Friday, November 26, 2010

Our airfares are too low

was amused to see the following report in the papers:

Read this or this or this.

Ostensibly, the airfares have gone up. And the Civil Aviation Minister Mr. Praful Patel and the Director General of Civil Aviation (DGCA) is preparing to ‘take action’ against this ‘loot’.

“Civil aviation minister Praful Patel on Thursday asked airlines to price fares in pre-notified “bands” and avoid any kind of predatory pricing……….. Warning erring airlines, he said the government and the Director General of Civil Aviation (DGCA) had taken serious note of ‘exorbitant prices’ being charged on most routes in the last few days.

“DGCA has already sent notices to airlines ... it can invoke special powers if required .... it will discuss with airlines on ways to regulate fares in low and high bands.””

To be sure, the Airfares have certainly gone up. I flew from Bangalore to Mumbai last week, and the cheapest ticket on the sector for a Friday night (ostensibly, a peak period) was upwards of Rs.12,000. Reports suggest tickets on the Delhi – Mumbai sector have gone up to as high as Rs.25,000 on some days. For those used to flying for a couple of thousand bucks from one corner of the country to another, this would seem certainly high.

But is it?

Come to think of it – what does an airline do? It transports people (and goods) from one place to another. In this respect, it does nothing different from what any other transport operator does – such as a bus, train, taxi or a rickshaw. In fact, an airline actually competes with these other modes of transport (i.e. bus or a train) to get its passengers. When airfares went down a few years back, passengers actually shifted from trains (especially Ist class / IInd A/C) to flights. And this is what led to the aviation boom in the country. Airlines, such as Air Deccan created a ‘taste’ for air travel among those who had never flown before.

But they did it at a throwaway cost.   At prices which were unsustainable in the long run. (For example, between 2005 to 2008, I flew several times between Mumbai and Bangalore (a distance of 860 km) paying fares of Rs.2,000 - Rs.3,000). In the process, they made huge losses and shut shop. Air Deccan, which pioneered low cost flying became bankrupt and was taken over by Kingfisher. Air Sahara was gobbled by Jet. Paramount is grounded. Those who are still running (or flying), are also making losses. For example, Kingfisher’s entire capital has been wiped out, and it is surviving solely on the largesse of the Banks and Financial Institutions. Air India runs on tax payer’s money. All other airlines are also making losses. Even a chaiwala will tell you, for any business to survive, it should be self sustaining – it should generate atleast some amount of profit. Doesn’t the Aviation minister and the DGCA know this?

Now, look at the ‘exorbitant' airfares that the Minister and the DGCA have been talking about. In Mumbai, an auto rickshaw costs Rs. 6.50 per km. Taxi costs Rs.10 per km. (Rates in some other cities such as Bangalore are even higher). And we don’t find these rates high. Now compare the operating costs of a rickshaw or a taxi to an airline. An aircraft costs a bomb, they are forced to hire highly specialized pilots and aviation engineers and pay them huge salaries, they keep the airline spic-and-span. They buy expensive non-subsidized fuel and maintain a huge inventory of spare parts – even a single screw missing from the plane can cause the aircraft to crash. How much does it cost to run an auto rickshaw business? Compare the comforts of flying vis-a-vis the comforts (actually, the lack of) travelling by road. Also add the money value of the time saved. Don't you think you should pay more per kilometer for travelling by air, than travelling by road?

Mumbai – Delhi distance is around 1100 km, Mumbai Bangalore is around 850 km. Thus, theoretically, if we were to travel Mumbai – Delhi in an auto rickshaw, it would cost us Rs.7,000 (Rs. 6.50 per km X 1,100 km), Mumbai – Bangalore would set us back by Rs. 5,500. If we took a taxi instead, Mumbai to Delhi fare would come to Rs.11,000, and Mumbai to Bangalore Rs.8,500. We won’t find these rates ‘high’, this is the normal rate he would charge 'by meter'. But we expect that an airline which flies us these distances in luxury in a couple of hours should do so for Rs.3,000? What are the minister and the DGCA ‘warning’ about? Can they please explain?

I am surprised Praful Patel, a businessman himself, does not understand this simple economics. Perhaps he does, he is just playing to the gallery. But you and I should not  be fooled. If airfares have gone up, they better be. If the airfares come down, the airlines will come down too. Don’t crib. Buy airline stocks instead. That is what I am doing.

