Private airlines paying price for mismanagement
It is for the experts to chew upon as to how so many private airlines which began with a bang in the early and mid 1990s, have fallen on bad times, having to either curtail or close down operations. When the Indian skies were opened up to the private sector, it had seemed to be a new and promising beginning, for both the airlines and the fliers who had until then been limited to the choice of the staid national carriers, Air India and Indian Airlines. But soon enough, for varying reasons, early birds like East West Airlines folded up; Sahara and Jet came together and then went apart and then the former fell apart — or nearly has. Meanwhile, Kingfisher Airlines, among the most high-profile ones in the sector — an image largely derived from the larger-than-life persona of its promoter Vijay Mallya — is in the dumps, and from which it is unlikely to emerge soon.
Meanwhile, the latest addition to the casualty list is the budget airline, SpiceJet. For some reason, conventional wisdom had been that budget operators were neither likely nor supposed to face turbulence because they were relatively more cost-effective; some experienced fliers would even call them penny-pinchers. And yet, the now beleaguered low-cost SpiceJet has been cancelling flights because of a drastically reduced fleet strength. It is saddled with pending payments to lenders, lease firms and airports. If a knight in shining armour does not appear soon, to rescue it, SpiceJet is doomed.
Things had been going awry for the airline for some months now, but when it was sold off to the Tamil Nadu-based Kalanithi Maran there had been hope that the airline would turn around. That has not happened. Mr Maran has the choice of infusing massive capital to prevent the airline from being grounded. Unfortunately for him, he is facing troubles on other fronts which could hamper rescue efforts. He had an early indication of what lay ahead when he bought the near-sick airline in 2010, four years after it had begun operations. With its share prices going downhill since then, it appears that even raising capital is going to be a monumental task.
While it is true that private airlines are crippled by certain rules of the Government which appear to be tilted in favour of the national carrier, this alone cannot be the reason for so many private players being in trouble in the last decade or so. Gross mismanagement by private players, who were (and are) more focussed on their earlier businesses and the greed to expand without having the fundamentals in place, are the principal reasons for the present crisis. Continuing friction with the ground and flying staff (as was the case with Kingfisher Airlines) have worsened matters. The situation is ironical given that more and more people are flying today, what with the low fares that most airlines have been offering in a bid to change the travel habit of Indians, and tying up with foreign players to offer customers attractive options to fly abroad.