March 28, 2012

Kingfisher Airlines: Part of the Same Reality

In the ‘10 Ideas that are changing your life’ issue, TIME magazine this month notes that each day, the average American spends about 12 hours consuming information, taking in more than 100,000 words that total 34 gigabytes of data. Given the rate of self-updating RSS feeds, this estimate of information consumption does not seem to be an exaggeration. Off late, my twitter feed had been cheekily notifying me of the developments around Kingfisher Airlines. “Vijay Mallya denies rumours that Kingfisher Airlines is about to launch a Frequent Non-Flyers Programme”, “With Such Massive Credit Crunch, whenever anyone calls him Vijay Mallya, he must be hearing 'Vijay Maal Laya?’”, “Vijay Mallya says he pays taxes and owes no one an apology for his lifestyle. He is right, he does not owe an apology. He owes lots of money” and “Vijay Mallya had massive piles of cash. The cash has gone but the piles remain. This condition is called King-fissure.”

Along with these one-liners, there are several facts available as well – the airline has a debt of over Rs. 7,000 crore, this money has been extended by a consortium of nationalised and public sector banks (including SBI (Rs 1,500 crore), PNB (Rs 750 crore) IDBI (Rs 700 crore)), outstanding amounts due of Tax Deducted at Source is Rs. 422.98 crore, Service Tax Rs. 10.48 crore and Fringe Benefit tax of Rs. 4.51 crore. International Air Transport Association (IATA) asked travel agents to itop booking tickets on Kingfisher’s behalf for failure in settling dues since February. Hindustan Petroleum Corporation Limited (HPCL), Kingfisher’s biggest aviation fuel supplier, had stopped refuelling as there were outstanding fuel bills of Rs. 515-520 crore.

The TIME article goes on to note that in spite of availability of information and memory storing devices, we still need to recruit a supply of stored knowledge in order to situate and evaluate new information that we encounter. You can’t google context. Seeking a context for this tale is an exercise in the multidisciplinarity that is policy making and governance in general.

In the brief period when Kingfisher Airlines was making a case for itself, in television studios, and in the “free press”, the defences offered related to the fact that the airlines were “too big to fail”, it would lead to a massive loss of jobs and “waste of resources”, and that if Air India could be bailed out, why not Kingfisher. It was stated that the airline had ready foreign buyers lined up to save it, but this would require a slight tweak in a minor matter called foreign direct investment. Current rules allow 49% FDI in Indian aviation companies, but do not permit foreign airlines to own stake in India’s carriers. The Department of Industrial Policy and Promotion (DIPP) in a statement issued in November 2011, said it was looking into the matter of allowing foreign investment in Indian Carriers with a 26 per cent cap, thus allowing foreign carriers to invest and also have voting rights on the board of prospective Indian carriers.

These arguments were systematically discredited by people within the airline, government and banking sectors, activists and the wider new media A bailout involving public funds implies that the average tax paying Indian will bear this burden through higher taxes (direct, indirect, municipal, state and central). This will further reinforce the skewed allocation of limited resources between the social and business sectors. While it is true that the closing of the airline will lead to a massive waste of resources, instead of a “bailout” the sensible route appears to be under the Indian Companies Act, where the government should intervene and force a change of management. Clearly this airline has been suffering from mismanagement for a while, given that the airline sector itself is not unprofitable, as other airlines have managed to make profits. Further, on a purely moralistic level, no government money should be extended till the personal assets Mr. Mallya are liquidated. Still, it is true that such situations determine policy and vice versa, so if this potential bailout has refocused much needed attention on aviation industry policy, then a comprehensive, transparent review must be initiated. Before allowing FDI we must first address the issues that have arisen from private capital and seriously examine events related to the Indian Airlines over the past few years.

What is extremely worrying is the absolute skewed influence of a few numbers of people with large amounts of power, on potential policy and the convenient and arbitrary use of this huge entity called the state. The State exists for all and to deliver to all, particularly the marginalised and poor. If one person can mobilise resources – television studios, influence public opinion, and make the state change an entire policy, while so many remain without essentials, then this is something that needs to be combated.

Within the State, while there is always need for specialised expertise in drafting laws, accounting and analysing performance, at the same time, governance is really, ridiculously simple. It’s about your everyday life, everything that impacts it, and it is not difficult to imagine, what possibly might or might not endanger it. If bad roads and traffic affect one set of people, having your land acquisitioned affects another, not being paid minimum wages is a reality as is not receiving any pension or social security, or living without civil liberties and under curfew. Reality is not different for these sets of people – we live under the same government, with the same budget allocations and under the same constitution. We share the same reality, and we are all interlinked, responsible and culpable. So while one set of this reality needs modern well functioning airports, and would be sympathetic to bailout out an airline, there is an equal set of this reality that cannot understand the logic of shuffling a few thousand crores between public sector banks and a serving Rajya Sabha Member of Parliament for his private business. While addressing one set of issues, we can never, and must never lose sight of the broader narrative, and always insist of equality, justice and transparency in our processes and governments.

1 comment:

  1. I know this blog is about your opinions/take on certain things. But I was wondering if you could perhaps, when you have the time, for people like me, do a series on current affair shit like this Kingfisher thing by breaking it down into super super super easy terms? I'd pay for you to explain the economics of such stuff :D

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