I have been away in Macao and almost missed some stories from back home in India. When I got to Singapore, the first news from India that caught my eye was about Indus Airways stopping flights and shutting down. It brought back memories from the 1990's when start-up airlines in India started folding, one after another.
Funnily enough, I had written in December last year that some of the airlines in India are run on ego and not on sound business plan and I had predicted their closure. This included Indus, as evidenced from one of my replies to a comment from a reader. My post got some bouquets and brickbats, as it usually does, with some going on to refute my prediction. I had mentioned that the reasons for my observations were based on pure math and also from knowing that the wrong aircraft for the wrong routes and wrong pricing can never add up to profits.
The writing is on the wall, I had said, sounding more like a doomsday prophet than an aviation professional, and some had questioned my observation about corporate investment in the airline sector.
I had said in my blog then "There's another curious activity going on these days that's also making news. Financial companies, investment firms and other corporate types are buying up small equity shares in some of the Airlines. I don't know why and some seem keen on picking up larger equity. I don't know who is advising these guys and I'll bet there is an army of CA's and MBA's in ties involved. I did hear some sound bites from the "experts" about this and they were saying: "these are very positive a signs indeed, signs of maturity, such an investment lends credibility etc" and all that hogwash these guys come up with. And they get paid a mint, mind you, to say all this rubbish".
I had written about specifically the TATA group having picked up a stake in Spice Jet and that I thought was a mistake. This led to a question from a reader asking why I did not support corporate investment in Aviation business. I had felt that while corporate investment in the Airline sector was a good thing to have, it did not make much sense for a company to invest blindly. TATAs do know a thing or two about Aviation but on the advice of some of their financial consultants it seems, they had found it prudent to pick up some equity in Spice Jet.
So, coming to Spice Jet's current cup of woes, the latest news projects Spice Jet's loss this quarter is up by 395%. Staggering? It would be for any one else but as I mentioned, some one keeps injecting some fresh life in the scene and things keep floating for a longer time.
I have heard that the other Airlines are all keeping a positive attitude - that's good because that's all they can do; keep positive. They will paint red all over the skies with their results this year, notwithstanding bravado statements from the "glitterati" of aviation. The sector is set to lose something like Rs.1,800 crores and that’s no small change! Like I said before, it's been good for the flying public, cheap fares and all. My advice, stop complaining and keep flying. When more airlines fold up, the fares are heading north for sure!
So, we have the first blood drawn in this aviation scenario. Luckily it has not been a bloodbath in terms of an all out price war and the intention of one Airline to see another go down the tubes and fail. My blog on Macao had to wait for this piece, just had to get this one off my chest. This blog appeared first in desicritics.org