Exclusive! Does Assocham's logic for Kingfisher hold?

Neelam Mathews

Nov 26, 2012

Assocham, a trade body, has welcomed Life Insurance Corporation of India (LIC) and Employee Provident Fund Organisation (EPFO) subscribing to Rs 7,400 crore debt issue of Air India as part of the government’s bailout plan for the state-owned airlines. It is now demanding a similar dispensation for Kingfisher Airlines as well. 

According to Assocham Secretary General D S Rawat, the circumstances under which both Air India and Kingfisher Airlines went down under "were almost similar, largely emerging from the demand slowdown, high cost of aviation turbine fuel and other rising overhead costs."
“While Air India deserves to be given  a bailout package, there is no reason why Kingfisher Airlines should be treated differently when it comes to lending agencies, banks and even  government organizations,” said Rawat.

How soon will other private airlines start to demand a similar bailout? And will it then, extend to other sectors as well, we ask.

Does poor management of the private sector really deserve public money? Not that Air India does, as the aam admi’s taxes being sunk into the airline.

Assocham says the closure of KFA has led to a steep hike in the air fares as the overall capacity has come down. What is stopping the government from allowing other carriers to enter the market and be more liberal on where the FDI by private airlines should be aimed at? The high ATF is a factor common to all carriers, so please, could be move that away as justification and applying it to just AI and KFA?