On Thatcher, Chacha And Air India

As a low-cost civil aviation enthusiast, I still recall the times in which this idea was born: the Thatcher era, with Freddie Laker taking on the “Big Five” - BOAC, KLM, Pan Am, Air France and Lufthansa - on the busy London-New York route, with his "skytrain." It was a thrilling moment. Freddie Laker was one of Margaret Thatcher’s favourite businessmen. She liked the swashbuckling type of adventurer who takes on big competition head on and emerges successful.

Let us now turn to the evil designs of the Chacha Manmohan State and the curious case of Air India entering the domestic low-cost airline business. What does this mean in terms of realpolitik? Allow me to illustrate by means of an incident I was witness to.

During my Mangalore years, something I found clearly noticeable on the streets was a vibrant private bus industry. As a champion of private business, I welcomed this. However, all these private bus owners here are forced to compete with KSRTC – the Karnataka State-owned bus behemoth. This KSRTC (like Air India) runs at a loss. Now, try imaging competing with someone who can afford to run at a loss, year after year.

Anyway, one morning I read the news that KSRTC was launching 50 new buses on the Mangalore-Udipi route, a very busy 50 km stretch of NH 17, on which you can get a private bus every 5 minutes. Which is why none take the train.

The announcement of 50 new KSRTC buses on this route created a big fear among the private bus operators. In the end, their view prevailed, KSRTC withdrew, but not after much lobbying, during which, or so it was alleged, many crores changed hands. I was also told that these bus operators had bought off the Indian Railways – because of their lobbying, the Bangalore-Mangalore rail link had never been constructed!

Note that all this corruption and bribery is rooted in the evil idea that The State should occupy the “commanding heights of the economy.” In a free market, the commanding heights are occupied by consumers. And “civil government” is always an ancillary to The Market. These are the ideas that should be at the foundation of the Second Indian Republic.

Getting back to civil aviation: Try and picture the scene. Some four or five new private sector low-cost and full service airlines have come up – and become the toast of the town. They have redefined flying in India, making it immensely affordable. There has been a dramatic increase in the number of first time fliers. This is progress – because of private enterprise. In the old days when State-owned Indian Airlines monopolised the market, we all took the train. Delhi-Goa on Indian Airlines cost more than Delhi-London on Pan Am.

Yet, unlike Margaret Thatcher, who encouraged Freddie Laker, Chacha’s State has actually worked against these pioneering businessmen. There is onerous taxation; there is the high cost of aviation fuel, monopolistically supplied by The State. There have been some mergers. These businesses are not yet completely out of the woods. And yet, at such a moment of time, Chacha is going to let the loss making Air India “compete” with these truly heroic private businessmen.

I condemn this idea as evil in intent, and against the “common profit of the realm.”

Air India should be sold – lock, stock and barrel.

Ditto for the KSRTC.