Don't derive pleasure from Kingfisher's bad times

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The German word schadenfreude best describes the manner in which many analysts have looked at the travails of Kingfisher Airlines (KFA). Schadenfreude is the pleasure derived from beholding another person's misfortunes, especially one who has been exceptionally privileged and fortunate in the past.

Vijay Mallya, the flamboyant King of Good Times, is in trouble deep and there is a sense in many that it is only meet that he has got his comeuppance. He was ill-advised to enter the airline business, they argue, and equally ill-advised in the manner in which he ran his carrier. Therefore, if the airline is fated to go under, it must be allowed to do so, with no external help proffered to keep it flying.

The problem with this approach is that misses the wood for the trees. There is no denying that KFA is in a kind of financial trouble that would be unsustainable in any common or garden industry. There is also much to suggest, in hindsight, that its troubles might have been less severe had it avoided certain steps in its journey to the top (we tend to lose sight today of the fact that three years ago it was India's largest domestic carrier).

But there is no gainsaying that the entire civil aviation industry in India faces challenges that deserve to be mitigated. High costs and lower yields are the bane of all airlines. Sure, IndiGo is doing well and its management deserves kudos for having steered its fortunes admirably. But look at Air-India.

KFA's financial problems pale in comparison to those that Air-India faced until the Government stepped in with a bail-out package that left observers open-mouthed in wonder.

The Centre's double standards are obvious. A bail-out is kosher if Air-India is involved. It is a strict no-no if a private carrier is involved. Dr Mallya, of course, repeats like a balladic refrain that it is not a bail-out that KFA seeks. It only seeks "help".

Now, the nature of the help and the structuring of it are matters that may justly be left to KFA and the consortium of banks. But KFA is also looking for policy changes that will help the entire civil aviation industry. The Government appears to have agreed in principle to allow airlines to make direct imports of air turbine fuel, which will result in huge savings in taxes. A Group of Ministers has also recommended that the Centre allow upto 49 per cent FDI by foreign airlines in Indian carriers. It is no secret that such a move will benefit KFA.

These are decisions that have been taken in principle, but await Cabinet nod. As with much else with the UPA Government, there is no knowing how long it will take to remove the shadow between intent and execution.

It cannot be an easy decision to adopt a hands-off policy and permit an airline of the size of KFA to go under without a fair fight. KFA did come as a breath of fresh air and was widely welcomed when it was launched in 2005. If it is grounded for good, the curtailment of choice will not be beneficial to the airline industry and its users. Besides there will be cascading job losses in collateral industries. That should worry any government.

Overriding everything else is the economic benefit of connectivity provided by a large carrier. As with telecom, so with civil aviation. Policy decisions must be made keeping in mind that there is a correlation between connectivity and GDP rate.

The telecom industry benefited enormously and grew exponentially when the Government stopped treating it as a luxury industry and began to see it as an essential service that deserved to be within everyman's reach. The civil aviation industry, too, shall bloom once the government regards air connectivity as a service that must be accessible to the largest number.

(Public affairs analyst Vivek Sengupta is Founder and Chief Executive of the consulting firm Moving Finger Communications. He can be reached at vivek.sengupta@movingfinger.in)