Aviation Industry : Why Bailout is not a Answer

In last few days we are hearing lot of noise on airlines bailout specifically Kingfisher. I really wonder why suddenly we have so many support and view on it. Rahul Bajaj argued strongly against it, with making strong case of open market and survival of fittest in capitalist economy. Still we can argue that we really not embrace capitalism open heartily and rightly so after seeing Wall Street greed collapse of 2008. But arguing that specific airline required to bailout to save the industry is somewhat flawed. Firstly the aviation industry is not going to collapse. Secondly it will create more opportunity for efficient airlines to expand their horizon but still providing budget airfare. Yes you heard correctly. In respect of so many news and fuss about aviation industry crushed due to government apathy and policy, there is one airline still make a profit last quarter when all other airline makes a loss. The airline is indigo. It is my favorite airline and I found it always on time. So the argument that airlines can’t make profit in present environment doesn’t hold completely true. It can be strongly argue that government policy is not at all industry favor and hampering the growth by high airport landing and aviation tax. That can only be changed when government change it pre-liberalization mindset of looking airline as high class luxury rather than middle class necessity of present India. But government policy only can’t make this industry profitable. Efficiency and economy of operation have to done by industries.

Let take an example of most glamour and now most bleeding airline called Kingfisher and presently only profitable Indigo airline . Kingfisher started with promise of really good time in air with all luxury which customer never asked in first place. Also make to look in big they started expanded pan India without checking economy of scale. Also they brought low cost airline Deccan airline which was diametrically opposite to their own brand. Slowly Deccan airline blended to kingfisher as Kingfisher red but it was no longer was low cost airline. The space created by suddenly disappearance biggest low cost airline was ready for a grab. And many player show interest and one airline stand out of it. It was indigo. Airlines stared without much funfair move strategically and slowly expand it to tier two cities. They expand their connectivity by strategically connecting metro with small city between them and efficiently operating to save take off and landing time. In this way they operated in full scale and also can offer ticket at very low price. Also they don’t require hire beautiful air hostess as the passenger love there punctuality rather a false smile of airhostess.

Looking at the above contrast cases, question arises why we should bailout inefficient airline with the hard earned money of tax payer. If it is dying let it die, it will be good for industry in long run. Let also don’t forget that the owner of Kingfisher still having a good time as he just brought Formula 1 team and also he is owner of IPL team. Oh, I just forget to tell, he also owner of biggest beverage group of India whose beer we all love to drink.