Do you think airlines can be run professionally under government control just as private airlines? Examine.
Published: September 18, 2017
In India in the early phase of commercial aviation, airlines were state-owned and profits were not the list of priorities behind the commercial operations. After the liberalization of air travel in the 1980s, there was intense competition, Low-cost carriers, introduced cut-throat rivalry, and government airlines started struggling. Therefore in some cases government was forced to go ahead with privatization strategy. However, privatization is not a panacea for current problems of airlines. Some airlines despite being owned by the government are doing well, for example, Singapore Airlines. Therefore clearly, ownership is not the only deciding factor. Apart from ownership, there are various issues:
- The government airlines are significantly overstaffed and there are issues regarding downsizing due to political considerations.
- Management is another issue. Airlines are managed by civil servants, which may or may not have the necessary business expertise.
- Also, there is a vicious cycle, government airlines are providing poor services as they are not making enough profits, consequently due to poor rating people do not prefer them, therefore they earn less revenue so they are loss-making.
- Apart from that government airlines runs on certain unprofitable routes and the reason behind such decisions are based more on political than economic considerations.
There is no doubt government airlines can be profitable if they are managed professionally. The government should take decisions on the basis of economic calculations, not on mere political considerations. Professional management, emphasis on service delivery will help in revival of government airlines. Apart from the professional management of the airlines, the best practices of the sector should be emulated for the government airlines.
Model Questions Category: 077 - Infrastructure Ports Roads Airports Railways