“I am taking things personally,” Vijay Mallya, chairman of Kingfisher Airlines, says when it comes to running his airline. Perhaps this is one reason why the airline is in shambles.
Lack of delegation is being talked about as the major move that Mallya did not undertake when running the airline. Unlike his other two major businesses — the spirits and beer segments, which have been running exceptionally smoothly under the helm of managing directors, the airline has been crash landing because of one trouble or another with frequent changes in strategy and direction as well as the absence of no long term CEO or MD. While Mallya is indeed closely associated with strategic decisions at United Breweries (UB-India’s largest brewer) and United Spirits (India's largest spirits player), he is understood to have been more than closely associated with day to day operations of the airline.
Started as a full-service carrier, Kingfisher Airlines then added a low-cost model, expanded it further, only to fold it up and go back to the initial focus of full service — all this in a period of just six years. “Long term strategy and laser focus is indeed essential when it comes to running an airline business. Such frequent change in focus has not helped the airline, which has also been hit badly by external factors,” an industry analyst tracking Kingfisher Airlines said.
When the idea of starting an airline was debated at the UB headquarters, there was strong opposition from his close aides. But Mallya prevailed. “We had a series of discussions and many of us said that if we have to start a new business, mobile telephony is an option instead of an airline. Leveraging the Kingfisher brand in the mobile telephony space would have worked wonders to expand our empire, but somehow we could not convince Mallya out of the idea of an airline business,” a board level official of UB Group told Business Standard. Even as recent as late last year, just before the 2G scam broke out in the Indian telecom sector, UB Group was toying with the idea of licensing the Kingfisher brand to a new mobile telephony player.
In a recent discussion with Business Standard, Capt G R Gopinath who sold his low cost airline Deccan Airline to Kingfisher Airlines, said that there was a disconnect between the two arms of the airline models. “Low-cost aviation business was treated as a step-child. I was telling Mallya that it is now his child and there should be equal treatment. Post the merger, whenever there was an Air Deccan and Kingfisher flight at almost the same time-slots, a decision was taken to do away with the Air Deccan flight in the hope that the passengers will graduate to Kingfisher full-service. But just the opposite happened. They went to other LCCs,” says Gopinath, providing yet another example of Mallya’s muddle-headed decision making.
However, one of the key reasons to acquire Deccan was to get the license to fly to high-traffic global destinations, a plan which Mallya passionately pursued until reality hit hard. One pet project was a flight from Bangalore to Silicon Valley in the US, connecting the two major technology hubs of the world. There is immense traffic in this sector, dominated by global airlines and if that move had worked out it would have benefited Kingfisher to a large extent. It would have also catapulted Kingfisher Airlines onto the global stage and would have given a global stage for its beer brand. This didn’t happen.
Mallya also tried his hand at connecting Bangalore to London but had to pull out as Kingfisher could not sustain this route. Now, Kingfisher flies to Hong Kong, Singapore, West Asia, London and to a few neighbouring countries of India. “We are curtailing our plans for global expansions as we are now part of OneWorld alliance. From London, Singapore and Hong Kong our guests have good connectivity onwards across the Atlantic and the Pacific. We do not intend to expand our overseas plans,” Mallya said.
“He started the airline with a lot of passion and all the troubles have not diluted that. My gut feeling is that he is unlikely to sell out despite mounting debt and high-level of public angst,” a senior member of a financial institution who has been funding the UB Group told Business Standard.
