Why do domestic airlines in India crib all the time ?

Why do domestic airlines in India crib all the time? It’s understandable to feel low in a depressing business environment, but cribbing and dropping your pants when the sentiment and business is good and there are enough opportunities to make money, calls for a callous attitude. Airlines in India are doing this for a long time and I believe they have perfected the art of ‘cribbing’.

They say we are bleeding and they show a highly levered balance sheet with enough operating and financial leverage and blood spread all over it to substantiate their claims. They blame the adamant attitude of government in its reluctance to open up FDI in the industry, they also blame the high oil prices (they should rather say volatile oil prices), arm twisting by regulators and airport operators to be the reasons for an ‘unsustainable environment’. I have my reservations against all this blame game by the airlines and would like to classify this as nothing short of hardcore lobbying. Some entities have in fact gained out of this lobbying by convincing lenders and regulators of measures like debt recast and delayed payments to state owned suppliers.

Lets take up these issues, they say high operating and financial leverage, I say don’t blame me for the mess you’ve created yourself. Airline as a business is tradionally categorized as a highly leavered business (particularly operating leverage), but the amount of leverage a business wants to take while maintaining its survival is entirely the prerogative of its management. We never told you to leaver your business way in excess of what is required and thus grow too fast and threaten your survival in a relatively depressing business environment.

You say high fuel prices, I say they were not always high and you were not unaware that oil does indeed have a tendency to spike in the short and medium term. You may have heard of currency hedging to cover foreign exchange risk, but don’t tell me you’ve never heard of hedging you fuel requirements. Or is it that  your equity is a very small percentage of what is at stake and you don’t mind taking extra risk by not hedging fuel if that means saving some bucks (option cost).

 

You also say you are arm twisted by regulators and airport operators, well I say regulation has only played a positive role in easing up your life by allowing free pricing (airlines had to file and get approval for fares from DGCA in the past). Infrastructure is getting better and you are at least better off reltive to industries like insurance and telecom (which are also service industries and driven by the same level of importance to the country)

You say allow FDI in airlines, well I second that too but that is by no means an impediment to your underperformance.

Airlines, there’s enough of cribbing and fooling the nation, get real and show us balance sheets which reflect the true state of affairs. We’ve not been greased by your bosses and we don’t believe the figures you are projecting.

Conscious Capitalism : The special case of IDEA

Be it Idea or Tata Tea, product or corporate advertisements based on social issues are always very tricky to handle for a company. The concept of being ‘socially conscious’ may give the company a ‘mojo’ moment in the short run but in the long run shifting out of such campaigns prove suffocatingly difficult for the company, especially out of campaigns which are hugely popular. An average person may start believing, maybe the company is no longer conscious about the case/ causes it was promoting earlier or may be it has reverted back to the concept of greed and hardcore capitalism.

Lets take Idea for a moment, its hugely popular tagline ‘what an idea sirjee’ and popular campaigns built on social themes featuring Junior B did make a mark (and made sense too). In an effort to be aggressive at the eve on launch of number portability Idea launched ‘no idea, get idea’ campaign. Not that it’s a ‘bad idea’ but shifting out of social theme advertisements has made the company loose some of the goodwill it may have created for adverts on social causes. Another point concerning NIGI (no idea, get idea campaign), the company built huge expectations when it featured and recommended ‘get idea’ for superior network in elevators, short queues in call centers and fair billing procedures.

I am an idea customer and the NIGI campaign actually made me believe that the company may have come up with something exceptionally good to be brave enough to make such claims (network in elevators, when u don’t get it in your loo). I did called up their call centre to be put on hold for 15 minutes before disconnecting my call abruptly, network remained as bad as it was and life has not got better as an Idea customer. For customers willing to shift out of existing networks may have thought of getting an ‘idea’. For existing customer like me, we still propagate NIGI – No Idea, Good Idea.

Bottom line- Don’t build huge expectations around your products when nothing substantially has changed or improved. You may fool your customers once, but they won’t buy your ‘idea’ next time.