ibnlive » Business

Aug 01, 2009 at 12:13pm IST

Airlines strike a gimmick, says Capt Gopinath

New Delhi/Mumbai: The chairman and managing director of Deccan, Captain GR Gopinath has called the strike planned by leading private airlines a “gimmick” and warned them to cut costs.

“Airlines are doing this as a gimmick or as a tactic to attract the Government’s attention but they are to be blamed for a large extent,” Gopinath told CNN-IBN about the strike planned by Federation of Indian Airlines (FIA) on August 18.

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Gopinath, who sold his low-cost carrier Air Deccan to Kingfisher Airlines in 2007, asked airlines to “trim fat” and develop innovative business models.

“In a country where 98 per cent travel by train and only two per cent by air, it should be obvious to anybody that if you want to grow in the airline business you ought have to a model which is efficient and innovative.”

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Gopinath chided airlines for behaving as a “cartel”, which he alleged was the beginning of their “woes”.

“They got together as a cartel and fixed price by blaming fuel surcharge. That was the beginning of airlines’ woes – occupancy fell, collections came down and losses went up.”

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Gopinath accepted the complaints airline owners had made about high aviation fuel and airport cost but believed they were well aware of the risks.

“The business magnates, Vijay Mallya or Naresh Goyal, know the reality: airport infrastructure is costly, oil prices are high. But they started a business and took a risk. TV channels are losing money but more channels are coming. The message to airlines is that there is lot of cost cutting they can do themselves.”

Gopinath alleged the Government was treating aviation as a “peripheral” part of the economy and not as a key infrastructure.

“The Government, in the interest of a vibrant airline industry and in the interest of passengers, must come up with a long-term strategic vision for the industry. The airports have been privatised and become a monopoly. Airport infrastructure is insufficient, aviation fuel price is highest in the world.”

Gopinath was asked what should the Government do if the airlines insisted on the strike. He replied: “the Government can arrest airlines chiefs under the Essential Services Maintenance Act – if truckers can be arrested they can do the same thing here.”

The FIA, which comprises the country’s five leading private airlines, on Friday announced its members would not operate domestic flights on August 18 unless the Government helped them with a universal bailout.

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