Telecom and Aviation in the limbo

 

Been reading a lot of news about how many telecom and aviation companies in India are all burning cash, and slowly heading towards ultimate shutdown.

The newly formed Vodafone-Idea is running out of Ideas to stay afloat, there are plans to disconnect numbers who do not recharge enough a month, and there are speculations, only speculations at this point, to charge customers for incoming calls ! Gives me the 90s vibe. During the late nineties and early 2000s, companies used to charge about 7 Rs/- a minute for incoming calls. It was Reliance who changed the game by launching their first telecom services , undercharging for services, and eventually forced the practise out of the industry.

And aviation, it seems is the other industry in a nosedive. A newly inaugurated and much hyped airport was promptly shutdown after two weeks, because the sole operator refused to ply. Companies are now charging more for online services. Some others are cancelling entire flights reportedly due to not having sufficient pilots. Owing to rising aviation turbine fuel (ATF) prices, the depreciating rupee and competitive ticket pricing, not a single airline in India is earning more than it is spending. The losses run into thousands of crores of rupees. Some frequent flyers are posting reasons online as to why they will stay with the failing company. It is not just Jet, Air India’s losses are mounting, market leader IndiGo has announced a loss for the first time since it took off in August 2006, SpiceJet is said to be looking for fresh investments to stay airborne. Some new airlines like Air Odisha (of Jharsuguda fame), Air Deccan and TruJet are not flying aircraft on several shorter routes as not operating is a more viable option than flying. In fact, had it not been for the recent fall in fuel prices and the rupee’s recovery, at least two airlines would have come to a grinding halt. They did not have enough cash to sustain themselves beyond a month.

Its surprising that despite all the opportunities in the market, these companies are always burning cash. Customers are simply not willing to pay. They can turn their fates around if they simply start charging more for their services, but then, in the world of social media, they also have to limit the memes coming their way.

 

 

India is truly shining.