Troubled Kingfisher seeks help

This is one of the many times Oil marketing companies have refused fuel to troubled Kingfisher airlines. In the past, they have done and they are doing it now too. The airline is pretty much grounded with 50 to 100 cancellations. I wonder how other airlines are able to cope up.

Vijay Mallya, the face of Kingfisher has even gone out of his way to seek help from government which has assured him of considering any sort of help possible, however not a bailout. I don’t think Kingfisher deserves a financial bailout but yes, any assistance other ways should be considered thinking of the fate of many employees who are at the risk of losing their jobs. It is the last thing aviation industry wants to see. As well, Kingfisher has sought to import fuel directly and use it for its airline operations. Hmm, that way he can save state taxes? I need some law people to help me understand how?

Kingfisher Airlines
Troubled Kingfisher Airlines trying to stay afloat

Having keenly observed the rise of aviation industry, a correction was due and airlines started responding by increasing the prices where possible and then seeking independence in pricing strategy from government. Mandates to fly non-profitable routes from government is hitting all airlines badly given the constant raise in the fuel prices. Plaguing issues like depreciation of rupee making expenditure in US Dollar or Euro terms even more costly.

I don’t think media has the right to sensationalize the issue linking up personal lifestyle of Vijay Mallya. He is the face of the airline, which doesn’t mean he is the only one running the airline. And the state of Indian aviation does not paint a rosy picture at the same time. Linking up to personal lifestyle is like linking up our Politicians to their chairs. Politicians cannot lavish on tax payers money and neither should.

Yes there are airlines which posted profits, like IndiGo. And if anyone asks me personally, I would like to Fly Kingfisher than IndiGo for the pure lure for luxury and something I could afford. After gobbling up Air Deccan and turning it into a Frills Low cost airline, Kingfisher Red, what Mallya has done is to give luxury to middle class. If Captain Gopinath has given Indians an airline to simply fly, Mallya gave it luxury.

I don’t align with the theory of Mallya’s decision to shut down Kingfisher Red. One business where you have volumes, where you have more opportunities to cut costs, gets much better efficiencies. Extracting profits, leveraging your prime slots, get back to the fight with medium fares to low fares. If I was in Mallay’s shoes and I had to shut down Kingfisher Red, I would have done that differently.

Kingfisher Inside
Kingfisher Inside

I would have brought back Captian Gopinath and ask him to manage this business separately with keeping 51% stake for myself and giving rest of the 49% for his company. And from the money I gain from the sale of 49% stake, I would have bailed out my airline. Or Captain Gopinath would not agree, I would have gone for someone else who is able enough.

From the recent news I hear, Kingfisher is in talks with an Indian Company for a stake sale. Yay, why did it took so long?

No FRILLS Airlines add FRILLS to woo fliers

Budget airlines are now introducing new flight service and schemes to either expand the aviation pie or wean away passengers from other players.

Kingfisher Inside
Kingfisher Inside

Almost all the no-frills airlines are going all the way to woo fliers with service offering that leaves little difference between full service carriers such as Jet Airways Kingfisher airlines, Air lines and Paramount Airways. SpiceJet Ltd had started offering tea and coffee about a month ago, will now be serving breakfast onboard its aircraft. The airline has also done away with the charge of Rs 500 on unaccompanied child and extra baggage fee for overseas travellers that have connecting international flight within 24 hours.

The trend that started off when Kingfisher Red started offering snacks fliers.

Kingfisher can breathe

Kingfisher gets a breather for a little time.

It was a call they had to take. Its not clear from what I read in the press when they are going to repay the dues. But Kingfisher can now add fuel to its aircrafts by using the Cash and Carry format.

Cash and Carry format is as same as what we do in our daily lives. We go to a super market with a Debit or Credit card, pay the money for what we have got and go home. Similarly, Kingfisher would pay the OMCs (Oil Marketing Companies)  the amount for the fuel purchased on the spot. No Credit.

This move is a time saver for Vijay Mallay to get more time to arrange for the much needed cash for his struggling airline.

Kingfisher will have to settle fuel bills

Vijay Mallya owned Kingfisher is in trouble. Ever since the merged entity has been active, its trouble time for the flamboyant business man. This time giving him trouble are the state owned oil cos. They have given a dead line of Feb 4 to clear all out standing dues owed by it to there entities failing which the fuel supplies would be stopped.

Though the notice also has been sent to Jet Airways, they have prompty reverted with some commitment. While Kingfisher has not done so.

The monthly bill for there carriers can be around some hundreds of crores.

Due to cost cutting measures, a major chunk of corporates have stopped offering travelling conveyance of its employees on Airlines. They are turning to cheaper alternatives like trains and buses. The most luxurious travel its employees get is on the lowest cost carriers and this is where Kingfisher and Jet have been hit hard.

Luxury always commands premium and these airlines make most of its lost revenue on economy sector.

Hope this is not a down turn for already bleeding Aviation industry.