The plan for the state-run airline ‘Air Kerala’ is to raise Rs 200 crore through equity as initial capital. The State government, Cochin International Airport Limited (CIAL) and other public sector companies will together hold 26 percent of the shares of the company while the remaining 74 percent will be issued to individuals and private groups.
Performance of Two Airline Companies
At the beginning of 2014-15, Jet Airways had outlined a three-year turnaround plan to increase the profits. The plan had various standalone measures and synergies with Etihad Airways. Jet Airways had an enhanced synergic strategic partnership with Etihad Airways and other allied Airways partners. These efforts were primarily aimed at saving the airline from making losses. Presently, the two airlines together offer more flights to and from India than any other airline, with a 17 percent share of the country’s international air travel market.
After an eight year gap, Jet Airways have gained profits at consolidated levels. In 2015, the fiscal second quarter profit rose by 25 percent. On the other hand, Air India has been experiencing a precarious financial position. Recently, the Minister of Civil Aviation has stated that no one will come forward to buy Air India given the balance sheet they own. Such is the dire situation in which the airline has landed. This a good example of how a public undertaking was systematically destroyed through incompetent leadership, rank disastrous planning and, worse, implementation of Government.
Vivid Example of Privatisation of British Airlines
The main reason for the privatisation of British Airlines was that when it was a public enterprise, it turned to be a parking lot for the politicians and their political supporters. It resulted in unprofessional management.
The second reason was that the British Airway’s productivity was very low compared to its competitors. The losses of British Airways were increasing year by year. Under public enterprises, the efficiency, profitability and debts are not such an important criterion for government managers while they own such such a big public enterprise.The administration will be flexible and will not be an experienced one like in a private firm.
The method used to privatise British Airways was “fixed-price offer”. After privatisation, their profits boomed. It helped them to close the gap between the aviation industry and the British Airways. The privatisation of British Airways was a success. It helped the company to be a world airline. The success story of the privatised British Airways could be a real example for those airlines that are waiting to be privatised.
Civil Aviation is One of the Most Challenging Sectors
Air Kerala might not be experiencing favourable winds in this super challenging sector. Even if it can successfully satisfy the need of passengers by providing ‘affordable’, ’convenient’ and ‘cheaper’ travel, it might not be able to gain many profits; rather it might end up having so many deficits. It took Jet Airways years to experience the challenges in the aviation sector, and they have learned and developed from their experiences.
However, for Air Kerala, that might not be the case. The administration comes under the federal government, which might not be governed by highly-skilled or experienced officials.The Kerala Government’s public undertakings like the Kerala State Road Transport Corporation (KSRTC) and the Kerala State Electricity Board (KSEB) are loss-making models. KSEB tops the list, with a total loss of Rs 1272.90 crore, followed by the KSRTC. The revenue that is derived from it is only capable of covering the expenditure for maintenance, existing deficits and the payment of workers. It does not earn the expected surplus or profit.
21/06/16 Dr D Dhanuraj & Lakshmi Priya/SwarajyaMag
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Performance of Two Airline Companies
At the beginning of 2014-15, Jet Airways had outlined a three-year turnaround plan to increase the profits. The plan had various standalone measures and synergies with Etihad Airways. Jet Airways had an enhanced synergic strategic partnership with Etihad Airways and other allied Airways partners. These efforts were primarily aimed at saving the airline from making losses. Presently, the two airlines together offer more flights to and from India than any other airline, with a 17 percent share of the country’s international air travel market.
After an eight year gap, Jet Airways have gained profits at consolidated levels. In 2015, the fiscal second quarter profit rose by 25 percent. On the other hand, Air India has been experiencing a precarious financial position. Recently, the Minister of Civil Aviation has stated that no one will come forward to buy Air India given the balance sheet they own. Such is the dire situation in which the airline has landed. This a good example of how a public undertaking was systematically destroyed through incompetent leadership, rank disastrous planning and, worse, implementation of Government.
Vivid Example of Privatisation of British Airlines
The main reason for the privatisation of British Airlines was that when it was a public enterprise, it turned to be a parking lot for the politicians and their political supporters. It resulted in unprofessional management.
The second reason was that the British Airway’s productivity was very low compared to its competitors. The losses of British Airways were increasing year by year. Under public enterprises, the efficiency, profitability and debts are not such an important criterion for government managers while they own such such a big public enterprise.The administration will be flexible and will not be an experienced one like in a private firm.
The method used to privatise British Airways was “fixed-price offer”. After privatisation, their profits boomed. It helped them to close the gap between the aviation industry and the British Airways. The privatisation of British Airways was a success. It helped the company to be a world airline. The success story of the privatised British Airways could be a real example for those airlines that are waiting to be privatised.
Civil Aviation is One of the Most Challenging Sectors
Air Kerala might not be experiencing favourable winds in this super challenging sector. Even if it can successfully satisfy the need of passengers by providing ‘affordable’, ’convenient’ and ‘cheaper’ travel, it might not be able to gain many profits; rather it might end up having so many deficits. It took Jet Airways years to experience the challenges in the aviation sector, and they have learned and developed from their experiences.
However, for Air Kerala, that might not be the case. The administration comes under the federal government, which might not be governed by highly-skilled or experienced officials.The Kerala Government’s public undertakings like the Kerala State Road Transport Corporation (KSRTC) and the Kerala State Electricity Board (KSEB) are loss-making models. KSEB tops the list, with a total loss of Rs 1272.90 crore, followed by the KSRTC. The revenue that is derived from it is only capable of covering the expenditure for maintenance, existing deficits and the payment of workers. It does not earn the expected surplus or profit.
21/06/16 Dr D Dhanuraj & Lakshmi Priya/SwarajyaMag
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