Monday, November 24, 2008

Turnaround strategy for airlines - "shut down"

Vijay Mallya is flamboyant even in the face of absolute ruin. Here he says "This long-awaited initiative will stabilise the aviation industry and provide much needed financial stability to airlines. In response to the initiative from the government, Kingfisher will immediately reduce air fare across the board as soon as the declared goods classification is approved."

But has he got a choice? He knows he is in deep trouble after having lost 60% of his passengers ever since he cannibalized Air Deccan (the LCC) and hiked the fares. The whole of aviation industry is bleeding as former air travelers flock to not so badly run Indian railways. I used to fly Bombay-Delhi often earlier but after my recent journey by Rajdhani Express (overnight, complete with A/C sleeper, dinner, breakfast, beverages and water), I am a card carrying member of the Rajdhani user club. Soon I’ll be a fan of Indian railways.

I save a lot too in time and money. The airport is an hour’s drive from home, will have to check in at least an hour before and then at the destination, I’ve to pay for the cab for another hour’s drive. The total cost of one way travel between Bombay – Delhi will be about Rs.8500/-. By train, it costs me just one-fourth of that. Given that there is a recession around and the stock markets are scraping at the bottom, the savings don’t hurt at all!

As I see it, there’s one sure way how airlines can get back into black – “shut down”!

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