[CA/Econ] US downgrades India’s aviation

Current Affairs

US downgrades India’s aviation safety rating

·        US Federal Aviation Administration (FAA) - They reduced India’s safety rating from Category #1 to Category #2; meaning we’re as bogus as Ghana and Bangladesh. [Hell, even Pakistani Airlines are safer than India!]

·        Main reasons cited

Ø     India doesn’t have sufficient number of Flight operation inspectors.

Ø     India’s aviation regulator Directorate General of Civil Aviation (DGCA) does not meet the safety standards set by ICAO.

Ø     (conspiracy theory) America intentionally downgraded the safety rating to “teach” us a lesson for the Devyani Khobragade controversy.

·        Consequences:

Ø     When Indian flights go to USA, their officers will do more safety checking = more time will be wasted, inconvenience to Desi passengers.

Ø     Jet airways’ share prices fell down.

Ø     Domino effect: Singapore’s aviation authority also started inspecting Indian aircrafts. The aviation regulators of EU, Japan, UAE may also reduce our rating – leading to more time waste and inconvenience to passengers.

·        New updation

v     India’s DGCA [Directorate-General of Civil Aviation] says we’ve addressed those deficiencies.

v     He is hopeful that in a month or two, we should move back from Category II to Category I

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[CA/Econ] Predator Pricing by Airlines

Current Affairs

Predator Pricing by Airlines

What is Predatory Pricing?

·        Means deliberately selling product below the cost price, to eliminate competition.

·        Usually predatory pricing is done by firms with deep pockets (like Walmart), because they can afford to make such temporary losses.

·        in short, it may appear good to customers- because products available @cheap rate

·        But in long term, the firm establishes monopoly and starts exploiting the same customers.

·        Sometimes the strategy misfires, company makes heavy losses (e.g. AirDeccan and Kingfisher).

Why Spicejet accused of Predatory pricing?

·        They’ve launched a scheme “One Rupee Air ticket”

·        Sounds good? but there are hidden terms and conditions

Ø     Offer valid only if you book tickets during April 1 to 3.

Ø     Only one or two seats offered in each flight under “One rupee” scheme.

·        So this is both “predatory pricing” + misguiding customers.

·        Spicejet already making losses, and now they’ve launched this scheme=> other aviation  companies will also be forced to launch similar schemes to stay on competition => everyone starts bleeding and making losses=> ultimately some get on verge of collapse like Kingfisher= staff salary not paid, loss EMIs not paid, Bank NPA increases and so on….

What has DGCA done?

·        Directorate General of Civil Aviation (DGCA) is empowered to take action against such predatory pricing (under Aircraft rule #135)

·        He has ordered Spicejet to immediately stop this scheme.

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More Topics on Economics

[Study Materials/Notes] Current Affairs

[Study Materials/Notes] Indian Geography

[Study Materials/Notes] Polity

[Study Materials/Notes] Culture

[Study Materials/Notes] Indian Defence

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