The Wrong Strategy was called - GREED, GREED and More GREED and LIES, LIES and more LIES
And this Greed was not by the Airlines themselves. To be frank, the Airlines did their best to be competitive but the Greed was entirely and completely by the Governments - the Government of India under Shri Manmohan Singh and Shri Narendra Modi and the State Governments and the Entire System
Point No 1 - The Kempegowda Intl Airport - A Beautiful building with one small problem. IT was built and invested privately. The Docking Fees, Landing Fees increased by 4.5 times (450%) from 2009 to 2014 compared to the Old HAL Airport near Maruthi Halli.
Foreign Countries have Bonds to pay for such airports and 30 years to ensure that the Airports can manage to pay off their construction costs. The Average rentals of Airports in 5 Developed cities- New York, London, Singapore, Dubai and Los Angeles is 5.42 times the normal rates but in India it is 20.71 times. Who can make a profit here?
A store in KG Airport went bankrupt with over 1.27 Crore owed in Rental fees. You have inferior food being sold for high prices just to cover the rent.
This is the Los Angeles Airport. They raised $ 650 Million in Revenue Bonds payable over 24 years to pay for most of the changes. The Private Investors have to Wait for their money.
The Docking Fees and Landing fees increased by 8%. Eight Percent. Compare 8% and 450%!!!!!!
If Landing and Docking fees increase - Ticket prices much increase……..
Point No 2 - The Price of Aviation Fuel Grade Z, Grade Y and Grade P
Globally the Aviation Fuel Prices rose by 43% from 2006 to 2013 and then fell by 52% from 2013 to 2018 and rose by 9% from 2018 to 2019 and fell by 31% from 2019 to 2020.
US, UK, Singapore have followed this trend. Airlines paid more for fuel when the global costs increased but less when the global costs decreased.
In India -Airlines have kept on paying more and more and more and more. Its literally like Karim Lala and his interest rates. You have demands from Excise Departments and regardless of what the scenario is with the losses of the airlines - the Government wants its money.
The Best part was in 2020 - The Global prices were 31% down but our prices were 42% up - this meant 73% inflated gap. Doesnt happen anywhere else in the planet except maybe Uganda.
And the Taxes. Indian Airlines have to pay the highest taxes among all Asian Airlines. Even BIMAN in Bangladesh pays less of tax (Not sure about PIA or any Nepali Airlines).
How could any Airline Survive this ????
Point No 3 - The LIES
Kingfisher Airlines wrote many many letters to the Government begging for special subsidies. They clearly said - “Taxes are too high. Fuel is too expensive” and asked for 50% subsidy granted to Air India. The Governments LIED. Both the BJP in the form of Arun Jaitley and the INC in the form of Manmohan Singh - Lied to Mallya and promised him this. They promised and assured him of this. The result was he sank a lot of his UB money into the Airline and was betrayed.
Instead the MMS Government directed banks to lend him more and more money. Basically dropping money into a black hole.
The Failure was written on the wall. The Airline was unsustainable. Mallya invested more believing in the Govt and now everyone threw the banks under the bus.
Goyal had the same lies narrated to him by the BJP. Same lies, Same promises, Same results. Maybe thats why Goyal is not yet in Prison or under serious investigations.
Point No 4 - Business Management Factors
Many Airlines suffered from Losses due to Mismanagement. Flying had changed from the 1980s and 1990s but the Airlines did not change as much.
The Mismanagement, the Strikes, the Demands for Pilots to Unionize in certain airlines, The Demands for Ground Crew to be classified as ‘Essential Personnel’ - all led to huge issues and losses.
Lufthansa required huge bailouts. British Airways and Air France had similar problems.
However these problems more or less disappeared due to timely dealing.
In India the same problem happened - despite losses- KFA and Jet continued to keep hiring or keeping their staff, increased employee force just to look prosperous, Atrocious decisions to buy smaller airlines (Like adopting a kid when you are yourself starving and desperate), Competitive Pricing and Budget Airlines.
So you ask what was the wrong strategy
I would say the reason is Its India , everything is an Illusion which has to burst one day.
Companies worth $ 42 Billion end up bankrupt 8 years later.
Businessmen hailed as Patriots end up being most wanted Looteras Bhagodas a few years later
Businessmen who take photos with Leaders and Film Starlets and are regarded as Future Business Leaders end up in London Prisons awaiting extraditions or pretending to have a heart attack and cowering in the Caribbean.
Its the System. Its POISONOUS with Greed and Lies and Hype.
The Honesty is all gone now.
And its going to continue with the Startups or the Hyped companies - one by one.
Picture Source Wikipedia
Thanks for Reading
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