The government has suddenly woken up to the fact that the clutch of private airlines that changed the Indian skies are bleeding profusely, even as they acquire aircraft, increase destinations, try to take over other airlines and cut ticket prices to corner market share. The government's proposed remedy of holding back permission for new airlines and curbs on fleet expansion is anti-consumer. It will only allow airlines to hike rates even as fuel prices are finally beginning to fall. Businessmen starting new airlines and investors who finance them are all big boys, who draw plans, assess market risks and make projections based on the expectation of making money. Why should the Aviation Ministry take upon itself the task of ensuring their profitability? If at all, it needs to focus its attention on air safety. The two near collisions between civilian and air-force aircraft within days of each other on the same Goa route suggests the need to rethink the co-existence of civilian and military aviation; especially since the latter is growing exponentially and needs space, high security and independent attention. India has a history of scores of airports (a significant number of them are lying unused and defunct) being built at the whims of politicians and there is no reason why they cannot be used or expanded to ensure a sensible separation.

Iridium haunts Motorola

Remember Iridium, the failed satellite phone venture in which Indian financial institutions were persuaded to invest by the Infrastructure Leasing & Financial Services? The company eventually produced the shoe box-sized, $3,000 phone that worked well only in open spaces and folded up in just nine months. Its parent Motorola, which supplied most of Iridium's $5 billion assets (that were liquidated for $25 million), is still battling lawsuits accusing it of fraud. According to The Wall Street Journal, Iridium's creditors are claiming $3.7 billion they lent to Motorola with interest. They allege Motorola continued to take money from Iridium, even when the project was clearly failing. They accuse Motorola of structuring the project so that the risk of developing satellite technology and its failure was passed on to outsiders, whereas it would have reaped the benefits of success had the project worked. While Motorola has contested these charges, the Journal says hedge funds are picking up Iridium's outstanding bonds ($1.45 billion worth), expecting Motorola to lose and cough up $600-700 million.

... contd.