bailout anyone..

Last week the private airlines in india decided to go on a strike to demand a "bailout" from the government.

well keeping in with what the developed capitalist world has been doing this was no surprise. only difference is in the capitalist world it is now the accepted norm that big business will get all the profits and bonuses and all the losses and delinquencies rest with the government. indian big business thought it was their right since they had after all funded the elections!!

sanity finally prevailed and the following reasons for the ills affecting the airline industry came out:

1. excess capacity (true capitalist tendency - where there are super profits everybody wants a piece of the action)

2. selling prices of tickets below cost - now who told them to do it?

3. high terminal charges - now these terminals are also private owned - just like these airlines they want to maximise their returns!! - so what are the airlines complaining about?

Well india has the lowest telecom tariffs with profitable companies to boot thanks to stiff competition and a decent enough regulator.

then why is the airline industry in the doldrums?

the reasons are not far to seek:

high infrastructure costs - terminal rights, pilots costs, high employee cost due to a wrongly perceived glamour quotient.

solution is simpler than the government or the private operators will ever accept:

1. have mulitple airports so that they compete for the business (at least in delhi NOIDA is an alternative) - in mumbai one can look at virar side?

2. set up enough pilot training academies so that pilots are available in plenty.

3. deglamourise the setup by mandating that only 50+people are stewards? :-)

of course nothing stops the airlines to come together to bid for future aiport projects in india or for that matter anywhere else in the world so that they can take out the guesswork of the future costs of terminal costs.

bad planning and execution points to a bailout and thats why there is a backlash waiting to happen in the US with respect to the bailouts from the long suffereing tax payer ==--

but then maybe not! for the tax payer has been the first beneficiary of the bailout scam - via the social security net for more than 8 decades!!

Long live the bailout? watch this column for more!!

note from author - oil is not considered as the author believes the same has to be additionaly taxed with a green tax - hence there is no scope for planning here by companies than to price their tickets to reflect the reality of cost.