I read with interest, an online edition of the business standard dated 19th Jan and that article mainly dealt with poaching of engineers by the Airlines in India. Poaching in this case refers to Aircraft Maintenance Engineers who jump from one company to the other, at the drop of a hat, lured away by a competitor for a higher pay (what else has people drooling about these days but moolah?). That’s all going to be stopped, like the scheme they invented for stopping the poaching of pilots, says the article. Not exactly Veerappan style poaching but close.
Anyway, what interested me more about this article is that the Author goes on to mention that the Airline industry is contemplating on increasing fuel surcharge on passenger tickets, to cover the increased cost of fuel. Now this is what I’d like to talk about and have done so in my blog in the past, maybe I stand vindicated. The Airlines are justified in making such a move, if they actually do it.
The Government made some noises about reducing the fuel bill burden on the Airlines by perhaps cutting taxes on the product. This prompted some readers of my blog to question me about whether I was wrong about my assessment, that the rising costs of fuel was going to be a major cause of downfall of the Airlines. I stood my ground saying that a reduction in tax wasn’t going to be quick and in any case wasn’t going to be meaningful.
Then another thing happened. I was in India briefly a couple of weeks back and saw on CNBC something strange happening on the BSE Mumbai Stock Exchange. The price of crude oil fell drastically in the World market. The BSE in Mumbai reacted to that news in frenzy, driving up the Airline stocks. I was just holding my head in my hands. Is the stock market a bit too euphoria driven and less driven by hard facts? Did they think that a drop in world crude prices was going to benefit Airline in India (or anyone else) so quickly?
I began to wonder how mature this market really is and whether everything is based on rumors and speculation based on sentiment rather than cold hard figures. Let me tell you why. Firstly, a fall in global crude prices means nothing for operators in India. The Oil PSU’s and the Ministry then decides whether to do something about it, or not. The Business Standard article goes on to say that jet fuel prices actually went up, prompting the operators to ponder about another increase in fuel surcharges. What does that tell you about the Airline stocks and their manipulations by the brokers at the BSE? Was this a case of jumping the gun or bad valuation as has been done in the Airline stocks since they became public, in the first place? Were more investor lured into a false sense of security and their money invested unwisely? These are the questions to ask.
The industry needs support, there’s no doubt about it. We need all of them to survive and do well, as a consumer that is in our best interest. What they need is level headed decision making. The Airlines have an association that comes together to fight common issues such as “poaching” but perhaps they are not asking each other to stop killing each other in pricing, revenues and other areas. Not much use having such an association that can be a mutual “backscratchers club” only on certain issues and a mutual “backstabbers club” when it comes to survival.
Anyway, what interested me more about this article is that the Author goes on to mention that the Airline industry is contemplating on increasing fuel surcharge on passenger tickets, to cover the increased cost of fuel. Now this is what I’d like to talk about and have done so in my blog in the past, maybe I stand vindicated. The Airlines are justified in making such a move, if they actually do it.
The Government made some noises about reducing the fuel bill burden on the Airlines by perhaps cutting taxes on the product. This prompted some readers of my blog to question me about whether I was wrong about my assessment, that the rising costs of fuel was going to be a major cause of downfall of the Airlines. I stood my ground saying that a reduction in tax wasn’t going to be quick and in any case wasn’t going to be meaningful.
Then another thing happened. I was in India briefly a couple of weeks back and saw on CNBC something strange happening on the BSE Mumbai Stock Exchange. The price of crude oil fell drastically in the World market. The BSE in Mumbai reacted to that news in frenzy, driving up the Airline stocks. I was just holding my head in my hands. Is the stock market a bit too euphoria driven and less driven by hard facts? Did they think that a drop in world crude prices was going to benefit Airline in India (or anyone else) so quickly?
I began to wonder how mature this market really is and whether everything is based on rumors and speculation based on sentiment rather than cold hard figures. Let me tell you why. Firstly, a fall in global crude prices means nothing for operators in India. The Oil PSU’s and the Ministry then decides whether to do something about it, or not. The Business Standard article goes on to say that jet fuel prices actually went up, prompting the operators to ponder about another increase in fuel surcharges. What does that tell you about the Airline stocks and their manipulations by the brokers at the BSE? Was this a case of jumping the gun or bad valuation as has been done in the Airline stocks since they became public, in the first place? Were more investor lured into a false sense of security and their money invested unwisely? These are the questions to ask.
The industry needs support, there’s no doubt about it. We need all of them to survive and do well, as a consumer that is in our best interest. What they need is level headed decision making. The Airlines have an association that comes together to fight common issues such as “poaching” but perhaps they are not asking each other to stop killing each other in pricing, revenues and other areas. Not much use having such an association that can be a mutual “backscratchers club” only on certain issues and a mutual “backstabbers club” when it comes to survival.
