The wrong reasons for Air India


There was a tweet chirping around and being re-tweeted – that Air India/Indian Airlines had reduced its fare for Leh – thereby justifying the need for a national carrier.  Curiosity piqued, I checked on the fares.  AI had indeed dropped their fares – but were still above the fares charged by private airlines! It’s the kind of data check that we ask young analysts to do all the time.  Turns out that KF/Jet are more patriotic – maybe they ought to be nationalised!

More seriously, I believe that even if the data were in support of AI – the logic is flawed.  You can’t justify the need for an airline based on the discounts it gives in the time of crisis.  It would be simpler and cheaper for the government to subsidise fares during a crisis or charter planes instead.  Running an airline is hardly the solution for such black swan events.  It’s not like petroleum where the nation’s energy security may potentially be threatened.

We need a better logic for Air India.

P.S. Richard Branson said that the easiest way to become amillionaire is to start out a billionaire then go into the airline business!

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