Take a fresh look at your lifestyle.

Troubled Kingfisher seeks help

5

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?

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.

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?

Do not miss any updates! Subscribe today!
Sign up here to get the latest news, updates and special offers delivered directly to your inbox.
You can unsubscribe at any time
5 Comments
  1. UMESH DEREBAIL says

    Good analysis Hemal on Kingfishers plight, if VM wants to run only full scale airline i am sure he will have to shut shop within next 5 years. The reason being simple if a budget airline is charging 4000 with 50% occupancy kingfisher has to charge 8000 for the same distance. This will virtually mean business class travel. The best alternative is to have business class 50% and rest 50% economy class. I hope he is moving in that direction. He wants to fulfill the promise of 5 star experience to his customers, and mandatory routes he has to ensure only budget airline there is no other option.

  2. Anoop Mathai Mathew says

    I’ve never traveled by Kingfisher, but I’d love to. It’d be extraordinary to get sheer luxury for the middle class a.k.a economy class. Jet airways keeps running low. I wonder why Air India does not try to improve her services. Above all, it’s a rat race for what?

    1. Hemal Shah says

      Thank you for your visit Anoop, Welcome to my blog!

      True to your words, its really an unique and extra ordinary feeling to feel the luxuary in affordable way.

      Air India is plauged with time bound babu-thinking problems which has been affecting its status. Today everyone thinks more than two times before choosing Air India and settles for Air India only if anything else is not available. Air India still has some fan following and I have travelled my first International trip on Air India, most my domestic trips on Indian/Air India. I also had put up a post on Air India and its never ending woes.

  3. Pramod says

    Jet airways losses are piling up. This year net 768 cr was their loss. Previous yrs losses are being carried forward. They are all scapegoats of Indian politics. I rem. The scene created when jet cut down on staff.
    This industry needs an overhaul.

    1. Hemal Shah says

      Yes Pramod, Jet is flying low too and so is SpiceJet with 230 Crs in losses. Now I hear that All India Bank Association has sent out a letter to Reserve Bank of India stating if banks opt to bail out Kingfisher, they will start protests through out the country. I completely fail to understand why they are acting such.

So what do you think about this article?

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: