Air Mauritius grounded


By M.K.

Looking beyond what appears at the surface

Air Mauritius has attributed its current uncomfortable situation to the prevailing internationally difficult condition for airline operators. It announced last week that it had registered a loss of approximately Rs 900 million for the first three quarters of the current financial year.

One of its major explanations was that while its incomes are largely denominated in Euro, its inputs such as fuel are paid for in US dollars and that the exchange parity between the Euro and the dollar has acted to the company’s disadvantage.

These appear to be customary problems that the airline has been facing since long, perhaps since its establishment, given its concentration on certain markets, so that there must have been recommendations made by McKinsey in the past on how to deal with this kind of mismatch. Currency swaps are part of the toolkit in such cases as well as some reasonable amount of price hedging for key inputs. However, the national airline has gone to take advice from an international consultant, Sybery, on the action it needs to take to redress this situation. It has decided accordingly to proceed with some amount of “restructuring”.

This will entail dropping certain destinations in India, Europe and Australia while “reinforcing” its flights to certain other regular destinations. Stopping certain unprofitable routes should have been part of routine managerial recommendations supported by board decisions to this effect so as to stop the bleeding before it cuts deeper. These are responsibilities of the marketing division and don’t require a consultancy to go ahead. Be that as it may, we are not quite clear whether the “restructuring” recommended by the consultants will also involve rationalizing staffing of the airline, which might become a sore point that McKinsey must have visited earlier on. But the changing Euro-dollar parity is an old issue and should have been dealt with as a day-to-day market reality.

We do not have the full picture as to how the national airline is proposing to get off the ground to profitability although there are rumours that it may seek to beef up its operations by entering into an arrangement with a strategic partner. Even this will require careful thinking, it being given that a previous alliance partnering by the company has ended up making it better known for the discomforts to which passengers have been subjected whereas its goodwill has been founded all the time on its caring attitude towards passengers. The company has prospered despite all the odds whenever it has “put the comfort of passengers first” and not engaged into heavy loss-making egregious hedging deals.

To an extent, it is true that quite a few airlines have faced difficulties and are continuing to do so against the backdrop of downturns in major economies as well as rising fuel prices. Air Mauritius is no doubt affected just as well, although it must be observed that it acts as a quasi-monopoly, along with the other carriers, on certain “restricted” regional routes that are not confronted with the stiff international competition that international airlines have been getting from low-fare cost-cutters like Easy Jet, Ryanair, etc. The ticket prices are jacked up on monopoly routes which are served alongside by effectively non-competing regional carriers that have no reason to cut down their supernormal income under the collusive arrangement. Extra earnings from this source have been contributing more than their fair share to compensate for the company’s under-management in other respects.

Most of the airlines that have recently faced difficulties at the international level have suffered the consequences of essentially poor management under intensifying competition. For example, Jet Airways and Kingfisher have delivered excessive competitive price cutting in a bid to attract more travellers to themselves to a point where their cost-effectiveness has broken down. Air India has been failing because it has operated more like a fixed-up bureaucracy than like an airline adapting itself constantly to the greater rigours of modern air travel. Trans-Atlantic carriers have failed because they have not been up to the mark to face the competition.

The key to economic good performance of Air Mauritius has been and still remains nimbleness in its sound decision-making. That it takes decisions about which unprofitable destinations it should no longer serve only after a consultancy has delivered its recommendations, shows that it does not have the required flexibility to bypass unproductive lobbies. No matter what is said, it is Air Mauritius and Air Mauritius alone which has the prime responsibility for nurturing Mauritius as a sustainable travel destination, not the others. In this role, it has to set standards of service which commercially-oriented other airlines are not naturally inclined to live up to. Will Air Mauritius resume its role of standard setter while maintaining its destination and its profitability?

* * *

Rumblings at the Mauritius Revenue Authority

Sudhamo Lal has been at the head of the Mauritius Revenue Authority since 2005. With revenues collected amounting currently to Rs 53 billion, there is no doubt that the MRA has fully played its role to enable the government to foot the bill of its ever increasing expenditures without running the budget into ungovernable budget deficits.

