Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  Government has brought the whole industry on its knees
BackBack

Government has brought the whole industry on its knees

The Jet-Etihad deal could mark the end of domestic entrepreneurship as Jet risks being reduced to an appendage of Etihad, says Shirodkar

Shirodkar says high taxes on aviation fuel, regulations on supporting non-viable routes, and allowing Air India to price fares at uncompetitive rates has meant that all domestic carriers have made huge losses over the last few years. (Shirodkar says high taxes on aviation fuel, regulations on supporting non-viable routes, and allowing Air India to price fares at uncompetitive rates has meant that all domestic carriers have made huge losses over the last few years.)Premium
Shirodkar says high taxes on aviation fuel, regulations on supporting non-viable routes, and allowing Air India to price fares at uncompetitive rates has meant that all domestic carriers have made huge losses over the last few years.
(Shirodkar says high taxes on aviation fuel, regulations on supporting non-viable routes, and allowing Air India to price fares at uncompetitive rates has meant that all domestic carriers have made huge losses over the last few years.)

Mumbai: Girish Shirodkar, who leads the infrastructure and resources practices at consulting firm Strategic Decisions Group International LLC, said the Jet-Etihad deal could mark the end of domestic entrepreneurship in Indian aviation because Jet Airways risks being reduced to an appendage of Etihad. “All global ambitions of Jet will be via Abu Dhabi," Shirodkar said in an interview. Edited excerpts:

Does the Jet-Etihad deal mark the end of domestic entrepreneurship in Indian aviation?

It is a sad story that instead of providing the necessary foundation to allow Indian airline companies to flourish globally, the government through its distorted policies and blind support to Air India has brought the whole industry on its knees. High taxes on aviation fuel, regulations on supporting non-viable routes, and allowing AI (Air India) to price (fares) at uncompetitive rates has meant that all domestic carriers have made huge losses over the last few years.

Kingfisher Airlines has closed. With high debt levels, other players have no option (but) to end up in the hands of one of the global carriers.

With the deal, Jet is now an appendage of Etihad. All global ambitions of Jet will be via Abu Dhabi. It is unfortunate that instead of flying Jet Airways when travelling international, we will have to use Emirates Airline and Etihad Airways.

Will India lose out on building its own aviation hubs?

There are significant advantages which can come to a city by evolving into an aviation hub. London/Shanghai/Atlanta/Chicago are big hubs, which significantly improve global connectivity to these cities and, hence, improve the ease of doing business with these cities.

With the new airports in New Delhi and now in Mumbai, there was a distinct possibility of these airports evolving into hubs. But you also require a strong airline which complements the facilities and infrastructure of the hub. It was hoped Jet would be that airline for Mumbai while Air India was using Delhi as an hub.

But now with Jet-Etihad planning to use Abu Dhabi as the hub, a lot of Indian traffic going to Europe/US/Africa will tend to go via Abu Dhabi. There are already requests for increase in flights from Abu Dhabi to smaller cities.

How do you see Air Asia’s entry into India?

This is a very good development. Air Asia has mastered the art of low-cost flying and it could bring some of its innovations to the Indian market. This would also provide consumers greater and cheaper options to various South-East Asia and Asia-Pacific destinations. It could also lead to the development of secondary low-cost airports or low-cost airport terminals so as to reduce the overall cost of travel.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 17 May 2013, 12:54 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie