Indian Directorate General of Civil Aviation (DGCA) threatens to take severe action against private airlines for strike on August 18 but the problem is different
Parth Sharma
Aug. 1, 2009

"The government reiterates its advice to private airlines against suspending operations on August 18," Civil Aviation Minister Praful Patel said in a statement.

The private airlines in India are running on losses just like many other airlines across the globe. The Government of India controls the fuel price, and the cost associated with the Airport facilities. These costs have gone up sharply in recent days while Indian economy has stagnated to some extent. The private airlines’ major demand came from the rich Indian outsourcing executives. As the western economies went into depression, the Indian outsourcing market lost its steam and endless honeymoon in profitability.

The net result is a hopeless situation fro the Airlines industry in General. Air India is running under massive losses. The private airlines in India are bleeding losses even more. The Government wants the entrepreneurs owning these airlines to come up with a solution. There is no solution for a failed business model.

Problem in India is that the business people are not that talented. They did not understand how miserable the airlines business could be. They thought the outsourcing money from western countries would keep flowing in for ever. They also never realized how artificially controlled fuel price India can be eventually devastating for any business model based the free world business economies.

The eventual solution is that these airlines have to consolidate. They rely too much on Government controlled fuel price, airport facilities and upper middle class pseudo income from America and Europe. The business model is faulty. India may eventually have to take over these airlines and provide subsidy to run the operations. Eventually price wars will end. The airlines tickets will cost much more than it is today. There will be fewer airlines at much higher prices.

Indian Directorate General of Civil Aviation (DGCA) threatens to take severe action against private airlines for strike on August 18 but the problem is different
Parth Sharma
The eventual solution is that these airlines have to consolidate. They rely too much on Government controlled fuel price, airport facilities and upper middle class pseudo income from America and Europe. The business model is faulty.
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