Airlines... The contradiction

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The huge debate recently was whether the government should bail out Kingfisher Airlines? The counter argument, spearheaded by Mr Bajaj, is that in a democratic (read, capitalist) environment the private sector needs to fend for itself. Companies that are unable to manage the business intricacies should be allowed to sink. The Government as well as majority of the people don't think that tax payers' money should be used to save a plunging private company.

Got it... The tax payers' money should be spent on developmental projects and for the overall uplift of the country... a country in which 25% people are below poverty line... which as per the latest planning commission report stands at Rs 32 per day. And anyways, Airlines as an industry can never fall in the ambit of the set of industries or sectors where the Government would like to invest. It is an industry for the elite, for the crème de la crème and definitely not for the masses.

I am sorry but am I missing something here...

Air India, last I remember, is a Government funded organization operating in the Airlines industry. It has a debt of only Rs 42,000 crore which seems to be much lower (taunt intended) than Rs 7,000 crore of Kingfisher. Air India reported an operating loss of (brace yourself) Rs 22,000 crore in the year ending March 2011 while Kingfisher (the evil of all evils) reported a earth-shattering Rs 469 crore for the second quarter just ended. Statistically, just the one year of Air India’s loss can pull 2 crore people out of poverty or can be used to put up a 1000MW Nuclear power plant. In terms of utilization of resource, while Kingfisher operated at a ‘pathetic’ 75% load factor, Air India had an extremely ‘royal’ 22%. Finally from the customer’s viewpoint, Kingfisher has mostly been one of the most preferred airlines while Air India the least preferred one.

I am a tax payer and I don’t think it requires Einstein’s brains for me to decide where I would want my money to go. We cannot preach double standards. Government either invests in the Aviation industry or not, but it cannot be that it invests in the whirlpool called Air India which keeps sucking in cash like Pakistan cricketers and preaches social commitment and better utilization of tax-payers’ money when it comes to salvaging Kingfisher.

Policy by convenience. At least I am not convinced. Are you?

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