Recently there was news of recent increase in fuel prices across the country. And I tried to search what is the amount of tax, State Government levies on petroleum products. According to an estimate, around 30-40% of any state revenues comes from taxation from fuel. The central government has little control over the state taxes. Basically the central government is funding the states government in form of taxes and subsidies. I found a very good article on Value Research by Sanjay Kumar Singh. The whole article can be found at http://www.valueresearchonline.com/story/h2_storyView.asp?str=16965. Few of the excerpts from the article is given below.
India should end giving subsidies because of
1) Fiscal Consolidation. Because of high prices and high export volume of petroleum, it would be difficult to control the fiscal deficit
2) Encourage Conservation practices: High fuel prices give a phillip to usage of alternate fuels.
3) Subsidy is a cost borne by everyone. Even the companies are not happy as the subsidy don't come in time. There is a lag in subsidy payment and payment for fuel.
Read the whole article and you will come to know about the harms the current fuel subsidies are doing to us. What are your views on this.
Saturday, May 21, 2011
Wednesday, May 18, 2011
Tuesday, May 10, 2011
India Air(in the)lines. Do we need the national carrier
Do we need a national carrier?
Recently the pilots strike has ended. It is estimated that the loss due to this strike was around 180 crores. But this strike has raised another question too. Do we need a national carrier? Even after pumping crores of rupees, the airline is not able to get on air. According to DGCA, it has 14.9% share in the domestic market. It ran at around 61% seat factor in March 2011 due to lean season. Compared to this Jet ran at 69% seat factor in the same month. Jet airways have 17.5% market share in the market.
The last time Air-India was profitable was in 2005. It was once a flag bearer for India, but now it is struggling from overcapacity and unprofitable routes. It is also not able to cut neither costs nor trim the staff. The 2007 merger between Air India and Indian Airlines was to deliver economies of scale and scope. But it has remains a case study on how to turn profitable airlines to unprofitable ones.
Today Jet Airways and Kingfisher Airlines are ranked above Air India. Also many of the other national airlines like Air Canada, Lufthansa, Singapore Airlines and Alitalia are only partly state-owned or even fully privatised.
The problem is that Air India is run by pack of politicians and IAS officers who have no experience of operating an Airline. The politicians run AirIndia like it is their property. And why they are interested in running Air India, because its the only airline which offers free tickets to netas. Last year there was news that Poorna Patel, daughter of Prafful Patel, the then civil aviation minister pulled out a scheduled AI flight for IPL players to transport them from Chandigarh to Chennai.
The problem is that the airline is falling into abyss of death, a point from which it is very difficult to return to profit. No investor will not be willing to buy a stake in the airline even if privatised. Again the question, should the government run an Airline or a hospitality entity. We have seen equity infusion of around 2000 crores in the airlines in the past and may 1200 crores in 2011-2012.
The best thing for Air India would be to divide the operations in Ground Staff. The same ground staff can give services to other airlines thereby generating money for the enterprise.
As part of entry into Star Alliance, they have to unify the domestic operations and international operations. So this cannot be ruled out. As a Star Alliance member, a passenger would be able to book ticket from Ranchi to Chicago even if Air-India runs operations from Ranchi to New Delhi and New Delhi to New York. As a unified ticket, the passenger would be able to save money. Currently the passengers are avoiding Air India as they are not getting single ticket to their destinations.
What do you think? Your Comments are most welcome.
Recently the pilots strike has ended. It is estimated that the loss due to this strike was around 180 crores. But this strike has raised another question too. Do we need a national carrier? Even after pumping crores of rupees, the airline is not able to get on air. According to DGCA, it has 14.9% share in the domestic market. It ran at around 61% seat factor in March 2011 due to lean season. Compared to this Jet ran at 69% seat factor in the same month. Jet airways have 17.5% market share in the market.
The last time Air-India was profitable was in 2005. It was once a flag bearer for India, but now it is struggling from overcapacity and unprofitable routes. It is also not able to cut neither costs nor trim the staff. The 2007 merger between Air India and Indian Airlines was to deliver economies of scale and scope. But it has remains a case study on how to turn profitable airlines to unprofitable ones.
Today Jet Airways and Kingfisher Airlines are ranked above Air India. Also many of the other national airlines like Air Canada, Lufthansa, Singapore Airlines and Alitalia are only partly state-owned or even fully privatised.
The problem is that Air India is run by pack of politicians and IAS officers who have no experience of operating an Airline. The politicians run AirIndia like it is their property. And why they are interested in running Air India, because its the only airline which offers free tickets to netas. Last year there was news that Poorna Patel, daughter of Prafful Patel, the then civil aviation minister pulled out a scheduled AI flight for IPL players to transport them from Chandigarh to Chennai.
The problem is that the airline is falling into abyss of death, a point from which it is very difficult to return to profit. No investor will not be willing to buy a stake in the airline even if privatised. Again the question, should the government run an Airline or a hospitality entity. We have seen equity infusion of around 2000 crores in the airlines in the past and may 1200 crores in 2011-2012.
The best thing for Air India would be to divide the operations in Ground Staff. The same ground staff can give services to other airlines thereby generating money for the enterprise.
As part of entry into Star Alliance, they have to unify the domestic operations and international operations. So this cannot be ruled out. As a Star Alliance member, a passenger would be able to book ticket from Ranchi to Chicago even if Air-India runs operations from Ranchi to New Delhi and New Delhi to New York. As a unified ticket, the passenger would be able to save money. Currently the passengers are avoiding Air India as they are not getting single ticket to their destinations.
What do you think? Your Comments are most welcome.
Subscribe to:
Posts (Atom)
