Kingfisher Taking its Last Breath!
Bangalore: Chairman of Kingfisher Airlines, Vijay Mallya has been an example of one should not run a business. With few services left with the company and shareholders barking at him, however, Mallya still is not in a position to give in.
It seems that Mallya entered into the business for the glamour it brought, rather from having real understanding of the industry. In the U. S., the last 30 years have witnessed nothing less than 50 airline bankruptcies. With high fuel prices and related costs, success in aviation industry in India is not an easy achievement as well. In the country there have been at least 10 failures since the opening of aviation to the private sector in the 1990s.
Mallya might not have done research on it before diversifying his business into an unrelated sector. He might have taken up the challenge thinking of repeating his success, which he enjoyed in his liquor business. Mallya did create the best airline brand in Kingfisher. Passengers were opting for Kingfisher than Air India or Jet, as Mallya had introduced a no-expenses-spared approach to Kingfisher First Class. But, then he bought Air Deccan at a huge premium, which stood contradictory to the cut-rate carriers of the company.
And at the worst, he staked entire of his liquor business to save his sinking airline. Today, he is having talks with Diageo to sell a stake in United Spirits, since he had pledged too much of his liquor business and his personal assets to keep Kingfisher flying. He told his shareholders that he is in talks with foreign airlines to sell a stake. However, the point to notice here is why any foreign airline would want to buy a stake in such a sinking company.