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January 28, 1997


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Why are India's private airlines in such bad shape?

East West and ModiLuft do not fly anymore. Damania has sold out. Private airlines in India are in terrible shape. An investigation into why the dream of open skies has died a premature death.

Modiluft Two men sit across a dimly lit room, a generator humming quietly in the background. There is just enough light to see each other by and the few papers that lie on the table. S K Modi and his aide Alok Sharma can hardly be described to be in buoyant spirits as they stare at each other across the vast expanse of mahogany.

For here, in a nondescript room in a nondescript tower of Nehru Place -- Delhi's very own concrete jungle -- last desperate attempts are being made to revive India's most high profile private airline: ModiLuft. The airline has been in coma since October last year. Not a single plane has lifted off the ground and Modi and Sharma wonder if any plane will ever fly again under their banner.

A lot is at stake: S K Modi's reputation, his money and the Indian flyer's belief in private domestic aviation.

The only consolation Modi can draw is from the fact that there are others in the same flight: heading down and accelerating.

East West Airlines -- the private aviation pioneer as it called itself -- hasn't flown a single flight since August. Parvez Damania of Damania Airways sold out a long time ago to -- of all people -- NEPC's Ravi Prakash Khemka. And Khemka himself has been running along the edges of law with the Securities and Exchange Board of India dogging his heels. Sahara is still in the sky, but it survives on U K Bose's chit fund operation -- unstable by any definition -- and many are fearful of the day when that bubble bursts.

Of the five private airlines, only Jet Airways still soars on, having recently expanded its fleet to 12 aircraft from the four it started off on.

So what went wrong?

The Narasimha Rao government's open skies policy was hailed as the most revolutionary of its liberalisation merasures. No longer would the government-run Indian Airlines hold passengers to ransom: making them wait for hours on dreary airport terminals, treating them to rude air hostesses and tasteless food and charging them whatever fares the minister of the day thought appropriate.

Indian flyers saw visions of a private, competitive and robust industry. But things haven't turned out quite that way. On the contrary, while Indian Airlines has grown stronger, private airline companies have steadily deteriorated.

The reason is threefold: the nature of the aviation industry the world over, the Indian government's peculiar aviation policy and the kind of people who entered this sector.

Courtesy: Sunday magazine