On the Verge, Countdown Begins...

One of India's most high profile airlines few years back, now in shambles. It is really
interesting to ponder that in same market scenario, one of the competitors of Kingfisher is
flying high and high. Yes, Indigo Airlines is the most profitable airlines in India. The question
is the difference between discipline and grandeur. What makes one company succeed, while
another, in the same operating environment, falter? One of the reasons is Mr. Vijay Mallya
flamboyant nature.
Kingfisher Airlines(KFA) was established in 2005. It is owned bythe Bangalore based United
Breweries Group. The airline started commercial operations in 9 May 2005 with a fleet of
four new Airbus A320-200s operating a flight from Mumbai to Delhi. Kingfisher was
launched as an all-economy, single-class configuration aircraft with food and entertainment
systems. After about a year of operations, the airline suddenly shifted its focus to luxury.
When an airline keeps changing its model and takes to random expansion, there is no time for
the airline to stabilize. . It has bagged the award for Service Excellence for a new airline by
Skytrax. After Kingfishers plunge into luxury came its next follya merger with Air
Deccan, an airline formed by Captain G R Gopinath in 2003. I believe the fall of Kingfisher
airlines started the very day when they bought Air Deccan. Capt. Gopinath, the owner of Air
Deccan can be termed as shrewd but smart investor who knew when to part with his
investment, just at the right time. The all-economy configuration of Air Deccan was
rebranded and called Kingfisher Red, which continued to operate as its low-cost wing till
recently.
Kingfisher ended up spending Rs 550 crore on an airline that had losses of over Rs 550 crore.
It is widely believed that Kingfisher merged itself with Air Deccan so that it could classify as
an airline with five years of domestic flying in 2008, thus fulfilling requirements to fly
international routes. The fact that Jet had meanwhile swallowed Air Sahara didnt help,
fuelling a competitive race to be the biggest airline around. Essentially, jet fuel prices began
to sky-rocket and soon touched $150. Then came the 2008 recession that made fundamentals
in the airline industry worse, which is when the airline launched its international operations.
Kingfisher has decided to change its model yet againdiscontinuing its Kingfisher Red
brand and completely converting its fleet to a dual class, full-service configuration.
Kingfisher was gifted to Mr. Sidhartha Mallya by his father on his birthday i.e. a Near Zero
experience in running a company and the later CEOs appointed by Mr . Mallya couldnt bring
any significant result too. His over indulgence in petty things like parties and Kingfisher

Calendar also lead to inadequacies in his finances. .IPL is also one of the reason for
Kingfisher downfall because it is known that many of the money was diverted to IPL from
Kingfisher airlines, resulting which they defaulted in Loans and recently became a NPA (non
performing asset) to its leading bankers like SBI .
The lack of trust was shown recently when Mr Mallya asked the government of India to bail
him out. The new minister Mr. Ajit Singh clearly told that the Government will not bail out
private airline because Air India is itself in need to bail out. I personally feel that Mr Ajit
singh made a good decision because When Kingfisher doesnt give public anything in return
of its profit , then why is it asking for Public hard earned money ( income tax money) to bail
him out.
The lack of management and top of it the soaring petrol prices, the airport charges added to
Kingfishers humiliation. Frequent cancellation of flights, non-payment to employees, rude
staff laid the ground for Kingfishers grave. Kingfisher reputation took a beating when it was
known that employees tax was not submitted to government on time since the last three
years! Government of India also freezed 40 Kingfishers bank account. Even Kingfisher
employees have been not paid three months salary. We all know how we feel when our salary
is delayed by a day; imagine what happens to them when they are not getting salary for last
three months. How do you expect the employees to keep a smiling face to its customers when
they themselves are crying? A company which forgets its employees is also soon forgotten. A
classic example is Kingfisher airlines. Mr Mallya had to sell 49% of his ownership of Force
India( F1 car) to Mr Subrato Roy to get kingfisher going ( owner of ailing airline Air Sahara ,
years back) , but it too failed to save the airlines from tatters.
Recently United Bank Of India became the first lender to declare debt-ridden KFA, its
promoter Vijay Mallya and others directors (by Grievance Redressal Committee) as Wilful
Defaulters as the company allegedly indulged in diversion of funds by opening multiple
accounts. Also Supreme Court of India refused to entertain a petition by the KFA to restrain
UBI from declaring them as Wilful Defaulters.This move puts severe restrictions on Mallya
and his companies from seeking future loans, besides other predicaments that include
criminal proceedings and attachment orders.
Its tagline FLY IN GOOD TIME may no longer hear now, as it may changes into LAND
IN BAD TIME. According to our viewpoint, If KFA wants to fly its name again in the sky, it
has to sell all its assets to foreign airline(49%) with any domestic airline(51%). Rest depends
on the Mr.Mallya and his Companys decision how they can handle this situation to overcome
and pay their debts-off/salaries.