Airlines plan strike on Aug 18, 2009 - Will it work?

India's leading private airlines - Jet, Kingfisher, IndiGo, SpiceJet and GoAir (as of now) - have decided to go on a nationwide strike on August 18 to compel the Government to reduce tax on ATF and reduce rentals on various services availed by the airlines. This would mean around 12,000 cancellations on the D-Day. The strike is planned as airlines are continuously losing money and it is estimated to the tune of Rs. 10,000 crores.

Is the strike really a good idea? First of all, Jet and Kingfisher cannot blame the Government for their losses. The reason of their losses, to a large extended, can be attributed to the takeover of Air Sahara and Air Deccan respectively, which were loss making entities. Jet made a blunder by acquiring an all Airbus fleet when it had its owning Boeing fleet.

Second, the so called LCC (low cost carriers) in the country are NOT LCC in principle. They are just LOW FARE airlines. As compared to other countries, such LCCs have a different business model. Those airlines operate out of less congested airports, hence pay less airport tax and even pay lesser salaries to their pilots, crew and ground staff.

Even if the strike goes through, Government still not might relent. Rather, it can see this as an opportunity to add few bucks to NACIL, which is under heavy losses currently. Also, NACIL has extensive reach in the country and passengers, in principle, can avail their services.

Finally, the airlines need to realise that they are digging their own grave by doing such an act. If they go an indefinite strike, they need to refund passengers which will be adding to more losses.

Personally, I feel that Airlines stand to lose with this act of theirs!