Can Mallya’s Deccan and similar low-cost airlines handle the onslaught of a new competitor, Lalu’s Indian Railways? shashank tripathi of 4Ps B&M digs

IIPM’s 36th Glorious Year of Academic Excellence

As a kid, strange as it might seem, I always used to scoff at cartoons, especially the ones with superheroes. And through the years, my favourite hotshot target superhero always remained the man of steel, Superman! As comical as the reasons might seem, I had two to berate him. One, he was always there to do social service and save the world (I mean, come on, is there no other good reason for a superhero to exist?!); and two, he could fly (Oh please! Get real!). For me, Superman was, in short, a loser, who was like a sissy with just one pocket-full of Kryptonite! And who was, in fact, my favourite toon emperor? Uncle Scrooge! Consider this. Scrooge couldn’t ever fly; he was never there to do social service; and saving the world was as alien to his mind as the Indian football team thinking about qualifying for the World Cup. And what more, Scrooge could have eaten Kryptonite dry for breakfast and not have indigestion (till lunch at least)! So what was he there for? Money! Period! Scrooge didn’t care less about relationships, and lesser about what people think of his dressing sense!

I guarantee, the deja vu and the metaphoric similarity would hit you as hard as it hit me, if you were to compare – like I did – India’s low cost carrier (LCC) industry with a competitor they never expected, Lalu Prasad Yadav’s Indian Railways. Think about it, Lalu ‘Scrooge’ Yadav doesn’t care less about relationships, gives two hoots about what people think of his dressing sense or deportment, and would kick ‘world-saving’ ideas out of his dairy farm if it would cost him even a penny. But the one issue CEO Lalu has never lost sight of in all these years, is profit! The Indian Railways has perhaps never seen brighter times! And what, on the other hand, has the LCC industry focused on? Social service. What else would you call year after year of operating with humungous losses of thousands of crores, and still attempting to offer lowest prices to air travellers?

“There are no real pure low cost airlines in India and there will probably not be any in the future,” shared Maunu Von Lueders, CEO of Jet Lite, when I caught up with him, “In other words, even the best performers are bleeding and they’re trying to use Band-Aids to stop the bleeding!” Without doubt, the King of them all, Vijay Mallya, was and continues to be the poster boy of the aviation industry, rewriting the entire inflight experience to world class standards using Kingfisher Airlines, offering exceptional services at affordable prices. When Mallya jumped on to the LCC bandwagon using Deccan Aviation’s takeover, everyone expected this sector to have glorious days up ahead. But nobody had counted on fuel prices, eh!

But really, LCC’s competition had started way back in May 2004, when the UPA government was sworn in and Lalu took over the huge loss making Indian Railways as the Union Minister. Imagine how he would have felt. There was the authoritative government funded Rakesh Mohan Committee report, which forecasted that the sordid state of affairs of Indian Railways would guarantee over Rs.61,000 crore losses by 2015 and the only way out was privatisation.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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