The Hindu Business Line : Aviation formula gone sour

The recent marriage between Kingfisher and Jet Airways has not produced the kind of euphoria that the owners of the two airlines had expected. On the contrary, the share values have dropped and their frequent flip-flops on decisions have done immense damage to the management’s credibility.

In this context, what Janine Allis, CEO and Founder, Boost Juice Bars, and the 2004 Telstra Australian Business Woman of the Year, said seems appropriate: “Your credibility in business is critical. Your word should always be kept and if it cannot, for some reason, make sure you have the courage to discuss the reason for this. Not having credibility is always a short-term fix. Business is never short term, it will always catch up, and you will never be the winner if you lose credibility with your suppliers, customers and staff. Your credibility, your word and your reputation is everything.”

In their book, Credibility: How Leaders Gain and Lose It, Why People Demand It, the authors, James M. Kouzes and Barry Z. Posner, say: “More than half of new businesses fail within five years, and many of those that endure can’t seem to bridge the gulf between “just surviving” and true success. If you want to beat the odds, then your business will need Winning Credibility.”

Let us look at what the Kingfisher Airlines Chairman and CEO, Mr Vijay Mallya said at the CII Innovation Summit in Bangalore. “The Indian consumer is evolving — he is willing to pay more for better quality and for better luxuries. That motivated us to launch Kingfisher Business Class — the absolute finest in the sky! And the best campaign that we can ever launch is that I endorse the product myself, when I put my own signature, I put my own credibility on line.”

At a regional aviation conference in June 2005, he had said that Kingfisher Airlines expected to “break even in the first year of operations, if we are lucky; if not, most certainly next year. We’ll begin with the Airbus A330, which is a great aircraft and already in widespread service, and then we will create a sensation when we become the first Indian carrier with the 21st Century flagship A-380, before adding the world’s newest airliner, the A350. Imagine flying the good times — not just in India, but worldwide!”

Staff motivation

Jet Airways, which had built up a very good image and world-class service, did immense damage by over-reaching its limits. Its foray into international operations was not done judiciously. Instead of feeling the pulse of the industry and progressing slowly, it was gung-ho over its projections.

While the airlines placed orders for a very large number of aircraft, they ignored an important aspect — motivation of their staff. Over the past 4-5 years, the morale of the Indian staff has been declining.

In just the last few months, especially with the sacking of the Jet Airways staff, and the immediate backtracking, the two airlines and the Civil Aviation Ministry, have little credibility left. Every forward step they take is followed by two backward steps for damage control.

The airlines have asked for a bailout through an official handout from the Federation of Indian Airlines — an interest-free loan of Rs 5,000 crore for five years. Yet, a very senior office-bearer of Ficci says it is not a bailout but an ‘extension of credit line’.

People want a level-playing field when it comes to competition from multinational corporations or foreign airlines. But when a winning industry begins to go down the drain due to greed and mismanagement, it should be allowed to fall. Why should taxpayers’ money be used to subsidise the tickets of cricketers to faraway West Indies or those of scantily clad models to exotic islands for a calendar shoot?

Repayment deal

The Petroleum and Civil Aviation Ministries have brokered a deal with the airlines for clearing the defaulted amount — the latter have been given an extra 30-day credit period and have been allowed to repay in six-monthly instalments the several thousand crores of rupees outstanding. An extended credit line at market rates may be in order. But the Ministries are yet to clarify the rate of interest that the defaulters are going to pay.

The Ministers are aware that the next six months are going to be crucial, especially with general elections round the corner, and with political leaders doing a lot of travelling.

Lessons not learnt

It appears that the lessons from the past — especially the punctured hopes after the aviation boom in the 1990s — have not been learnt. What we are condemned to endure today may have serious repercussions.

To poach pilots and other technically qualified staff, airlines increased the salary structure. This game continued until the owners of influential airlines prodded the DGCA (Directorate General of Civil Aviation) to clamp down with a six-month notice period. The Ministry and the airlines projected such high growth rates that several youngsters began to pursue careers in the skies by taking huge loans.

At 19 and 20, several young Indians were taking home five- and six-figure salaries. Many of them took bank loans to accumulate consumer goods and luxury items. Today, the sword is hanging over their heads, with threatened pay-cuts. But these are necessary to cut costs.

Fatigue factor

Does the system realise the implications? Neither the Ministry nor the DGCA seems to realise the effect of fatigue in airline operations. Regulations are manipulated to suit the airline owners’ requirements.

Apart from having a fatigued crew, the airlines will have to grapple with a ‘financially stressed’ crew as well.

If the authorities go through the reports of the National Transportation Safety Board, US, on the accidents involving SilkAir 185 and Egyptair 990 flights, they will realise that they were caused by the pilots’ suicide. Several hundreds of lives were lost in those accidents. There have been several other such cases where disgruntled pilots have resorted to suicide in an aircraft with passengers. Unfortunately, our authorities and airline owners do not seem to take into reckoning such happenings.

William Voss, the CEO of Flight Safety Foundation, in the latest issue of AeroSafety World quotes George Santayana, a philosopher and poet, who said in 1905: “Those who cannot remember the past are condemned to repeat it”. Santayana also said: “Chaos is a name for any order that produces confusion in our minds.”

Indian aviation, today, is in a chaos and a confused state. Thinking ahead with clarity and removing the blinkers is the only solution.

(The author is an airline captain with 35 years of flying experience. blfeedback@thehindu.co.in)