Air France - Delta out of the race for stake in Air India

[echarcha]

Just read in the business section of a local newspaper that Air France and Delta Airlines who were jointly trying to stake a claim in Air India are now backing out. They claim to have not found a suitable Indian partner in the venture. Indi requires that an Indian partner be present in the venture with some percentage of stakes.

On the other hand Tata and Singapore airlines are still at it. Hinduja Brothers and Lufthansa are also in the fray.

Do you think that privatistaion of Air India will really work? What with the union mentality of workers, complicated and out dated Indian labour laws and the attitude of "sub chalta hain" in govt. jobs and institutions like Air India, it looks tough for any new company to turn around the ailing Air India in the near future.

Maybe I am wrong... but then do give your 2 cents on this :)

... and I believe that their customer service needs a big overhaul. I have been pretty happy with their inflight service. The stewardess are nice, courteous and service is at par with other major airlines.

What sucks most is their ground service. Starting from baggage check-in to ticketing and boarding - whether you are in India or the US. They have some of the bizarre methods of checking the carry ons. While I agree that it is for passenger safety esp. after the Kanishka crash in 1985, the method should be more friendly.

But, I travel on AI because of some wonderful connections and good inflight catering.

[aryaputra]

funny!

'cause there was a time when these goriyaas wanted 100% (more than 50%) stake in the business that they run in India.

Now when those rules are relaxed(....O....), they are afraid :D

Bas, yahi kaam baki reh gaya hain..wo jo bole, wo India ko karneka. One day they will again screw India with their naaz-nakhras.

[echarcha]

Okay lets discuss this topic for a change

[Indian]

Here in South East asia , countries like Malaysia , Singapore etc. are feared being effected by US economy slow down.
Some of the reasons why this effect..
- Domestic economies dependency on US
- Too many joint ventures with Multi Nationals
- Funds going out of the country

In this scenario..
It May be good for India ..to concentrate on Domestic Indstrial development ..rather than completely depending on foreign companies.

something similar is said by Malaysian prime minister ..
check the following thread
http://www.nst.com.my/z/Current_News/NST/Wednesday/Frontpage/20010228073748

some excerpts
He said that it is time the world thinks of taxing the rich countries on a sliding scale in order to gather sufficient funds to finance the construction of infrastructure in poor countries.

"The basis of the assessment can be worked out and agreed upon. So can the agency which will collect and administer the revenue and implement the projects agreed upon."


Arguing his idea further, Dr Mahathir said the rich might question the moral or legal basis for taxing them. But they had insisted that poor countries should open up their economies for them to exploit.

"Of course they are going to argue that the flow of capital into the poor countries would be beneficial for them (poor countries). I am not so sure. Malaysia's experience is that capital can also flow out and when it does this rapidly the economy can collapse.

"In any case, the globalisation of the world will profit the rich mostly. Even the expenditure on infrastructure development from the tax on the rich will benefit the rich also. Only they have the know-how, the machines and the trained experts to carry out the projects.

"They will therefore get back a good portion of the money they paid out for the world infrastructure tax. But beyond that, when the poor countries become richer, they will provide excellent markets for the goods and services of the rich

[Indian]

My Question was..
Selloff of 27 PSUs including, Maruti, A-I, VSNL okayed ..is this we call Globalization ?..selling off our profitable companies , how does this help our economy?
Countries like Malaysia , Singapore and others in Asia Pacific are facing economic slow down due to these countries economies dependence on US and other foreign countries .. i think the selling of Profit making PSUs like maruthi , VSNL etc will lead us the same way as these countries.
Is Government trying to loose control over some basic infrastructure industries ?
... I REQUEST AN ANSWER FROM ANY OF THE EXPERTS HERE

Answers by the panel..
PROF M D NANJUNDASWAMY, PRESIDENT, KARNATAKA RAJYA RAITHA SANGHA answers,
yes, the Govt is definitely losing its control over the domestic infrastructure along with the proposed changes in labour laws facilitating easy retrenchments. This would also result in mass unemployment.

MADHUR BAJAJ, EXECUTIVE DIRECTOR, BAJAJ AUTO LTD answers,
I'd like to answer this question on behalf of Inderdeep who is a good friend of mine. the Govt has no business to be in business. They must govern and let industry manage companies. Do you agree?


Mr INDERDEEP SINGH, PRESIDENT AND EXECUTIVE DIRECTOR, CONTINENTIAL DEVICE INDIA, CHAIRMAN, CII, SMALL INDUSTRY COMMITTIEE answers,

The real answer lies in having open competition, which is the single best way to ensure benefits to the consumer and citizens. In the case of each of these areas -- Maruti, AI and VNSL -- we have already seen the benefits accruing to the common man when competition was brought to these three sectors with marked improvement in the quality of product
and services and competitive pressure on price. Now that there are other players in the field the government should encash their investment in these PSUs and put the fund to use in building infrastructure, heath, education and improving the quality of life of our citizens because the above 3 sectors will continue to provide better products and services all the time. These three companies are
also primarily serving indian customers in the local environment and we do not have to worry about foreign countries. And if you are worried about companies, Indians can also buy the PSUs...

is the answer I agree most with. When Nehru visioned public sectors (and I give him a lot of credit for that), they were to be in the core sector like the Railways, Steal, Mining, Telephone, Heavy machinery, Defense production etc. where the private investment was either not forthcoming for the lack of immediate rewards or the govt. needed control to ensure secrecy and maintenance of service.

