolled out red carpets in Airports.  They had great looking flights, comforts, television screens in front of every seat, spent a lot on models and support staff – now everything seems to be nose diving down.   This week they were in news for a series of daily flight cancellations and pilot exits. Travel agents have also stopped taking bookings for the airline as they and passengers grow wary of how long the airline can continue its rapidly shrinking operations.  The cash-strapped airline is struggling to even pay its staff’s salaries, which has prompted up to 50 pilots to leave the airline in the past week alone. More than 300 pilots have reportedly left the airline in the past six months.

There are reports that the airline is now flying just 16 of its 64 aircraft  - whether it is due to bad management or bad business model or the sector itself is unprofitable is not understood easily by  outsiders like us.  The challenges and response makes it that KF is not all alone out there – Jet Air and Spice Jet have all reportedly been posting huge losses and the confidence of the customer stands vastly eroded. 

In such a scenario, when every airline is reported to be crumbling under pressure of high operating costs, fierce undercutting of tickets by rivals, and heavy debt loads – the future looks bleak and the travelling costs of the remaining players would only go skywards.  Already there are reports that some are exploiting the present difficulty of the stranded passengers by fleecing them higher amounts under the garb of high jet fuel.   There are also reports that the National carrier has been selling tickets below the cost to ensure the market share – which does not sound to be any logical strategy !   There have been calls to shut down Air India which is throwing on air crores of taxpayer money while indulging in wrongly conceived tactics.

The bank accounts of Kingfisher Airlines  have been frozen for non-payment of taxes, but  has now  blamed the Income Tax (I-T) authorities for its flight disruptions.  The airline, while deducting tax from its employees’ salaries, had stopped depositing it with the  Income Tax Dept forcing them to take stern action.  The lines  throws up its hands in the air and calls for milder action to allow flight operations in public interest.  The financial bail out seemingly looks a non-viable option and looks remotely possible. 

So the Air above looks  murky like muddled waters and all is not well !

Regards – S. Sampathkumar

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