• Special Report
  • Chhattisgrh
  • Ailing airlines: Victim of the government’s meddling hand

    By now, almost every industry analyst has begun to write-off Jet Airways. Jet had big dreams. It had benefitted from many favourable government policy decisions – right from being granted favourable slots to having a policy crafted by the government which allowed its vessels to fly overseas.

    But then, like so many industries which were once backed by government favours and largesse, Jet also fell.  A similar fate could afflict Air India as well. It remains the biggest beneficiary of government largesse. It should have been privatised or even closed down long ago. Yet it survives, burdening taxpayers with more write-offs. That could be because it would not have suited the privileged.

    Ministers get upgraded to first class automatically without having to pay for it. Ditto for senior government officials and select national award winners. Such benefits would not have automatically been extended to them by private airlines. The payment terms would have been more transparent.

    And yes, occasionally, you have the unsavoury incident of an award winner flying executive class after paying economy class fares, yet billing clients’ business class fares for reimbursement. And you also have elected representatives beating up airline crew (and breaking their spectacles) without even being jailed for violence – a cognisable offence. Such opportunities too might have been denied by private airlines.

    The price at which planes were bought, the manner in which ministers were not even charge-sheeted, even though there was court documentation overseas of bribes being paid to the aviation minister, were matters that successive government have sought to overlook – unless of course political considerations demand that the person be called a crook, and media hype against him orchestrated accordingly.

    In fact, the airline industry in India remains one sector where the heavy hand of the government is constantly visible – right from granting licences, to framing policy, to even granting bank loans. When an airline does fold up, eventually, it could mean that the promoter has fallen out of favour – politically.

    Logically speaking, neither Kingfisher nor Jet should have faded into the sunset. They were favoured airlines. They got more money from banks than warranted. That is how Kingfisher and Jet could notch up outstanding over Rs 5,000 crore and 8,000 crores respectively.

    Someone twisted the arms of bankers without any written orders. Somehow, when the airline promoters fell out of favour, the bankers were left holding the sack. And – as always – the common man will eventually pay the price through higher bank charges and additional taxes. Did someone talk of transparency and ease of doing business?

    Look at the table alongside. There was growth in passenger traffic – both domestic and international. Airlines don’t normally fail when demand growth is strong. Yet, it happened in India. One factor could be the way the government chose to price aviation turbine fuel (ATF).

    As a CARE Rating report points out, during FY 2019, the price of crude oil decreased “by 7.3% whereas the price of ATF during the same period has gone up by 3%.

    This clearly indicates the entire benefit of reduction in crude prices is not passed on to the industry even though an increase in prices is more dynamic. This despite the Government reducing excise duty on ATF by 3% from 14% to 11% in November 2018.”

    The table shows how ATF globally was much cheaper than ATF in India. So flying overseas would allow an airline to purchase ATF at cheaper prices. That could lower costs for some routes. Logically, therefore, airlines flying overseas should have made more money. But Jet obviously didn’t.

    Was it because the political price for this favour became too high? Maybe, forensic examination of Jet Airways’ books will reveal some details. But it is best not to count on it. The ways in which governments make disclosures are usually strange and mysterious.

    That is why CARE Ratings’ recommendation is important, “There is an urgent need to address this difference in the price of ATF for domestic and international airlines as it gives an advantage to international airlines.” Sadly, even a government that called itself nationalistic, could not even the pitch in favour of domestic airlines! This could happen to domestic coastal shipping too (http://www.asiaco nverge .com/2018/10/indian-shipping-grows-overseas-not-in-india/).

    So what does the future hold out for the remaining airline survivors? A lot will depend on whether the new government continues to create policies that favour select airlines. Logically speaking, the reduced competition – thanks to Jet Airways’ demise – could translate into improved airfares.

    That could mean better profits. But then logically speaking increased passenger traffic should not have allowed Jet Airways or Kingfisher to collapse. Logic does not always work with the airline industry in India. The heavy hand of the government is always visible.

    The writer is consulting editor with FPJ.

     

NATIONAL

  • BJP leads in all five seats of Uttarakhand

    Dehradun: The Bharatiya Janata Party (BJP) candidates in on Thursday consolidated their leads in all the five seats in the states, vote count trend showed.

    In the five seats, the BJP was leading by more than 60,000 to 1.25 lakh votes against the Congress. BJP state President Ajay Bhatt was leading by 1.15 lakh votes against Congress General Secretary and former Chief Minister Harish Rawat from Nainital seat.

    In Tehri, Maharani Mala Rajya Laxmi Shah of the BJP was leading by more than 87,000 votes against state Congress chief Pritam Singh. In Pauri, BJP national secretary Tirath Singh Rawat has increased his lead to 1.24 lakh votes against Congress’ Manish Khanduri, son of BJP stalwart B.C. Khanduri.

    In Haridwar, BJP candidate and former Chief Minister Ramesh Pokhriyal Nishank was leading by 62,000 votes against Congress’ Ambrish Kumar. In Almora, BJP’s candidate and Union Minister of state for Textiles Ajay Tamta was leading by 79,000 votes against Congress candidate Pradip Tamta.

WORLD

  • 9 die in western Mexico shootout, official slain in south

    Mexico City: A shootout between rival gangs in western Mexico killed at least nine people and wounded four, authorities said Wednesday.

    Prosecutors in the state of Michoacan said the confrontation occurred near the city of Uruapan. They did not identify the gangs involved, but the Jalisco cartel and a small gang known as the Viagras have been active in the state.     Assault rifles were found at the scene. Also Wednesday, authorities said gunmen killed a city official in the southern state of Guerrero.

    The state prosecutors’ office said in a statement that Simón Gama García was exercising Wednesday morning when two people approached and shot him. He was identified as secretary-general of the town of Coyuca de Catalan. Prosecutors released an image showing forensic investigators examining the scene with evidence markers on the ground near a bicycle.

    Killings of Mexican political officials rose in 2018, an election year, and then tapered off, but are still not uncommon. On April 25 a mayor and two others were slain in the Gulf coast state of Veracruz. The previous day a mayor was kidnapped and killed in Michoacan. Overall homicides in Mexico were up 9.7% in the first quarter, compared with the same period in 2018.

Technology

Top