Friday, December 5, 2008

Political pressure or Corporate Ethics

After more than half a decade of extravagant growth, the aviation sector is yielding to the World Economic Crisis. Suddenly the word 'pink slips' has become common. It was a matter of over capacity. The sky-rocketing oil prices added fuel to the fire. The American aviation sector saw huge amount of capacity cutting including retirement of some old workhorses from their fleet which weren't efficient. Older pilots got their retirement early.
In the Indian sector those carriers which were operating daily services to tier-2 and tier-3 cities started cutting their capacity even on the inter metro sectors. The two Private giants Kingfisher and Jet Airways who were on an international expansion mode put on hold, their plans as well as new contracts. But the term 'pink slips' never entered the Indian aviation sector. Except for a handful of old international pilots who were sacked(that was also following a DGCA notification on air safety) and the unsuccessful layoff drama by Jet, Indian aviation didn't see much.

Jet's layoff and the immediate backtracking by its chairman brings up to the table a long pending question that hasn't been answered yet. In case of a crisis situation, how will the Indian Corporate sector react? This is the first time that the private sector is facing such a deep crisis in our country. Before 1991, government policies insulated the bottom half of the employee pyramid from any such problems. But now, the private players, they have to decide upon the future of the company and its employees. Jet Airways followed the west's method but came under severe pressure from local political parties for it, and the concept of employees union entered the arena. Kingfisher and Air India were cautious enough to not take such drastic steps.

The corporate culture and ethics in India is quite different from the rest of the world. The Tatas and the Birlas stand as living example of what it is. The Indian players will be up against those who are ready to take desperate measures to see that their stocks remain in the green throughout the year. Back home the playing field is different. Other things like social responsibility, Employees welfare etc assume larger significance.

India is fast emerging as a super power in the region. Now its decisions will not only affect the Domestic industrial sector, but also to some extent, the region as a whole. Every move made by it will be watched from outside. With the private sector having a larger role to play, they must realize their responsibility. The next few years will be a testing time for it. How it deals with the crisis is going to determine its role and value, in India as well as in the global arena.

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