Flies on the wall

Arguments about a monopoly are flying thick and fast even before the Jet Airways/Air Sahara alliance is off the ground. This is typical of Indian civil aviation. Because regulation, policymaking and services are all part of an incestuous government family, there8217;s no intelligent, impartial authority to evaluate deals. That allows whisper campaigns by everyone from obscure MPs to powerful lobbyists. A proper regulator would have quickly dismissed these people8217;s objections to the Jet/Sahara deal. Monopolies are not defined by simply adding prospective partners8217; market shares. To say that Jet plus Sahara will have 53 per cent of the market wrongly assumes that the alliance will be a snug fit. Plus, market power, not market share is the real determinant. If Jet plus Sahara could dominate the market to the extent that flying became more expensive, new players couldn8217;t enter the game and new routes could not be added, concerns about a monopoly would have been valid. But there8217;s Indian Airlines commanding a third of the traffic. And there8217;re low cost carriers LCCs that have already won plenty of converts. Jet plus Sahara can8217;t dictate terms in such a market.

In fact, if the civil aviation ministry allows it, IA, which has responded to competition quite well in the recent past 8212; flexi fares were an IA innovation 8212; can perhaps better its performance. There8217;s an irony here. For decades IA8217;s was a Soviet-style monopoly, offering arbitrarily high fares and lousy service. Many of today8217;s passionate anti-monopolists were quite content then. These days, they are equally content old policy habits persist. So it is that private domestic airlines were first allowed to fly only to neighbouring countries, then, after much pondering, to other parts of the world but are not permitted to access Gulf markets. The result is that Gulf airlines are picking up most of the heavy traffic, while Indian operators lose out. So do Indian passengers, who would have enjoyed lower fares. Or, take the case of the litigation holding up Jet8217;s US operations. American authorities need a word from their Indian counterparts on the bona fides of the airline. Surely, if Jet can fly to all corners of India without raising official hackles, it can fly to the US? And if a smiling PM can be photographed handing over the first of many come-home cards to a person of Indian origin PIO, why is Magic Air8217;s licence being held back because it is promoted by a PIO?

These and many other knots will unravel only with thorough institutional reform, beginning with legislation that sets up an independent regulator. True, regulators can be outwitted, as TRAI has been sometimes. But imagine the telecom sector without a regulator, with the ministry yo-yoing between a state incumbent DoT and powerful private players. Now think why mobile phones have become a mass consumption item but flying hasn8217;t.