Jet debacle a warning bell
Wednesday - April 24, 2019 12:08 pm ,
Category : WTN SPECIAL
We have seen how such mismanagement has brought the downfall of Kingfisher and Sahara Airlines in the past. Companies like Deccan Air and Satyam also bit the dust.
WTN - Jet Airways, once India’s leading airline company, shut its operations completely recently. A fleet of over 120 planes now lies grounded. It is largely a case of financial mismanagement and administrative flaws that have led to the colossal debacle. We have seen how such mismanagement has brought the downfall of Kingfisher and Sahara Airlines in the past. Companies like Deccan Air and Satyam also bit the dust. Air India is in the doldrums. And so is BSNL and IDBI Bank. Companies like Nokia and Chevrolet wound up their India operations, even as big-ticket investments are becoming rare.
Is it the result of bad ethics and business practices that lead Indian companies to falter so frequently? Or is it something else that plagues our system? Is it an unsupportive ecosystem or is the proverbial bubble burst that we see? Are the companies overreaching their possibilities in an economy that is not ready enough to sustain them? Or it is red tape hurdles that make business impossible? It can be a combination of many factors the exact reason being difficult to pinpoint, but the trend we are seeing for the last 10 years or so, does not bode well for the future of Indian economy and business prospects.
More companies are faltering and shutting than making it big globally. Those which were once big are today struggling to keep afloat. Lakhs of people are losing their jobs. Running an airline company is definitely tough in India. The airports are congested and parking and airport usage charges bleed the companies.
Fuel charges are high. Most sectors are unprofitable to fly, and this makes the area of navigation and scope of expansion of airlines limited. If we leave the top 12 or 15 cities, there is not much traffic to keep the profit bells ringing. In most sectors planes run only half full. This spikes the operation costs and gradually losses surmount. It is a narrow margin on which the companies have to very cautiously tread. Not every company can manage this dexterity for long. No matter how gloriously the aviation sector is painted, for most people tickets are still high priced and trains make sense for the middle class.
There is a surge in the number of fliers in and out of the metro cities, which helps project encouraging figures, but in the smaller cities, the flier base is still stagnant or tardily growing. Airline companies must reckon these drawbacks before venturing. For over two decades now private airlines operating in India have never grown beyond five or six brands. Never have all of them earning good profits at a time – it is a rollercoaster ride for most— profit this year, loss another year. Their fortunes depend heavily on fluctuating passenger trends, the cushioning is missing. If one year there is low traffic, the companies are left worried about money. There is also the case of flab and inefficiency that escalates costs.
If there is greater efficiency in our work culture and smarter management techniques, things can look up a bit. We don’t always need grand schemes and expansive paraphernalia to make things work. Intelligent work entails extracting more from less. Till the time such changes in business approach happen, companies will always be exposed to high risks. The government must also be more pro-active and facilitative to support fledgling or wobbling companies from collapsing because it involves the lives and hopes of thousands of people.
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WTN - Jet Airways, once India’s leading airline company, shut its operations completely recently. A fleet of over 120 planes now lies grounded. It is largely a case of financial mismanagement and administrative flaws that have led to the colossal debacle. We have seen how such mismanagement has brought the downfall of Kingfisher and Sahara Airlines in the past. Companies like Deccan Air and Satyam also bit the dust. Air India is in the doldrums. And so is BSNL and IDBI Bank. Companies like Nokia and Chevrolet wound up their India operations, even as big-ticket investments are becoming rare.
Is it the result of bad ethics and business practices that lead Indian companies to falter so frequently? Or is it something else that plagues our system? Is it an unsupportive ecosystem or is the proverbial bubble burst that we see? Are the companies overreaching their possibilities in an economy that is not ready enough to sustain them? Or it is red tape hurdles that make business impossible? It can be a combination of many factors the exact reason being difficult to pinpoint, but the trend we are seeing for the last 10 years or so, does not bode well for the future of Indian economy and business prospects.
More companies are faltering and shutting than making it big globally. Those which were once big are today struggling to keep afloat. Lakhs of people are losing their jobs. Running an airline company is definitely tough in India. The airports are congested and parking and airport usage charges bleed the companies.
Fuel charges are high. Most sectors are unprofitable to fly, and this makes the area of navigation and scope of expansion of airlines limited. If we leave the top 12 or 15 cities, there is not much traffic to keep the profit bells ringing. In most sectors planes run only half full. This spikes the operation costs and gradually losses surmount. It is a narrow margin on which the companies have to very cautiously tread. Not every company can manage this dexterity for long. No matter how gloriously the aviation sector is painted, for most people tickets are still high priced and trains make sense for the middle class.
There is a surge in the number of fliers in and out of the metro cities, which helps project encouraging figures, but in the smaller cities, the flier base is still stagnant or tardily growing. Airline companies must reckon these drawbacks before venturing. For over two decades now private airlines operating in India have never grown beyond five or six brands. Never have all of them earning good profits at a time – it is a rollercoaster ride for most— profit this year, loss another year. Their fortunes depend heavily on fluctuating passenger trends, the cushioning is missing. If one year there is low traffic, the companies are left worried about money. There is also the case of flab and inefficiency that escalates costs.
If there is greater efficiency in our work culture and smarter management techniques, things can look up a bit. We don’t always need grand schemes and expansive paraphernalia to make things work. Intelligent work entails extracting more from less. Till the time such changes in business approach happen, companies will always be exposed to high risks. The government must also be more pro-active and facilitative to support fledgling or wobbling companies from collapsing because it involves the lives and hopes of thousands of people.
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