Our fellows are the new British.

Debt of airlines in India have increased by 8.9% in 2012-13 to an estimated $14.5 billion or around Rs 807.65 billion according to a report by consulting firm, Capa-Centre for Aviation. Livemint, 29 May. Air India has a debt of $8.9 billion, Jet Airways $2.25 billion, Kingfisher $1.8 billion, Spice Jet $336 million, IndiGo $176 million and Go Air has a debt of $147 million. Most airlines are still making losses even though losses are down because they have been able to increase fares due to the grounding of Kingfisher. Jet made a loss of Rs 4.855 billion last year against Rs 12.30 billion the year before. Spice Jet made a loss of Rs 1.91 billion against Rs 6.058 billion the year before and Air India made a loss of Rs 51. 99 billion against Rs 75.60 billion the year before. Most airlines have eroded their net worth. " A negative net worth reflects badly on a company," said Gautam Naik, a chartered accountant. What does it mean? Does it mean that most airlines in India will have to stop operating because they will not have the cash to pay employees and buy fuel? They have either to raise more cash through rights issues to shareholders or start making profits. In a panic the government has allowed foreign investment of up to 49% in domestic airlines but foreign airlines will want to make profits on their investments. That will happen if more people fly instead of going by trains but domestic air traffic fell to 58.82 million from 60.7 million a year earlier even though international traffic grew by 21.8%. This year traffic is expected to increase by 4-6% to just over 60 million. Indians are very price sensitive and the high cost of domestic travel inhibits people from flying. So, apparently to reduce cost of flying, the government decided to " unbundle " services offered by airlines which means that basic fares will be kept low and airlines will be allowed to charge separately for everything from check-in baggage to food to choice of seats, like the Irish airline, Ryanair does. The only trouble with this is that airlines cannot offer low basic fares in India because of huge airport charges, taxes on tickets and on fuel. So the net effect of charging for each item of service will be to increase fares even higher. The easiest remedy is to reduce taxes on air travel as in other countries. This the government cannot do because it wants to retain a price difference between air and train fares so that people are forced to travel by air conditioned and first class. This is because profits on these passengers subsidises masses of people from Bihar, UP and Rajasthan who travel without paying. They are the " vote bank ". Divide and rule said the British. Our politicians follow.