The Director-General of the MRA has proved to be an effective implementer of the government’s tax policies and he has no doubt raised a lot of hostility from among those who were avoiding paying up their fair share of contribution to the Treasury so far. Those who have been brought into the net are not only certain big professionals who managed heretofore to keep themselves off the tax net but also people engaging in what you would have thought are low income areas and hence, not liable to taxation. Actions to get them in creates some amount of animosity against the tax authority because the public here rarely understands that it is in its own general interest that officers who have been charged to carry out certain public duties are actually acting in their very interest when they perform those duties to the maximum.

That is why they tend to give in to false campaigns conducted against the few public servants who actually perform to the maximum the duties they have been entrusted with. It is not surprising therefore that the guns have been pointed against the Director-General in a case in which he is not directly involved. In fact, the head of the MRA’s Internal Affairs Department has, according to the duties befalling upon her, been conducting investigations into the conduct of MRA personnel who have been allegedly involved in taking of bribes from companies that would have bribed them into granting them exemptions so as to minimize their tax payments. More than 200 such investigations have been instituted over the past 7 years since the MRA is in existence. This has led, in the normal course of business, to disciplinary action being taken against a number of the black sheep. Other investigations are proceeding.

However, the matter has caught the headlines in some parts of the media. It is being made out as if it is the Director-General of the MRA who had called into question the integrity of MRA staff and that he should therefore be called upon to apologize. It is this kind of beside-the-point wrong targeting that has discouraged a number of public servants from delivering on their duties. This kind of politicking and trickery is not the preserve solely of a misguided media; it is engineered in parallel by persons within public sector organisations wanting to rid themselves of others who happen to be more efficient at work than they themselves.

Those who target their colleagues in this manner do not hesitate to indulge in all sorts of unfounded palavers, preferably in the back of those they want to hit, for securing personal advancement or to be allowed to graze freely on the pastures thus left behind. It is such as these that have distorted the missions of many an organisation in the public sector only to undermine them fully once they have themselves been invested with power. So, the “rodeurs-bouttes” are not only to be found in the public places; they are quite frequently conspirators disguised as public servants.

* * *

Should politicians talk politics at religious functions?

There was a row in the media recently after the Prime Minister gave a speech at a function organised at the Aleemiah College in Phoenix to celebrate the festival of Yaum-un-Nabi. It was alleged that he would have made political statements at the religious function and that this was not in order. The debate has centred since then around the issue whether politicians should be allowed to air political views on religious platforms.

The current emphasis on the matter is not an innocent matter in view of the fact that sundry politicians have at all times been making speeches on the occasion of Maha Shivaratri at Grand Bassin when pilgrims from all over the country converge for the festival. This gathering is currently on and socio-cultural organisations cannot be seen to be making an exception this year.

There is a lot of hypocrisy on the matter. While politics is a field in itself, it is not free from the different ways in which society organizes itself. Religion is therefore one of the subsets with which politics can concern itself inasmuch as religion is a matter of social organization. Very often, the politicians themselves dip into this religious lake to inspire their action. They draw their ethical and moral strength from this source at the personal level

In view of the fact that Mauritius is a multi-religious society, one would expect politicians to keep the religious content as a personal issue. In a number of political speeches delivered from religious platforms, politicians have tended to place emphasis on recommendations which are shared by all religions. Examples of the sort serve the purpose of unifying the people and this is no doubt an eminently political pursuit. However, religions exist in their separate compartments for the reason that they do not always prescribe identical codes of conduct on distinct matters governing individual lives. Where issues of personal consciences come into play, it were best for politics to focus on its business of promoting social and economic development and not delving into controversies arising from dogmatic considerations. This is why it were best for politicians to tread carefully.

We have for long seen the double standards adopted in different forums over here. Certain religious establishments will gleefully draw political support when it serves their purpose but they will denounce the same practices when these are resorted to by denominations not belonging to their fold. Others will make religious statements that look very much like the speeches politicians make from their pulpits but they will feel offended if a politician not from their own fold were to make identical remarks. Susceptibilities vary, depending on who the speech-maker happens to be and where he belongs to. This kind of hypocrisy has lasted too long and it may be counterproductive to social cohesion. The politician should therefore venture out not to deliver doctrine but rather to foster national unity wherever he can, whether from a religious or other forum.

* Published in print edition on 17 February 2012

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