Govindraj Ethiraj: Let sinking ships (and airlines) sink

DOUBLE EDGE

In the last ten days, I've witnessed an Indian aviation miracle of sorts. I arrived in Mumbai airport at three different times, late afternoon, evening and night. Each time, I was more or less on schedule. No circling, no "Ladies & Gentlemen, we are number 27 in the queue, so those of you who've forgotten to bring your pyjamas, we suggest you ask the flight attendant for assistance."

Okay, I made up the bit about the pyjamas but not about the man-days spent circling over Mumbai's airport. Uncannily, aircraft have been taking off and landing pretty much close to schedule in the last few days. Sure, incoming flights must be slowing down or speeding up to adjust for traffic but nothing more than that.

The last time I landed in Mumbai, which was two days ago, I saw an aircraft taking off within a minute of our landing, on the secondary runway that criss-crosses the primary one. This was truly revolutionary, for our over-cagey air traffic controllers I mean. There actually seems to be some normalcy and less suffering for passengers. The question is whether it will last. Well, yes and no.

The good news is that minute but visible changes have begun showing up at the country's largest airports, Mumbai and Delhi. The new airport owners have begun putting their stamp on the tarmac, so to speak. Mumbai's domestic arrival section has brought about a truly landmark (am not being sarcastic) change by freeing up the entire section reserved for "VIPs" and bringing in public transport.

This is the kind of mindset change that could have happened at any time of the Airport Authority of India's history. But it did not, nor would it. And this is why you need private owners for our airports. Delhi's departure terminal is looking a little brighter. Of course, even an extra bulb in the waiting area could do that. Mumbai has a new domestic private airline terminal in any case.

Now before the bad news, a little background. A month and a half ago, I pointed out in my column "India's Great Low Fare Spiral" that airline balance sheets were about to bank into the deep red. I also asked how we would manage our buccaneering aviators and their mega plans of adding some four aircraft every month for the next three years. I suggested (like everyone else) that consolidation must be hastened in some manner.

I further suggested that Civil Aviation Minister Praful Patel should call in the airlines and egg them on to merge with one another, a bit like the finance minister or his ministry would do in the banking sector. My thinking reflected the airline industry's--we need more aircraft and routes, but not necessarily as many airlines. A meeting, as we know now, did happen. But not the outcome I would have desired.

Air Deccan announced it would cut back on routes, which could have well happened without ministerial intervention. Then, two airlines were reported saying they had agreed not to drop fares on the day of the flight. Even more worryingly, the minister promised to look into the issue of airlines selling tickets below cost. The mechanism to do that was not clear but one can well imagine a Civil Aviation Bureau of Industrial Costs & Prices coming into shape.

Some of this is bad news. For one, a meeting to find larger solutions to the Indian airline passenger (particularly the new ones) appears to have turned into an opportunity to meet, greet and set the rules for a temporary oligopoly. Second, by even thinking of looking at costs as a means to decide fares, the minister is setting an unhealthy precedent.

To be fair to the minister, these ideas may not have come from him, as did not, perhaps, even the prospect of calling such a meeting. Full-service airlines like Jet and Sahara are now waging a desperate and losing battle to hold up fares, against the likes of Air Deccan, GoAir and SpiceJet. They stand to gain the most from attempts such as the one being made to mark fares to cost.

It's critical for the success of the industry that a few airlines must be allowed to sink, preferably with a trace. Because that's the only way future entrepreneurs will think twice about entering this space. Moreover, every entrepreneur already in the fray is fully conversant with the risks of the business, both business and environment. So, if he falters or falls, then he must be allowed to, with the utmost ease.

This is not to say the airlines should not meet. Of course they should. But focus on issues like soft and hard infrastructure. This is something the aviation minister should do as well. He should be seen to be focusing on whittling away at the basic infrastructure problems. Like increasing security check counters at Mumbai and Delhi domestic and international airports. Or creating more taxiways at airports like Chennai and Kolkata, where aircraft movements are still horrendously slow. And build on other small but clearly visible successes he has achieved. That way, he would do more service to passengers, rather than presiding over industry meetings which might set the tone for unaffordable bail-outs.

govindraj@business-standard.com