Friday, June 3, 2016

Blowing Up AirIndia’s Recovery

Not long ago there were too much hue and cry for selling Air India. After all who don't want to sell a company which makes mind blowing losses day after day. Government didn't sell Air India at that time; as a matter of fact there were hardly any suitors.

One argument which often heard along with the demand to shutdown/sell the company was – it was the government which destroyed the company. There is indeed some merit in this argument. If government ran that company like a corporate entity, then AirIndia would have been in a better position. 

That is past, in the end Government intervened and helped AirIndia to come out of the crisis. Company also started implementing plans to reduce costs and improve efficiency. This plan is actually showing some results. 

Now West Bengal CM wants a direct flight between Kolkata and a European City. There is no problem in such a demand. All CMs would like to get better deals for their states. Union Civil Aviation minister can consider that request. No issues. However, can he ask AirIndia to introduce a new plane in that route?

I don't have any problem in Kolkata getting a direct flight to London. But, we need to look into the question of why Airline companies are not introducing a direct flight in the first place. The reason they provide is very simple – the route is not commercially viable. 

# AirIndia itself stopped direct flight between Kolkata and a European city in 2007. Reason -  commercially NOT viable.
# Lufthansa discontinued Kolkata-Frankfurt in 2011.
# British Airways discontinued Kolkata-London in 2008.
# Lufthansa, Germanwings, KLM, AirFrance and Thomson Airways, Jet Airways expressed its inability to CM's request for a direct flight

It is to be noted that this is the situation even after CM went to the extent of completely waiving ATF Tax.

Mamta was demanding a direct plane for some time. However, it was her recent election victory which gave a new life to the request. Assembly elections give her the power to send more people to Rajya Sabha (Council of States) where central government currently don’t have enough numbers to push forward reform bills. Hence government is willing to satisfy some of Mamta's wishes. However, why bleed AirIndia for that? This type of politics may give quick results, but it will break institutions. 

We should not forget that, a direct flight to London is neither a primary right of citizen nor his/her basic need. Forget about basic need, it won’t even qualify under affirmative action.

What West Bengal should focus on is, how to get the state back in industrial map, how to revamp Kolkata port, how to improve literacy rate, how to improve GDP/capita, how to reduce child mortality rate, how to bring industries to the state... so on and so forth. Those actions will give more momentum to the state than a direct flight to London, which hardly much people use but bleed AirIndia.


Photo Courtesy: Wikipedia

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