A lesson for Vijay Mallaya in capitalism

Vijay Mallaya, Chairman of Kingfisher Airline and UB group made a statement in relation to the proposed strike by the airlines on 18/8/2009 made a statement “We want the government to understand what happens when private carriers don’t exist.” I think Vijay Mallaya is losing it or is drunk on the good beer that his companies produce or he seriously doesn’t understand the meaning of capitalism that I have heard him talk about on TV.

I think I would like to give him a lesson on what is capitalism and how it operates. Why? Simple. I am concerned that he may take a foolish decision based on his misunderstanding of economics and capitalism and ruin himself. I may not like him but I don’t want to lose him as I would not be able to find more interesting personality to write about in my blog. I am doing this purely for my own benefit which is what capitalism is all about.

Through his above statement, Vijay seems to be implying the following:

(a) All the airlines will go on srike. I hope that he is not naive enough to seriously believe that all the comrades in proposed strike will stay with him. Indigo has already pulled and so will others. Going on strike is not a good option for the airlines. They have investor, shareholders and other stakeholders who have invested a lot of money in the airlines and they cannot just go on strike and lose more money. Pure economics will not allow the airlines to go on strike. Indigo has already pulled out.

(b) The country will come to a standstill with the current group of private airlines. Mallayaji, capitalism suggests that others will come up to start airlines. Vijay should realize that he entered the airline business because he saw an opportunity to make money. If he decides to close his airline, there will be others who will enter the airline business. I am sure that there are people interested in buying Vijay Mallaya out but not at his terms. So, Vijay don’t even think for a minute that without you we cannot survive. We have survived before without you being the airline business and we can survive even now.

Also, if Vijay Mallaya decides to close down, other airlines like Indian, Paramount and Air India will enhance their operation and benefit from the demand supply gap. With the airline business suffering worldwide, Vijay Mallaya should realize that aircrafts are easily available and the remaining airlines will take up his share as well as others who want to close down their airline business.

(c) Vijay Mallaya should also understand that he should not show tempers because if Kingfisher goes bankrupt, he might go bankrupt also as major portion of the promoters shareholding is pledged. Vijay Mallaya should understand that some of us are not as stupid as he thinks.

(d) I have never heard of any company or industry teaching a lesson to the government as Vijay Mallaya is proposing to do so. Let us just review what all the government can do to make Vijay Mallaya’s life hell:

* Nationalize all private airlines or maybe just Kingfisher airline.
* Call-in all of Vijay Mllaya’s guarantees given by him to Airport Authority and oil companies. He owes nearly Rs. 1000 crores to the government. Or better still, stop Kingfisher from landing at airports as well as suspend oil supplies till all outstandings are cleared. Mallayaji, I hope you understand that you will be doomed.
* Major portion of Vijay Mallaya business like liquor is heavily regulated and dependent on government policy. I think Vijay is in no position to teach a lesson to the government.

(e) The structure of the airline industry as well as the pricing policy of ATF was well known to Vijay Mallaya when he entered the airline business. So Vijay Mallaya has no reason to cry foul or have a reason to complain. Now just because he made a few mistakes on his desire to make his airline a global player in a short time, the government and the people of this country cannot bail him out.

(f) From now on, Vijay Mallaya should not be against unions as he has himself formed a union to protect his interest. Workers also form unions to protect their interest. If Vijay Mallaya thinks that in numbers lies negotiating strength so do the workers. From now on, Vijay Mallaya should not talk about capitalism as in capitalism, you cannot go crying to anybody let alone to the government for help.

(g) Sriking airlines are talking about refunding money to the passengers booked on flights on 18th August. Where is money are they talking about? Or is it monopoly money? Airlines are dead against refunding money to customers for any reason even in good times and now they expect us to believe their statement.

By the way, I think this act of the various airlines is illegal and anti-competition. I think MRTP should be applicable. As far as I think, this seems like a serious offence.

Let me tell you that this is a sham to scam the people of this country. The last time, Kingfisher and Jet did the drama about their joint agreement and layoffs and were able to manipulate the government to benefits worth crores. As I mentioned in my earlier blogs, Minister Sahib Praful Patel seemed to have prior knowledge of what Kingfisher and Jet were upto. Is this another one of the games that “King of Goodtimes” or should I say “King of Badtimes” is playing to get some more relief till his valuations go up.

Avinash Narula

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Mallya has rights to taqlk about his company and he has the rights to do what he thinks right. That is why this is a privaste organization. If employees think otherwise they can quit and join an organization which supports Unions. Remember this is a two way street. I also think there are other ways to resolve issues than to create unions.


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