Kingfisher’s collapse

Sommyajit Saha

Before we talk about Kingfisher let us talk about the United Breweries group, the parent company of Kingfisher airlines. This group was founded by Thomas Leishman in 1857 which used to primarily produce beer for British troops. Vittal Mallya, the father of Vijay Mallya became the director of this group in 1947 at the age of 22. Over a period of time this group created subsidiaries and Kingfisher airlines was of them.

Kingfisher Airlines was formed in 2003 and it commenced its operation in 2005. Vijay Mallya is portrayed to have a larger than life image and his is what reflected in his airline as well. Right from air hostess to interiors to furnishing he did not compromise on quality and ensured his customers experience the same lifestyle he is accustomed to. And he very well delivered that experience. Till 2011 Kingfisher airlines was the second largest airline in the domestic market receiving several awards and accolades. However, despite all this achievements something just did not seem right. Within 7 years of its commencement, in 2012 their flights were suspended and in the following year their license was cancelled.

So what went wrong with this airline despite being headed by one of the most successful businessman in India? According to many it was the Vijay Mallya factor that was supposed to be the USP of this company led to its downfall. The first reason stated was the overhead expenses and investment in luxury items. Even though he wanted to give the best experience to his customers, he also wanted to keep the prices of the tickets reasonable. But this step backfired and led to huge loses to the airlines. Mallya also acquired Air Deccan, a struggling domestic low cost airline and converted it to Kingfisher Red but it failed too. Frequent changes in top management and strategies also led to their downfall. After entering into the international market, he decided to put a lot of money in the airlines and eventually sold a part of his stake in F1 team to fund his airline. In 2009, IDBI bank approved a loan of $144million despite a negative rating of the airline. These funds were said to have been misused by Mallya which led to the Supreme Court and the central government pressurizing Mallya and eventually leading him to flea India in early 2016.

The future of Kingfisher airlines is still in the dark and we wonder if it will ever fly again.

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