Aviation industry in the red, lay offs inevitable

Jet Airways Chairman Naresh Goyal has admitted that the Domestic Civil Aviation industry is facing a crisis and appealed to the Government help the domestic airlines. "The Government will have to see to it that we are viable" Goyal said in Hyderabad on Wednesday. Goyal also reassured that despite the consolidation, lay off will not be done in an arbitrary manner. “We are here to protect the interest of our employees. Whatever we are is because of them. The idea is not to get rid of the people or staff but there are bigger issues to be dealt with,” Goyal said. “Basically it is the alliance. Alliances were started in Europe by British Airways, Lufthansa and Air France. They have also other European carriers in their alliances. This is the first time it is happening in India. Mergers and acquisitions have taken place in India. Mergers are taking place in every industry like banks, insurance, hotels, automobiles, telecom etc. When the industry opened in 1992 and further liberalisation took place in 2004. I have already said when we took over Sahara you cannot stay in business unless there is rationalisation,” he said. Goyal, who is in Hyderabad for India first-ever civil aviation exhibition and conference India Aviation-2008, claimed the cost of running business has gone up by 30 per cent and added that many US airline companies have gone bankrupt in recent months. "Alliances have already started in Europe. We are doing this in India now," Goyal said. “Consolidation in aviation industry is inevitable. Market share is not an answer to profitability. Rationalisation of routes, capacity and costs etc are essential for survival. Rationalisation will improve the bottomline," Goyal said adding that divide and rule was no longer feasible. “Our alliance is not a marriage of convenience,” Goyal replied however, when asked about the talks with Kingfisher over a possible alliance. Kingfisher Chairman, Vijay Mallya, too, echoed Goyal's views. "There is no equity swaps on the cards. It's purely an operational alliance," Mallya said. He also warned that the airlines industry could see more lay offs. "I have laid off staff. They (Jet Airways) have also laid off staff. We need to be efficient and cut the costs and will do whatever it takes," Mallya said. "Jet-Kingfisher alliance will help save up to Rs 1,500 crore," Mallya said. Aviation Industry sources added that Jet and Kingfisher will be meeting on route rationalisation in the next two-three days. The Aviation Industry is facing a difficult time due to the ongoing global financial crisis and high fuel prices and the CEO's of domestic airlines will be meeting on Wednesday morning to discuss a bailout package with the Union Civil Aviation Minister Praful Patel. The sector is staring down at losses of over Rs 4,000 crore and want a financial bailout of about Rs 5,000 crore, which could be a mix of soft loans and decrease in high aviation turbine fuel (ATF) taxes to a uniform four per cent across the country.