Saturday, November 13, 2010

Noise pollution

When I went to Bulgaria 3 years back, one of the first things that struck me as remarkable (and there were quite a few!) was the extra-ordinary level of “silence” in the atmosphere. There just weren’t any sounds around. Nobody said anything loudly, nobody shouted. No cars honked. No hawkers selling their wares. Smooth and noiseless vehicles. No loudspeakers blaring music or ‘celebrating’ festivals. No noise at all. It was almost haunting, even during daytime. You could actually ‘feel’ the silence.
It was quite a change from the noisy world that we are living here in India. There is noise everywhere.  Just switch off the TV (here you go!), close your eyes and try to listen. Even in pin-drop silence, in the middle of the night, you can actually ‘hear’ something. Some of it will be specific sounds made by clearly identifiable objects, like the fan or the air-conditioner, or an occasional car passing by on the road below. But you will also hear a slight humming in the air. If you don’t, then that’s because you are not able to identify it, to distinguish it from a truly silent atmosphere. Because you have never ‘heard’ the real silence.
I think the biggest contributors to noise pollution in our atmosphere are the automobiles. Autorickshaws rattle as if the silencer is yet to be invented. In fact, I am surprised how such a vehicle is even given a license to be sold. Some of them create so much noise that they deserve to be out of the roads. It is a clear encroachment of an individual’s right to privacy, to a calm and peaceful surrounding, a right not to be disturbed. Another and perhaps the biggest contributor to noise pollution is the incessant honking of vehicle horns all around us. It is just too much, we honk anytime and everytime. Just start observing once you step out on the roads from today. We don’t even realise it. Here are some of the reasons people honk on our roads:
·         To tell the vehicle you are overtaking “I am overtaking you!”.  This is universal, followed more religiously than even the traffic rules themselves. I won’t be surprised, if, in a survey, someone finds out that more than 50% of the drivers think you SHOULD honk while overtaking others, that is the rule!
·         To tell the vehicle in the front “I am overtaking you from the wrong side”. This is used as a ‘disclaimer’, once you honk, you have the right to overtake from the left. Nobody can complain!
·         To tell vehicle in the front “I am overtaking you rashly.”  Same as the point above, disclaimer. Now the onus is on the other guy to ensure there is no accident.
·         To generally announce “I am coming!” and warn everyone else on the road and on the footpath to be careful (!). Shows how much confidence the driver has in his own driving.
·         To “announce” that the signal has turned green and now everyone can start moving! As if, the signal was red for so long that some of the drivers might have fallen asleep at their steering wheels. I find this the most amusing – just observe how many horns blurt the moment a signal turns green. I have never understood why.
·         To shout at the pedestrian “abey, andhaa hai kya?” or some other such homilies.
·         To call the security guard to open the gate.
·         To tell the security guard to open the gate fast!
·         To call someone in the balcony from the road below (!)
The list is endless, you can go on adding to it.
Most of the people honk quite mechanically most of the time, it comes as naturally as applying the clutch, break or the accelerator.
According to my observations, 99% of the honking is futile. Whatever you are trying to tell, the person is already doing it. A simple slowing down of the vehicle will do. In fact, the most interesting thing is that honking does not avoid slowing down anyway, since everyone honks so often that most of the people ignore it, defeating its very purpose. Excessive honking is a reflection of the agitated and irritated state of the driver’s mind, it just reveals his impatience, and even immaturity. It causes stress to everyone around. Noise pollution leads to aggression, hypertension, high stress levels, sleep disturbances and other harmful effects. Stress and hypertension in turn lead to several other severe health problems.
The U.S. President Barrack Obama, during his recent visit to India, said that India is no longer an emerging nation, it has already emerged. In some respects, this might be true. But in many others, we still have a long way to go.

Wednesday, November 10, 2010

Joke of the day

"I resigned because of the Congress party's moral stand on such issues. I resigned on my own." - Former Maharashtra Chief Minister Ashok Chavan, after being kicked out of the CM's post in the wake of the Adarsh housing scam. Link here.

Monday, November 8, 2010

Thought for the day

"If you want something that you never had, do something that you have never done" - Anonymous