Who asked you to fly Vijay Mallaya?
Vijay Mallya has stated, “Sometimes it costs more to fly than not to fly.” Well, I think we never asked him to fly. He entered the airline business of his own free will and he can get out of it at his own free will. If he finds it more economical NOT to fly, he can stop flying and make as much as he wants. However, he can’t form a cartel and blackmail the people of the country. He has been given a licence by the government to run an airline and the same can or should be taken away if Vijay Mallya takes illegal action. He has done this before when he signed an agreement with Jet. Mallya has taken too many liberties just because he knows people in the government.
Every business goes through ups and downs. We have also suffered losses but that does not mean that we adopt illegal means. Do you think any minister will even comment if we decide to close our business or waive of interest on government dues. We are paying huge amount of conversion charges every year but the government has not waived the amount or waived off any interest as it has done to the airline industry. Vijay Mallya should realize that he is saving Rs. 180 crores as interest on the amount due by him to the oil companies. If he is still if Vijay is not happy, I think he should close down or sell his airline.
The problem of the airline industry is not higher ATF prices or the landing cost as Mallya keeps harping on. The problem is basically two fold as follows:
(a) Higher capacity as compared to the demand. This happened because of two reasons. Too many players entered the business little realizing the dangerous character of this industry. When I was in the US during 1984 – 1994, airlines used to fold up or land up in the bankruptcy every now and then. The airline business is probably the only business which was globally connected even in a non-globalized world. Second, flamboyant people like Mallya who like making headlines made plans to build capacity very fast without understanding the uncertain character of the airline industry worldwide.
(b) Global slowdown. One will have to wait out the global slow down as most of us are doing.
Lower taxation level has been demanded by businesses all the time all over the world. This is nothing new. So Mallya demand for lower taxation is nothing new. But that is not the sole reason for his problems. Let me prove Mallya’s theory wrong by suggesting that the liquor industry that his companies are involved is not only the most regulated but is also taxed heavy but Mallya is not complaining because he still manages to make money. Why is he making money inspite of high level of regulation and taxation? Simple, there is demand for the products. In the case of airlines, demand is poor because of the global economy.
However, I do support the demand for lower taxation on the ATF. In fact, I think the taxes on everything should be lowered as that will expand the market as well as increase demand. If we want Indians to compete globally, we need to ensure a level playing field.
Avinash Narula
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