The ‘Fear Factor’ in Politics

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On the face of it, the message being sent out by the President of BJP is quite purposeful and positive. Who wouldn’t want an India that doesn’t vote on the basis of religion? But then, when it comes to the foot soldiers of the party who actually ‘contact’ the consumer in the field during elections, the gospel of equal distance between religions somehow gets transformed into an invocation of the lurking ‘fear of the other’. Just look at what Varun Gandhi, grandson of Indira Gandhi and great grandson of Jawharlal Nehru had to say while campaigning in his constituency in Pilibhit in Uttar Pradesh. If nothing else, it was a clear assertion that you can’t trust Muslims and that a vote for Varun Gandhi will mean the protection of Pilibhit Hindus from Pilibhit Muslims. Much has been said and written about the ethics and morals of the now notorious Varun Gandhi speech. But beyond the rhetoric, the brutal fact remains that the ‘fear factor’ will once again be decisive if Varun wins and turns out to be a smart marketing strategist.

In fact, the rise and rise of BJP and its prime ministerial candidate L. K. Advani can be clearly linked with the power of the ‘fear factor’. It was the Shah Bano controversy during the mid 1980s that created genuine misgivings amongst millions of moderate Hindus about the alleged appeasement of Muslims. BJP successfully parlayed this apprehension into a powerful marketing strategy. So successful was the strategy adopted by L. K. Advani and his team of strategists that the BJP actually emerged as a ‘national’ rival to the Congress.

The Left too has its own version of fear factor to play around with. Says, CPI leader D. Raja, “Our line of campaign is entirely different… We speak for the poor people, we fight for the interest of the people, for sovereignty, for secular values.” The message outwardly is positive. But at the ground level, much of the real message is visceral distrust and dislike of the United States of America. The Left still thinks that Uncle Sam is a malevolent imperial power and that the people of India would be scared enough of Uncle Sam to vote Left. No wonder, their appeal has dwindled over successive elections, except the unexpected bonanza in the 2004 General Elections.

And what of the Congress? The party was clearly the pioneer of the ‘fear factor’, using it dramatically & successfully back in the 1984 elections when Rajiv Gandhi won a historic mandate. But those glory days are well and truly gone and Congress represents a tired national brand whose market share is being constantly nibbled away by aggressive regional players. In state after state, the core competence of Brand Congress has been hijacked by regional parties and it has not been able to retaliate. In that sense, Brand Congress is like Brand Bajaj. Till the 1980s, both the Congress and Bajaj completely ruled the market. Their ‘hegemony’ was virtually unchallenged. To buy a Bajaj was to be an Indian. Contrast that with the situation today where Bajaj has become the No.3 two wheeler company of India. Can both Congress and Bajaj reinvent themselves and find a new positioning strategy?

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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You may fly no more!

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Current economic conditions are threatening survival for many aviation players. Tremendous scaling back is needed to avoid bankruptcy, says Ratan Lal Bhagat of 4Ps B&M

“Students open your textbooks to page number nine, chapter 11,” stoutly commanded the elderly professor. The students, who dreaded calculus, knew that their worst nightmare had just begun.

Players in the aviation sector dread Chapter 11 too, but not for the reasons that the students do. This is the chapter that airlines have to open when their flawed business models throw their business calculus (read profits, revenues) into complete disarray. They now have to look into the ever dreaded Chapter 11 (bankruptcy) despite loathing it from the bottom of their hearts.

According to a report by Centre for Asia Pacific Aviation (CAPA) more than 30 airlines the world over, like Frontier, Skybus et al, have been forced to shut ‘hangar’ and file for bankruptcy in the past 12 months. Many others like Continental Airlines, US Airways, Southwest Airlines, Alaska Airlines, et al are all passing through bad times and are on the verge of being grounded.

“The revenue outlook is not encouraging, but we remain competitively well-positioned. We are seeing declining revenues on international routes, but these are still good markets for us,” explains Larry Kellner, Chairman & CEO, Continental Airlines to 4Ps B&M. Delta Airlines and Northwest Airlines, wich have already swallowed the bitter pills of bankruptcy (in 2005) have come together to avoid a round two of the heart shattering episode. “Given the difficult economic environment we face, the flexibility in the system is even more crucial and we are moving quickly to create a flight schedule for 2009 that optimises the profitability of every route,” professes Jimmy Eichelgruen, Regional Director Sales, India, Middle East and Africa, Delta Air Lines exclusively to 4Ps B&M.

Many of the players who had dialed the frightful number in 2008 were hard hit by the sharp surge in fuel prices. However, while the economy was relatively strong, many airlines found that they were able to pass on these cost increases to passengers in the form of fuel surcharges, which added to the already high fares. The global economic slump is perhaps a more challenging situation than high fuel because airlines have limited ability to maintain demand and yields in a softening economic environment. “The current economic downturn is extremely challenging for the airline industry. There has been a particularly pronounced fall in premium class and cargo revenue. In December 2008, premium class traffic in Asia declined 24% year-on-year. Not only are airlines finding that fewer passengers are flying, yields too are declining,” explains Binit Somaia, Regional Director, CAPA. And it is evident that the current economic mayhem might prove to be the culprit bird that could get sucked into the propellers of these airlines, forcing them to crash land.

The accumulated loss for airlines was a whopping $5 billion loss in 2008. All these have been fuelled by the global international cargo traffic, plummeting by 22.6% in December compared to December 2007. Whereas a similar comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%. Moreover, throughout 2008, international cargo traffic was down 4%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%. All the aforesaid factors, along with the gradual decline in the cash reserves of these players over a period of time, seems to only add pace to their fall and force them to file for bankruptcy.

Furthermore, the International Airport Transport Association (IATA) forecasts a further loss of $2.5 billion based on a fuel price of $60 per barrel in 2009. It further states that there would be a decline of 3% in passenger volumes, 5% in cargo traffic and yield deterioration of 3%. Moreover, industry revenues are expected to contract by $35 billion yoy to reach $501 billion in 2009. “2009 is shaping up to be one of the toughest years ever for international aviation. Keep your seatbelts fastened and prepare for a bumpy ride and a hard landing,” said Giovanni Bisignani, Director General and CEO, IATA. Somaia straight-facedly sums it up, “It is likely that we will see more carriers enter bankruptcy in 2009.”

The only way out is through controlling costs, cutting down on fleet size and maintaining a sustainable cash reserve. “In an environment of declining demand, the most effective solution is to reduce capacity, which would mean grounding aircraft,” explains Somaia. The Delta-Northwest joint collaboration is already applying such measures. Testifying to the fact, Eichelgruen of Delta explains, “We are cutting international capacity by 3-5%.... We are watching each route very carefully to ensure we are matching capacity to demand.” Surely, Delta has set its priorities right. A lot of such cuts in operations will be needed before the players get their business calculus right in order to avoid turning to the dreaded chapter 11!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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