As the budget airline SpiceJet's crisis played out, one thought rang out loud in my mind — “We mustn’t let another airline crash because of its promoter’s follies”. And the episode of grounded Vijay Mallya’s Kingfisher Airlines came back to haunt me.

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Many are seeing a pattern, and drawing parallels with the flight path of Kingfisher Airlines which went bankrupt. Often, the rash actions of vendors, banks, statutory authorities and the regulators, as well as the airports, which are critical infrastructure providers, hasten the disintegration and trigger 'sudden death'. Imagine a run on the bank. People panic and actually cause the collapse.

Reserve Bank of India governor Raghuram Rajan charged (and others too before him) that we have “sick companies” in our country but no “sick” promoters in an obvious implied reference, probably, to Mallya, who, it is supposed, continues to live life king size with unpaid (and unpayable debts.)  His glitzy lifestyle deflected everyone’s focus from the nature of the malaise in the system because it made for good copy and also salacious gossip. Mallya ran two other very successful companies — United Breweries and United Spirits both commanding over 55 per cent market share in the beer and whiskey segment. But his airline venture, which he launched more recently, with great aplomb flew into air pockets and is now grounded with large unpaid dues to employees, vendors, government oil companies, airports, statutory tax arrears and banks.

Maybe he mismanaged; it could be that he was a flamboyant megalomaniac who neglected the airline business while attending to his multifarious interests; maybe he's a 'wilful defaulter'; maybe the banks themselves colluded under pressure from higher ups and enamoured of his charisma, continued to lend even when his balance sheet did not support it. 

Whatever may be Mallya's personal faults which grounded the airline, we must give the devil his due. He had built a great airline with an endearing, larger-than-life brand and world class service. Close to 80 cities and almost 30 regional towns were put on the air network for the first time connecting the very bowels of the country.

It had close to 100 airplanes, about 10,000 employees, a huge and loyal customer-base of 14 million passengers per annum.  A board of directors of luminaries — a former finance secretary, a former SEBI chairman, a tennis legend, a world renowned heart surgeon who runs an iconic corporate hospital, a famous ad-agency CEO, and still things went wrong.

The banks could have converted the airline debt to equity, removed Mallya and the board and saved the airline from closure by proactively restructuring the debt and sold it off to new investors.  Instead, they mistook Mallya for the company and lost sight of the company completely. The country lost great infrastructure rendering thousands jobless and precious aircrafts littered at various airports like Christmas tree decorations. 

If the sole aim was to teach Mallya a lesson and make a 'bakra out of him' as Mallya himself said reacting to the banks’ action against him, it turned out to be a classic costly case of cutting one's nose to spite one's face.

Hounding the promoters whose companies may be in default and abandoning the companies is a fatal mistake. It is missing the wood for the trees. Government and institutions must figure out ways to support and save good companies from folding up, especially when they are in critical infrastructure space. Financial institutions and statutory authorities need to make a distinction between the 'promoters' and the 'companies' that they run.

If owners are delinquent, action must be taken against them but the companies, which are floundering, if they have potential for creating value and have a chance to be turned around, must be saved.

In the absence of bankruptcy laws, the government, the authorities and also major creditors, in their own interests and interest of the country, should do everything possible to save SpiceJet as it's a critical infrastructure.

Jobs will be saved and consumers will benefit when monopolies are prevented from getting created by the closure of the airline. Let's remember only 3% of Indians can afford air travel today which compares to many sub-Saharan African poor countries.

'The Maran' issue — (the brothers are under investigation by the CBI and Enforcement Directorate and belong to political parties not part of NDA) — shouldn't come in the way of saving the beleaguered airline. They should separate the two.

Banks may not play ball. SpiceJet needs quick bailout. The finance ministry, the oil ministry and the civil aviation ministry must summon Kalanithi Maran and his board along with the banks, and after evaluating the situation announce a fresh lease of funds without losing time — every day counts — which will boost confidence in the major vendors and suppliers. The airline's chance of revival will give a fillip to its stock as well as its daily bookings and collections, which is crucial to the survival of the airline.

A lack of confidence is a double whammy as SpiceJet will not only lose revenue but it will be compelled to make refunds to passengers who may cancel bookings. The government must do everything to save SpiceJet, as was done in the US with regard to Citibank, Ford and General Motors in the aftermath of the banking crisis in 2009.

And more significantly the crisis in SpiceJet is also a wake-up call to the government to look at the aviation sector with a long-term vision to make it vibrant and integral to economic growth. It is the symptom of a deeper malaise and the aviation sector is terminally ill. Successive governments have neglected it. The sector suffers from knee jerk policies to suit individual players.

If it is the vision of Prime Minister Narendra Modi that India must become an economic power with equitable growth and compete in the global economy, then aviation has to be part of that vision. Just treating SpiceJet with some palliatives will be akin to treating the symptoms instead of curing the disease.

The author is the founder of the first budget airline, Deccan Airways