| Published on 18-10-2008 In General | | Viewed 1434 times | Written by Nilotpal Basu | | Jet-Setting Economy needs regulations—will you agree now? |
| |
The world appears to be turning upside down. Otherwise, how could one expect such a screaming headline on manpower retrenchment? The pink slips received by 800 employees of the Jet Airways and 1,100 more on the chopping block did hog the headlines of the mainstream media. Heart rending images of young pretty, smart, middle class boys and girls breaking down at the news of their retrenchment did capture the imagination of an atmosphere of apathy which usually greets such discourse on labour issues and illegal retrenchment. It is another matter that given the overwhelming political and public reaction to this development, the Jet Airways Chairman turned into his magnanimous and feudal best and announced the revocation of the retrenchment order. This was, of course, greeted with a sense of relief which, however, has not been able to completely dispel the air of uncertainty in the aviation industry.
Why then is the change of heart? Is it merely because Jet Airways employees could easily be one from our middle class neighbourhoods? Of course, people did identify with the protesting young men and women who must have participated in collective action for redressal of their grievances. But the public response and more importantly, the mainstream media coverage do seem to be triggered by a sense of urgency at what is happening in the financial world – globally and within the country as well. And, perhaps, the plight of the aviation industry is most comprehensively symptomatic of all that has gone wrong in the global economy.
Why is our aviation industry in such a dire strait? The abnormally high prices of Aviation Turbine Fuel (ATF) have led to the bleeding of the airline companies. That the international crude oil prices and the fuel for the entire transportation sector were subject to the most rapacious speculative profiteering is now a universally- accepted fact. The cost of operation in the aviation sector is disproportionately dependent on fuel cost as against other operational expenditure, including manpower cost. Of course, in India, this was compounded by the earlier policy of unplanned and unregulated growth of airline companies which presumed that the dream run of the financialisation-driven growth will continue for ever! Now, with the oil price induced losses of the Indian aviation sector in the financial year will be to the tune of Rs. 10,000 crores. The multiple private airline induced competition had earlier brought down the fares and increased route options for air travelers. These had actually expanded the markets triggering an exclusive boom. Now, with expenditure rising sharply, fares have also gone up in tandem and this has resulted in a negative growth of passengers to the tune of 10 to 15 per cent during the last few months.
Meanwhile, what started as a trickle has now assumed proportions of an avalanche; the subprime crisis involving mortgage companies in US has now blown up into a full-fledged financial crisis for which there are hardly any parallels since the great depression of the 1930s.
The entire financial sector in US has gone for a toss. The integration of global financial system has ensured that in the whirlwind of the crisis in the US, the entire global financial system is on a tailspin. Bankruptcies, distress sales and foreclosures are the most frequent descriptions that try to capture the global financial landscape today. And, the IMF itself has been forced to concede that the global economy is very much into a process of acute recession primarily led by what has been happening in the financial sector in United States.
With the crash landing of the financial sector, liquidity and credit have become scarce. Not only are global equity markets continuing in their downslide, but commodity futures and other derivatives have also shown a downturn. One of the most visible signs of such a course is the falling prices of crude oil which were earlier manipulated by the big guns of the financial sector. But here lies the irony. At a point of time when the aviation companies could have expected their fuel costs to go down, the general recession is so massively affecting traveling, globally and domestically, that they find themselves unable to recover.
Therefore, this lament by the Indian private airline companies appears to be so unreal. Till the other day, the Jets and the Kingfishers were lauded as the successful carriers of a brave new world. Those were the days when public sector and regulation were treated with contempt and derision. The trouble is that the ideologically-driven advocates of neo-liberal globalization were blind in their belief that financialisation of the economy and the primarily speculative function of capital is the panacea for all ills. The Nation State – its agencies, its interventions, its regulations – all were conjured up as villains of the piece! Little did they realize that the unregulated financialisation and the marginalization of the real economy can, in no way, be sustainable.
What has happened to Jet Airways comes as a shock. And, hence, this response. But that is not enough. Already, there are loud cries against those who were till yesterday being touted as financial wizards. From different corners of the developed world itself, demands for an alternative are becoming vociferous. Return to regulation and government intervention is becoming increasingly acceptable options.
The Jet Airways and the crisis of the aviation sector in general signals that the global financial crisis is now spilling over to the real economy. Thankfully, the Indian financial sector continues to be comparatively insulated largely due to the stiff resistance of the Left during the first fifty months of the UPA government. But nevertheless, the situation that we are faced with is complex. For a change, the Finance Minister must accept the reality and give up his bravado. We need greater and better regulations and a much more urgent intervention of the government.
|
|
|
|
|
|
|
| Social Web |  |
| |
|
|
| |
|
|
Processing please wait ...
Top Stories
