Kingfisher crisis: No ground for government bailout

It is difficult to understand the civil aviation ministry’s keenness to bail out the debt-ridden Kingfisher Airlines (KFA). By requesting the finance ministry to tell banks to restructure KFA’s debt, Civil Aviation Minister Vayalar Ravi has needlessly made the Union government a stakeholder in the issue.

This also sets a dangerous precedent. For instance, if matters become worse for Jet Airways – which has reported a net loss of Rs. 7.13 billion for the July- September quarter – the government will be under pressure to extend it the same benefits as KFA. In fact, the government’s favourable treatment of KFA reflects the manner in which it has handled the civil aviation sector in recent years. There appears to have been a close convergence of interests between the ministry and private players, which makes little sense given the fact that they run rival companies.

Let us not forget here that the staterun Air India is also in the red.

With its dues running into crores of rupees, it is clear that KFA has mismanaged its operations and finances. Having been a bad performer, there is no reason why the government should come to its rescue. After all, the government did nothing to stop the closure of the textile mills in Mumbai (then Bombay) in the 1980s despite the fact that lakhs of mill workers lost their jobs.

True, KFA is India’s second largest airline and its troubles bode ill for the civil aviation industry as a whole. But the very essence of a free market economy is that the government allows private players to flourish or perish.

In fact it is a little ironic to see KFA proprietor Vijay Mallya – who has otherwise been a vocal advocate of an unfettered market economy – seek the government’s help to get his company out of its financial mess. Private players must retain their belief in a free market at all times, not just when the going is good.

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