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Collapse of Kingfisher Airlines
Many of the management gurus and experts were perceived to be behind the global recession of 2008, but there is only one man who's mismanagement could have done this…yes the Big Bang collapse of India's most fashionable and luxurious airline brand – "Kingfisher". There are several reasons for the much touted financial collapse of Kingfisher which was foresaw by Gopinath and many other experts on Kingfisher board itself.
First of all, Mallya's inability to strategize and place the critical airline business on the national and global front, which is totally different both in nature as well as in approach, than his liquor business. His attitude of 'Ekla Chalo Re' in airline venture caused him much harm than good as he didn't delegate the business operations and decision making rights to other skilled executives who could have taken much better decisions than him. Secondly, he has mastered the art of squandering away opportunities, first when he acquired Air Deccan and then ignoring the microeconomic conditions prevailing within the country's boundary (where there is a sustained large market for Low Cost Carrier Airline) as majority of people belongs to the economy class, he continued to take care of the elite and executive classes. Thirdly, he always considered Air Deccan as his step child and continued allocating globally operating flight slots to Kingfisher ,completely ignoring the core competence of Air Deccan in operating flights on international skies which otherwise could have generated profits for the ailing airline carrier.
Not able to cope up with ever mounting debts due to insufficient passenger traffic on such routes and increasing fuel prices, he then resorted to salary cuts and pay loss of the airline employees which further aggravated the airline woes as the employees started venting out their frustration in the form of misbehavior and mistreatment of passengers which broke the cordial link between the airline and its loyal customer base. One of the board members of UB group correctly pointed out that "at the time of thinking about starting a new venture, had Mallya would have started the telephony business (which was one of the viable option mooted then), the scenario could have been different. If he could have worked on his strengths, he might had achieved a lot better than this." Airline business needs a long term vision and strong determination, infact every business does, and both have been seen missing in Mallaya's approach so far.
There is another critical feature to this failure is that he has been over indulged and wasting away resources in Kingfisher calendar activities and of course, the multi crore rupee event, IPL where he had diverted huge sums of money from his core businesses. Despite asking GoI to bail his debt-ridden airlines out (accumulated losses stands at 8200 crores), he better would have invested this money in restructuring the Airlines' organization structure and strategize the course of action to be taken with his top executives and lenders. Government, though did the right thing not to give away any relief package to him as the national funds are meant to be used in bailing out national ventures (Indian Airlines in this case) first rather than a private one, and that too until and unless it is of some strategic importance to the nation and Kingfisher is surely not fits into the picture.
Lastly, the kingfisher should learn from its competitor, Indigo who is faring quite well in the domestic skies as a LCC airline and eyeing to explore international skies soon. The one important thing that allows Indigo to set such high aim is the ability of its promoters to think long term and stick to it rather changing vision frequently, lack of which certainly hurt the Kingfisher badly. I seriously hope Mallya would learn from his past mistakes and come out with a business model which would be profitable as well as sustainable in the long term and bring back the 'Good Times' for his father's and UB group creator Vittal Mallya's soul.
- Himanshu Dhumash