Companies like Maruti do not fit that vision and so should never have been a PSU. Maruti's profits initially came from lot of favors that it received from the govt. like an excise duty rebate tailor made for their engine sizes. Today, when the sector is open to private participation and almost every car company has a shop in India, maruti's market share is falling.

I am strongly in favour of privatisation. I have seen in USA how privatisation has benefitted both the consumer and the economy. I am glad that the present government is thinking about privatisation and I think that's the way to go. Fewer restrictions on them to do business and industry favorable labor laws that make people work for their wages.

On thread subject, if Delta/AF has opted out of the AI race, it is because of their not finding an Indian business partner. Business deals are not a guarantee ever. They thought that they will find one and have opted out since they didn't.

[aryaputra]

Hmmm....

Not that I am taking the side of the Govt., but how does the government ensure that the public gets the best deal?

My personal experience tends to make me think that competition in countries like India may or may not succeed.

When too many competitors emerge in a market, the following situations are possible:

1. None of the supplier has longetivity (so what happens to the warranty?) - who is the loser?

2. If one does emerge as the superior supplier, the market becomes monopolistic - 'cause majority of the people are going to buy only that only one brand. - who is the loser?

3. Formation of a cartel - prices are the same across all the suppliers - mil-baat ke khayenge policy - nobody is interested in extending a fight anymore. do you expect any new product development then?

... or the anti-trust case against Microsoft in the US.

The govt. has several ways to control private industry and safeguard consumer interest.

Yes, I agree that longevity (or lack of) of a business also determines the quality (or lack of) of service but why not trust businesses to last forever. Big businesses have lasted several generations in India!!

[aryaputra]

MRTP is again subjective. How does one decide whether a specific supplier is monopolistic?

Market share?

If yes, then nobody would like to grow because it is going to break up the business :D

... required for all mergers and acquisitions. To complete merger with SDL, JDS Uniphase had to sell one of its plant to Nortel (its competitor and a customer). Exxon-Mobil had to close its gas stations or transfer lease to competition in certain states .....

For inside growth, trade practices more than the market share will determine if there is a violation or not. For example, Walmart is the king of retailing and except for some of its price-wars coming under regulatory scrutiny in Europe, it has been increasing its market share without a problem. The inside growth and market actually did not hit Microsoft but their practices were seen as anti-competition.

My two cents!!

[aryaputra]

Exactly eNRI.

WAL-MART is a classic example. So much so that people no longer even bother to check out other stores if Wal-mart is in their area.

What if WAL-MART started increasng their prices...the public as everybody knows is BLIND and FOOLISH. (really! )

They will still believe in WAL-MART because their Dad believed and their Grand-daddy believed that WAL-MART has the best price!!

Even Better example is Honda. Excellent quality. Skyscraping prices. Did you realize that Honda was in the same situation that Hyundai is right now - EL CHEAPO.

Ever since Honda became a cult and an epitome for reliability, the price raise has been astronomical.

Has anyone raised their voice? NO.

Public is not as stupid as you think. People go everywhere not just Walmart. If Walmart becomes expensive, people will go elsewhere, just as the good days of KMart are long over.

As for Honda, the government does not have to care about their raising prices (actually I didn't know that they were, coz I dont drive a Honda). The consumer has a choice of fine cars not just Honda. Some people still like Honda and are willing to pay for the quality. Some have moved on other cars that they think offer more value for money. If I think Honda is too pricy than I could buy a Ford or a GM or a Toyota. Yes, if everyone is raising prices and their is no bad practice seen (like a cartel), then it must be costing them more. Keep competition, consumers will be happy and the economy moving and no better way than privatisation.

[aryaputra]

I guess that is what we are discussing : privatization.

Is it good or bad?

What industry is good for private sector and where the Govt should regulate?

Thin Red Line , I must say.

... PSUs being limited to core sector in Nehru's vision and the reasons for that. When situations change, investment should be reviewed and if disinvestment is necessary, it should be done.

I think Maruti was never a PSU case. Airlines is ready for privatisation.

[aryaputra]

and after disinvestment, if situations change, how do you propose to go about re-investing?

... or intervene in the affairs if the management is stupid or milking the company. But I doubt that will happen.

Remember, the biggest risk is not taking one !!

[aryaputra]

eNRI, remember the centralization of Indian banking by Indira Gandhi?

All the banks were made govt. supported/governed banks.

'cause Indira Gandhi thought it is not working out.
Economists thought otherwise.

It is very very subjective and vested interests play a damn BIG role in all this.

What you say is very true - but it works only in situations like the USA -one big reason why the USA is riding high in the world.

All they need is one BAD president like Indira Gandhi who will maa-chood all the systems in place.

[sorry for the foul language..but she deserved it]

... always sided with the Soviets and applied their way of administration in India. RG had different ideas initially but too immatured to get any foreign support on equal treatment. Aren't we lucky that we saw a decisive supporter of capitalism in Manmohan Singh and then in the BJP government. Aren't we glad that this governement has moved the inclination to USA and has been successful in its diplomacy to replace Pak as US ally in the subcontinent.

Yes, all India needs is one term of a left government to reverse the progress of 50 years. But until then, let the reforms continue, no matter what the labor unions cry about losing jobs. In this budget, there is a provision to reduce government jobs too.