India Insight

Fare wars over India: You win, airlines lose

(Any opinions expressed here are those of the author and not of Reuters)

Indians like it cheap — be it a car, a phone call or airfare. If that plane ticket is about 25 percent cheaper than a train ticket, you can imagine the rush to buy.

Airlines in India are doing just that. Jet Airways, until recently the biggest Indian carrier, offered 2 million tickets at nearly half price in a “goodwill gesture”. Its website crashed soon after, just as SpiceJet’s did when it offered a million tickets for just 2,013 rupees  last month. That led many to believe the offer was a hoax.

I was lucky to book a New Delhi-Guwahati return ticket for March, paying just 3,578 rupees compared to the 13,047 rupees I paid for a one-way ticket as recently as November, and 4,420 rupees for the cheapest round-trip ticket on the Rajdhani Express, India’s premier long-distance train.

No doubt reduced fares are excellent news for consumers. But does it make business sense?

Indian airlines hardly make money, and everyone knows the fate of Kingfisher Airlines. High fuel prices and expensive airports make India a tough sell for airlines, with tickets usually priced below cost. State taxes up to 30 percent make jet fuel more than 50 percent more expensive in India compared to the global average, one of the reasons why foreign carriers prefer to stay away from the local market.

To pity or not to pity Vijay Mallya

Picture this – You run an airline that never made a profit, you need to pay off $1.4 billion debt from who-knows-where and airports, taxmen and oil companies are pursuing you to get their money back.

You still believe you can turn the airline around. You still believe you will find a white knight who will buy into your carrier and help it back on its feet. You are giving your best to convince investors that your brand-value is still strong, you can still attract passengers – all you need is some hard cash immediately.

And then, suddenly, your airline is forced to cancel dozens of flights because your pilots want their salaries before you are allowed to run the airline, or even negotiate with investors to save their jobs.

Selling stake in alcohol business – Mallya’s last roll of dice?

It’s always spectacular when things go horribly wrong for the rich and famous.

When Vijay Mallya — the king of good times — launched a high-profile airline in 2005, his primary motive was to use the platform to promote his best-selling Kingfisher beer.

“I can’t advertise my brand. I have to live my brand,” he said then.

We are flying, without salary: Kingfisher pilots to passengers

Desperate times call for desperate measures.

Passengers onboard Kingfisher Airlines flights are being treated to more than run-of-the-mill announcements for the past couple of days. Pilots employed by the beleaguered airline have devised a unique form of protest.

Just before passengers deplaned, Kingfisher pilots announced they have not been paid for two months and they are still flying purely due to a “sense of duty towards the guest”, local media reported on Thursday.

A civil aviation ministry official travelling on one of those flights went to the cockpit and congratulated the pilots for not resorting to “industrial action”, the Economic Times newspaper said citing a pilot.

Kingfisher situation an example of India’s free market/welfare state identity crisis

Bailout. A term which till recently was alien to India.

It was something the West did, to save their big financial institutions which had grown too big too fast and had squandered their cash positions while betting on complex instruments that even they did not fully understand.

India, and largely Asia, was rather different. We were the growth engines of the world. The Asian giants would prevent the global meltdown from getting worse and would reverse it eventually, or so went the perception.

Three years on and as the Greek crisis looms, the major Asian economies and their counterparts from around the world are still pondering on how to prevent the problems in Europe from spreading worldwide.