Death-wish: Mallya and the masochism of airline ownership

The airline business is the worst one to be in, through the ages. So why are people with money still attracted to it?

R Jagannathan February 21, 2012 08:57:41 IST
Death-wish: Mallya and the masochism of airline ownership

What is it about an airline that everyone - from liquor barons to travel agents to governments - wants to own one?

In the US, the last 30 years have seen nothing less than 50 airline bankruptcies. In India, we have seen at least 10 failures ever since aviation was opened up to the private sector in the 1990s.

And yet, masochism rules.

Perhaps there is something exciting about a machine that flies that makes all the red ink and heartburn worth it. I suppose, when you are at a party, it is better to be introduced as "Mr X owns airline Y" and let the ladies swoon rather than be introduced as "Mr A sell booze" and get an "Oh, ah" as audience response.

This is the only thing that can explain why a Vijay Mallya wants to own a bleeding airline when he has a gushing booze business. This is possibly why a Subrata Roy was happy starting an airline (for a while at least), when he was making more moolah in money collection schemes bearing the Sahara name.

Deathwish Mallya and the masochism of airline ownership

In India, we have seen at least 10 failures ever since aviation was opened up to the private sector in the 1990s. Reuters

Like a a flame that draws the moth, successful men seem to be drawn to airlines almost like a death-wish.

Perhaps owning an airline is like having a trophy wife, something to flaunt. For the man who has everything, the airline is the ultimate ownership challenge.

So much so that even governments looked at it as a matter of national machismo.

Before airline deregulation in the US sent the worldwide business into a tailspin, almost all governments owned a national airline (the flag carrier), never mind the costs. Initially, it helped that most of them were national monopolies, given favoured landing and other rights in their home bases. But once this ended, so did the party.

In India, we did things better, We had not just one national airlilne, but two - Air India, and Indian Airlines. The only good Praful Patel did when he was civil aviation minister was that he ended the double agony and merged it into one. Now, we have only one airline on perennial life-support. Patel's successors have kept the urge to own a flag-carrier alive and well.

In the private sector, a fresh saga of airline owning mania began in the 1990s when the air taxi segment was opened up. Everyone from travel agents to sundry players signed up for the ride.

The early birds included Jet, East West, Damania and ModiLuft. All of them ran a good airline from the point of view of passenger service - but only Jet got its sums right at that time, by having fuel-efficient aircraft. The last three folded up - East West after one of its promoters was bumped off in a gangland killing, and Damania, when it found that it's old aircraft were simply guzzling too much fuel. ModiLuft went bankrupt as its promoter could not afford it anymore.

Somewhere in the second-half of the 1990s, even Ratan Tata got the itch and tied up with Singapore Airlines - but a coalition of Jet and Indian Airlines put paid to that hope. He should be thanking Naresh Goyal of Jet for this. Goyal's airline is bleeding like the rest of the industry. Tata is safe and sound.

In the last decade, another batch of masochists entered the picture, including Capt GR Gopinath of Air Deccan, SpiceJet, Go Air (of the Bombay Dyeing Group), and Indigo. Even Niira Radia (of Radia tapes fame) wanted to start an airline. Luckily, she was turned down.

In just a few years, everyone learnt their lesson the hard way - that the airline business is a losing one, with very few successes. Roy sold his problems to Naresh Goyal. Capt Gopinath, despite some brave noises, was happy to hand his hot potato over to Mallya.

Last year, Mallya ended his dalliance with low-cost carriers and shut down the Air Deccan part of his operation. He was actually running a better full-service airline when greed got the better of him and he bought out Gopinath.

Today, Indigo, SpiceJet and Go Air are doing the cost advantage number on Jet and Kingfisher.

But unlike Roy and Gopinath, Mallya has persisted too long with a folly called Kingfisher. If he can't call it quits now, he might take his liquor business down with it. He can literally drown his airline sorrows in drink.

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