Sucheta Dalal :Cartelisation moves
Sucheta Dalal

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Cartelisation moves  

Oct 9, 2005

To be honest, none of us complained when a plethora of airlines uncannily announced fare-cuts on the exact same day. But last Thursday’s decision by major airlines to hike fares by 10 per cent across the board, smacks of a budding cartel and underlines the need for better regulation (Indian Airlines has yet to announce a hike, but that is probably because of slower decision making) and ground rules. The hike is clearly planned to take advantage of the festival holidays when all airlines are packed to capacity.


But the decision to apply it to check fares is clearly unfair. Holidays are for family travel and a 10 per cent hike on the eve of travel throws budgets out of gear, especially for those who booked well in advance to take advantage of ‘check fares’ or apex fares. Since airlines have collected check fare payments upfront and enjoyed the float on these funds, the hike in this class of fares ought to be contested. Instead, those who cannot afford to cough up an extra 10 per cent and want to cancel tickets will be further penalised by way of a cancellation charge of Rs 500. In any case, cancellation is hardly an option, because the timing of the hike rules out the possibility of getting railway reservations.


It may be recalled that euphoria over the telecom revolution also vanished after the initial price-wars petered off and the industry settled into a comfortable cartel. A recent consumer survey showed that the maximum number of customer complaints today pertain to telecom service providers. Although the telecom industry has a watchdog in the form of the Telecom Regulatory Authority of India (TRAI), it has done little to improve clarity in billing, improve service standards or ensure that an increase in the number of subscribers is accompanied by commensurate infrastructure to ensure clarity and eliminate frequent dropping of calls.


Net-work magic


K. Semlani, a public spirited citizen, has sued government departments responsible for the appalling road conditions in Mumbai — India’s biggest metropolis and commercial capital. When the case came up for hearing, the municipal corporation denied the charge and said that barring a few roads damaged by heavy rains, there was no problem. The Court asked Semlani to back up his case with specific examples at the next court hearing. Semlani then posted a request on — a rapidly growing website and meeting place for NGOs and concerned citizens around the country. The response was amazing. From tony neighbourhoods like Malabar Hill and Pali Hill to the far suburbs to the east and west of the railway line that divides Mumbai... people are posting an detailed lists of bad roads everyday. Some are sending pictures, others want to drive the judges around for a personal experience. The problem with Mumbai’s roads is mainly the dubious contracts that lead to the use of shoddy material and bad patch-ups as well as the constant digging of roads by utility companies. It will be interesting to see how the municipal corporation defends itself in the face of this overwhelming evidence of frightful road maintenance and public support for the litigation.


Damaging suspensions


The Bombay Stock Exchange has been smartly using the raging bull market to arm-twist companies into compliance with listing rules. It does this by announcing a short suspension of trading in their script. In the five to six day gap between announcement and implementation, companies immediately rush to comply with the listing rules, forcing the BYE to repeatedly cancel the suspension. The cancellation also seems fair, but it hurts retail investors who liquidate their holding to avoid being stuck with risky, non-compliant companies. When the suspension notice is withdrawn, the share price usually resumes its upward march, leaving cautious investor feeling very foolish.


Dravid effect


Bank of Baroda (BoB) forked out a hefty packet to get a new brand ambassador in cricketer Rahul Dravid and to change its image and logo from a boring blue to bright, eye-catching orange. But it is paying off in more ways than one. BOB Chairman, Dr. A.K. Khandelwal says that the bank has already opened five lakh new savings accounts and mobilized Rs 300 crore. The image change also means a transformation in the way it does business. It now has 335 branches that remain open from 8-to-8 and the number will go up to 500 in the coming weeks. BoB is also the first bank in India to open seven 24-hour branches across the country with a skeletal staff providing basic banking services all night. Still, there is great pressure to live up to the expectations raised by the Rahul Dravid campaign that goes “sab kuch badal gaya”. A subscriber wrote to BoB’s chairman complaining that nothing had changed in his branch, in terms of the decor, ambiance or service. The bank now plans to modernise important branches. Fortunately, the buzz generated by its media blitz has been a morale booster for the staff and leading to improved service.


-- Sucheta Dalal