Confucius said, “Wisdom by reflection is noblest, by imitation is easiest, by experience is bitterest”. As life goes on, people do encounter bitter experiences. Well, Wisdom always seems to arrive by the next flight.
So let us reflect on a matter while we wait at the arrivals for Ms. Wisdom.
Quite frankly, I don’t understand all of the intricacies or mechanics which drives the Aviation Industry. At best, we can make assumptions based on observations. Aviation Long-Timers, through bitter experiences, do get the benefit of perspective. The idea is to check out patterns of behavior.
You don’t need to be an expert to make some basic judgment calls. In a company, any staff will have a fair idea how that company is doing. Information many times starts as gossip and grapevine. By the time you call it fact, it’s already old news.
So, Kingfisher Airlines is going through bad times. It’s not that suddenly something happened and part of it crumbled. An infection starts with discomfort, then a pain and finally erupts into a pussy boil. That’s the time when Commentators and industry Sooth-sayers show up to concoct reasons. They love the festering wound and visit it often with fistful of salt.
Many economic and financial jargons are rattled to explain the cause of failure. Yield, GDP, Cost etcetera etcetera are thrown in to cook up a reason. It’s called Chutneyfication of Complications.
And all of these have happened before.
Aviation Industry Long-Timers will remember Damania and East west. They both had distinct attributes similar to the “King of Good Times”. Both started with extravaganza and lost steam midway. High “this” and Low “that” (fill your own economic jargons here) – were the reasons cited for their closures.
It is true, that since Wright Brothers, Aviation has never been a lucrative business. Many Foreign airlines have failed. They either ran dry or were driven out of the market through competition.
But India presents a strange case where airlines have failed due to simple complacency. Businesses pick up the aviation tab to preside over a bankruptcy. Or are we wrong.
Let’s explore further.
I have an assumption which I believe firmly. A top-end businessman always knows what he is doing. He has enough resources to help him understand. Sure, there will be business setbacks. His recruits can always be Re-Orged. But when a business wastes away through callousness – that’s the point we need to concentrate.
Take East West Airlines. When Damania had two Aircrafts, East West had multitudes. This was a time when Travel cost was high, Fuel cost low, competition weak and seats full. Yet, I still wonder what happened with all the revenue. After East West went down, Damania arose. It too sold its stake to NEPC and exited. After a brief run, Skyline NEPC folded. The Neo-Airlines of the nineties and did not make it till Y2K.
The pattern reeks of some modus operandi.
East West Airline started in 1992 went public in 1994. Shut shop in 1996.
Damania Airlines started in 1993 went public in 1994. Sold to NEPC 1995.
Re-christened as Skyline NEPC, it issued a rights issue of shares in 1995. Shut shop in 1997.
All the above High Flyers went public in great hurry and exited similarly. They were not Air-Taxi or Airline Operators. They were Fly-by-Night Operators.
Kingfisher Airlines started in 2005, went public in 2006. Wants to shut shop in 2011.
By the law of patterns, Kingfisher has already extracted its quota by 2009. Time to say goodbye! Let the Government cuddle the crybabies – Air India and Kingfisher.
What will happen if Kingfisher fails?
The aviation industry will take a hit. Its natural law – a sinking “Industrial” ship will consume many in its wake. Job Loss notwithstanding, it puts enormous pressure on employees of other similar industries. It will erode employee value and their perceptive bargaining power. When an alternate is eliminated, the employee is caged and compromised.
Many feel, the elimination of competition is good for business. Yes, indeed it is. It’s good if you are at the taking-end of the Business, not when you are at the receiving-end.
When East West failed in 1996, we in Skyline NEPC were happy. By 1997, we were holding the proverbial begging bowl and took refuge in other airlines at half our earlier salaries.
Raising an Industry is like raising a child. But raising an aviation industry has mostly been like raising a spoilt brat by the super-rich. The lacuna is in the conceptions and cloaked intentions. The only policy they have is Exit Policy.
Point to be noted. Jet airways started in 1993, went public in 2005. I admire the promoters. For jet Airways Emergency Exit is only in the aircraft.
What will be the best Solution?
If the government steps in, they will do great service if they use the Satyam Model of recovery. Get rid of the present promoters and appoint a team of eminent industry leaders to re-org the company. The resources of Kingfisher has been found wanting. But Government can muster the best resources from cross section of industries to start a turnaround.
Einstein said it – Problems cannot be solved at the same level at which it we created them.