It seems all the airlines are learining Mallyanomics

First there was collusion between Jet and Kingfisher. They wanted to join together and take the travellers for a ride. Now it seems that all the airlines have joined together to raise prices together. The surprising part is that the budget airlines are also joining hands with full service airlines. The price increase comes just a few days after they had cut prices.

The public is being taken for a ride. The Delhi Mumbai fares will jump by 25% – 50%, that is from Rs. 4000 last week to Rs. 5-6000 today.All promotional Rs. 1 and Rs. 99 fares are being discontinued

The above is prima facie illegal. Whenever all the competitors raise prices together, collusion is a foregone conclusion. Here the airlines have increased the prices on the same day. Add to this the fact that quite a few airlines had reduced prices just recently. There has been no change in the market conditions to warrant such a hefty increase from all of them.

I think Kingfisher is behind this action by the airlines. Why? Very simple. Just a few days back, I think its senior executive had commented that they have talked to the ministry about the fare cuts by budget airlines and that these fare cuts were not sensible. With Vijay Mallya’s friend Shri Praful Patel heading the ministry, one could not expect anything less.

Since Vijay Mallya announced the proposed agreement with Jet, he has been trying desperately all kinds of tricks to boost his airlines cash flows. Even though, it has been reported that he is trying to sell stake, Mallya wants to avoid the stake sale as he is not going to get good valuations.

All of a sudden, all the airlines are saying “low prices are not sustainable.” These were exactly the words spoken by senior Kingfisher executive a few days back. It seems that Vijay Mallya has opened an Economic School of Kingfisher where he teaches Mallyanomics. The basis of Mallyanomics is simple as follows:

“When you can’t make money fair and square, lets screw the customers because by hook or crook businesses have to make money. If a business does not make money, the business owners cannot have GOODTIMES which is unacceptable. The customer is at fault.”

Just to make sure that people don’t misunderstand me, let me say that I have nothing against businesses pricing their products whenever they want to without giving anybody any explanations. What I am against is companies taking such decisions jointly on the same day.

I also feel that most of the airline owners have stopped wearing pants because everyone is blindly following Vijay Mallya without even thinking about the consequences of such an action. If the airlines individually felt that low fares were not not sustainable, they should have taken their own decisions rather than joining hands with others to do so.

I think MRTP should immediately hold an enquiry and take suitable action against the erring airlines. I also think that the government should note of this action and not try to bail out the airlines next time.

Lastly, I have started praying to God to somehow help Vijay Mallya get out of the airline business so that he can keep having GOODTIMES with United Spirits and not give us, the customers BADTIMES.

Avinash Narula

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One should note that historically no airline has ever done well except a very few nich players. Air travel being considered almost a necessity continues to see bankruptcy on a regular basis. Why is that ?

The airline industry has always played a game for short term results rather than long term. They have always gone for load factor optimistation without giving priority to sustainable yields.

You take Air deccan scenario. The airline was obsessed to fill the aircrafts without a care on the bottomline with the result it almost went bankrupt. Jet responded to the game with their lower fares to retain their loads and they also got trapped in massive losses in the bargain.

This phenomena is very unique to airline industry unlike any other. We have seen cola wars, automobile industry competition, but, they do not cross the sacred line of selling any product below cost for any reason.

Is Vijay Mallya, Naresh Goel listening ? It is time to throw the white men from USA who have bankrupted the american airlines and have come to india to teach them how to go under.


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