Perilous Skies

THAT GO FIRST has suddenly declared itself bankrupt shouldn’t come as a surprise if you consider the history of aviation in India. It is doubt­ful whether any other sector has seen such a failure rate but still finds no dearth of suitors. Over the last 30-odd years since the skies were opened to pri­vate airlines, just about all have failed. And had the once government-owned Air India and Indian Airlines operated under the usual laws of business, they too would have shut down long ago. Even a business like Jet Airways, which at one point of time was considered a success, eventually went under.

The sector is hostage to the price of fuel and any unexpected geopolitical shock can send that soaring. It is cor­related to tourism and, while some­thing like Covid is an anomaly, even otherwise every recession is less people travelling by air. The state owns the skies and wants a say in who and what will go on it, and the sector can never be independent of extreme government regulation. All this is not particular to India alone. The world over, aviation has been a risky business. Intelligent investors stay away from it. Warren Buffett, for example, has made unimaginable amounts of money buy­ing shares of companies but with avia­tion, he always burns his fingers. He, however, can’t seem to resist it either.

In India, the only true aviation suc­cess story at present is IndiGo, but even that might be too early to tell. Because, despite all the history of what this sector does, entrepreneurs and industrialists never tire of venturing into it. Like the late Rakesh Jhunjhunwala, who after making thousands of crores as India’s most successful investor, launched Akasa Air, which began operations last year. Or the Tatas, who first started Vistara, and then acquired Air India. Because of this inexplicable line of new entrants to get into the sector, there is always competition, and that means no pricing power. The Indian air passenger also does not care about anything except the ticket cost, and that makes it hard to build customer loyalty based on service. All you can do is make tickets as cheap as possible but that is then just a spiral which sucks all parties in. All think that there will come a day when the few airlines still standing will rule the skies and maximise profits, but they them­selves meet the fate expected of their competition.

Aviation is a little like the small entrepreneur’s fixation with restaurants. People think because they are good at eat­ing food, they can also serve it and make money. Most restaurants shut down. Starting an airline is the big business­man’s version of this phenomenon. Is there any story in recent Indian business more tragic than that of Vijay Mallya, who had a phenomenally successful liquor company and then made a foray into aviation and lost everything he had, even though Kingfisher Airlines had nothing wrong about it in terms of service. In fact, the better an airline tries to be, the more capital it sucks and, unless there is a pocket of money without a bot­tom somewhere, it fails.

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