Govt is right to not help Kingfisher can it please stop helping Air India unto death?
Now that the State Bank of India has decided to not extend further loans to Kingfisher Airlines,those clamouring for government help for the ailing carrier should remember that a business failure is a business failure and that its an exaggeration to call it a potential national disaster. Thats what Corporate Affairs Minister M. Veerappa Moily seemed to imply when he insisted Kingfisher had to be saved,only a day before blaming its bad governance. Civil Aviation Minister Ajit Singh is right in saying Kingfisher couldnt expect the government to pull it back from the brink. After all,the governments record in helping sick airlines is loving them to bankruptcy,as it has done with Air India.
So Singhs qualification that Kingfisher couldnt expect a bailout,unlike Air India beggars logic. Its an understatement to say AI is an underperformer,unable to meet costs and keep time,employing pilots with king-sized egos who insist on striking even in protest at their colleagues from pre-merger Indian Airlines being trained to their standards because they also insist,conveniently,that they are blue-collar workers while drawing very high white-collar salaries. Air India,in fact,is terminally ill. And the government is responsible for it through its limitless largesse and chronic financial irresponsibility. AIs debt-burden is around Rs 44,000 crore,its losses amounted to Rs 6,994 crore in 2010-11. For Q1 and Q2 last year,AI met total costs on only two of its 175 routes. Yet,theres a sovereign guarantee on its debt,affecting the governments balance sheet. And how does AI typically return the favour? With free or discounted tickets for the extended families of current and former senior officers.
Nothing short of disinvestment and downsizing can help AI. Pampering the jaded PSU only throws away good money after bad. The civil aviation industry isnt enjoying the best of times,but private carriers with good business practices are doing well. They are the template for the sector. The government is right to not help Kingfisher. But it would do even better if it didnt help AI either. At least,Kingfishers staff work. Air Indias do not.