BJP turns up the heat on the Congress government in Madhya Pradesh, asks CM Kamal Nath to prove majority

News Snippets

  • Sensex above 39300 and Nifty crosses 11800 as investors get richer by Rs 5.33 lakhs in a day as punters are buoyed by the exit poll predictions
  • After hectic parleys in Delhi, Chandrababu Naidu visits Kolkata to sound out Mamata Banerjee in case there is a hung parliament
  • Mamata Banerjee says exit polls are "gossip" and the Centre will manipulate EVMs
  • Exit polls predict between 11 and 16 seats for the BJP in West Bengal
  • Congress says exit polls are bunkum, the country is in for a surprise on May 23rd
  • Exit polls predict clear majority for NDA
  • Congress says it will not insist on the PM's post if opposition gets close to the half-way mark
  • Pragya Thakur says Godse was a patriot, retracts after rebuke from party
  • Modi offer to rebuild Vidyasagar statue in Kolkata, Mamata rejects offer, saying BJP alms are not required
  • Delhi HC says #MeToo can't be allowed to become a "sullying you too" campaign.
  • National Consumer Disputes Redressal Commission (NCDRC) says homebuyers can seek refund if flat is delayed by more than one year
  • AFSPA might be lifted in Assam
  • Two climbers missing and two critical from an expedition tp scale Mount Kanchenjunga
  • Monsoon likely to be delayed by 5 days, to arrive on June 6
  • Supreme Court questions Bengal government over the delay in releasing BJP activist who posted a morphed image of Mamata Banerjee on her FB page
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Jet Airways: Nosediving Into Uncertainty

By A Special Correspondent

For the first time in recent memory, lending banks acted with great sagacity and hard-nosed business sense by refusing to provide emergency funds to keep the sinking Jet Airways afloat. If they had provided the funds, it would have been a classic case of throwing good money after bad. There is little chance of the lenders recovering their debt without taking a substantial haircut (reports suggest it could be in the region of 80%). In this scenario, lending Rs 400cr of emergency funds would have been extremely foolhardy.

The troubles being faced by Jet Airways are a result of mismanagement. It is common knowledge that margins in India’s aviation industry are wafer-thin. Was there any justification then for Jet to make selling and general expenses of 15-17%, especially when Indigo was doing a better job than it by spending just 2-3% under those heads? With the price of aviation fuel making up nearly half of their costs and with airlines having no control over it, they have to curtail other expenses to shore up margins. The Centre can also help by reducing some levies and airport charges which are among the highest in the world.

The lenders have called for Expression of Interest (EOI) from prospective bidders to offload their investment. But one feels that the condition Jet is in, there will be little or no interest from buyers and even if they show interest, it will be at a price that will not be acceptable to lenders. The lenders made a huge mistake by letting things come to such a pass, especially when the financial troubles of Jet were known as early as from September 2018. As time will pass, it will become more difficult to find a buyer as Jet’s slots and other benefits will be passed on to other airlines, making it even less attractive to suitors.

Not many tears need to be shed for the collapse of Jet Airways. Some of the employees will obviously face hardships but the planes will be leased by other airlines and the slots will be reallocated. After a period of uncertainty and jump in ticket prices, things are likely to return to normal. The only fear is that if Indigo, which already has a 43% market share, gets to dominate the skies, it will kill competition and fliers will suffer. Hence, it is imperative that the government stops subsidizing Air India with the hard earned money of the taxpayers and relaxes the norms for privatizing it. Further, to prevent more such collapses, airlines should take a more pragmatic stand on ticket pricing to bring margins to a level where they can sustain operations.