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Friday, March 30, 2012

Kingfisher Airlines: The King That Never Was

“The airline business is one of the toughest businesses to be in, along with the media industry. You need passion to survive in these sectors.”

In the 60s and 70s when the jet age was taking off and flying was still restricted to the rich and famous, the air travel industry had a sense of luxury, elitism and panache attached to it. Airlines such as America’s Pan Am flew passenger jets configured in the highest standards of luxury with lounges, bar areas, social areas, and five course meal services. This was when being a pilot or an air-hostess was a job that entitled great admiration and personified a globe –trotting lifestyle.

Fast forward a few years later and things changed. America’s Southwest Airlines was the first company to bring in the idea of LCC, or Low Cost Carrier to the industry. Southwest was setup in the late 60s by Rollin W King in Dallas Texas along with his legal counsel Herb Kelleher.

Southwest Airlines during its inception followed a different type of business model in which the key to success was not targeting the rich and famous, but the general working class population and offering them air travel at cheap and affordable prices. The airline even during the early 70s had ten minute turnaround time for its aircraft, a casually dressed crew and ground staff (Southwest was the first to introduce hot pants for its air hostesses along with giving a small bottle of alcohol with every ticket purchase) and so on. All these were the characteristics of the business model that many successful LCC airlines such as Ryanair, EasyJet followed in the future.

However, with Southwest’s success the luxury air travel market did not get into trouble till the 2000s, especially after 9/11 when the airline industry took a massive financial hit and many airlines either shut shop or trimmed their operations drastically.

India’s civil aviation sector, even after 9/11, was growing. After adventures and misadventures by many private players during the 90s when the sector was opened for private companies, a few successful players managed to survive and make international brands representing India in the civil aviation space.

Looking to get into the growing aviation market Indian liquor baron and billionaire Vijay Mallya launched Kingfisher Airline in 2005 with an ultra-luxury USP, selling the airline as an experience, rather than just a flight from one destination to another.



The airline, modelled around Richard Branson’s Virgin Atlantic, boasted of in-flight entertainment, gourmet meals, an attendant for every passenger including economy class to help him with luggage on the ground and so on. All this was offered at what Mallya believed was extremely competitive pricing.

To woo passengers in its initial stages of operations Kingfisher had India’s only surviving airline from the 90s, Jet Airways, as its main competitor. For starters Kingfisher, upon launching its frequent flier program King Club, offered completely free transfer of all miles passengers had on Jet Airways to King Club. So basically if as a frequent flier one had 20,000 miles with Jet Airways, Kingfisher would let you shift all your miles to King Club to make premium passengers change their loyalties.

Along with such offerings Kingfisher’s initial success with passengers was spearheaded by what was, without a doubt, great in-flight service matched with great on-ground service by the airline. The new fleet of A320s and A321s had comfortable seating, a generous seat pitch in economy and a general overall positive atmosphere.

However, passenger experience aside, the airline was on course from the beginning towards an over-ambitious plan of expansion spearheaded by an under-ambitious and poorly orchestrated financial design which had the airline heading towards the situation it finds itself in today.

Vijay Mallya’s main fault even before he launched the airline was that he had decided not to run it for what it is, but to run it only because he wanted a global flying billboard to advertise his brand name. Running an airline as an airline became collateral damage to Mallya’s long term plans for what Kingfisher Airlines stood for and he just chose the wrong business to execute his branding needs. If you see Kingfisher aircraft the word ‘airlines’ does not appear anywhere. While airlines such as Qatar can afford such advertising, as not only Qatar Airways is a state carrier, but it is a vital foreign policy tool for the Qatari Government and is owned by Qatari royalty, Vijay Mallya had no such royal backing other than that of the free markets.

The other major fault that Mallya did with Kingfisher was to go ahead and procure Deccan, India’s first low cost airline. Deccan was bought by Kingfisher only because of one reason, it had been operating for nearly five years and according to Indian civil aviation guidelines an airline in India needs five years of domestic experience before it can fly international.

To bypass this law Kingfisher bought Deccan so as to get almost immediate access to fly international routes. However, along with getting the routes access Kingfisher also inherited a big mountain of debt that Deccan had on its shoulders.

Following the acquisition of Deccan, Kingfisher went on an aircraft buying spree for its long-haul operations, a spree that it could not afford. The airline ordered more A320s, medium-range A330s, ultra-long range A340-500s and even the double-decker A380. By the time the first few Airbus A330s had started arriving for Kingfisher, the airline was already starting its spiral downwards as it failed to post a single day of profit since it started operations.

If the decision to order new bigger aircrafts was not bad enough, the way the airline decided to fit them out, to uphold its extravagance style in a now challenging economic environment added to the woes of the carrier.


Kingfisher Airlines Airbus A330

As more Airbus A330s started to arrive Kingfisher launched flights to destinations such as London, Hong Kong and Singapore. The A330s came fitted with comfortable economy seating, luxurious business class setting and also introduced a proper lounge-bar area which offered business class passengers a separate social recreational section. Although great to look at while boarding and such not many people seem to be using the bar on board the aircraft’s for it to be considered a necessary and successful tool. In fact the bar area on the aircraft is one of the most counter-productive accessory that the airline could have applied.

The bar section on each A330 weighs nearly 7 tonnes or 7000 kgs. It requires a specially built shell to adhere with safety standards and needs to be fixed by applying special beams into the structure of the aircraft. The space it takes could accommodate 10 business class seats or 26-30 more economy class seats which would overall be much more economically productive than a show piece.


Business Class and on board bar (A330)

The media in the past few weeks have talked about the financial options for Kingfisher Airlines in detail. One thing is for certain that the airline should not get any kind of bailout, direct or indirect, from the government.

Air India is already proving to be a burden for the tax payer that can’t be get rid of, the last thing the economy needs is to carry around a business which failed due to exuberance, poor management, miscalculated ambitions and only till a certain extent, suffered more due to archaic governmental policies…. only till a certain extent, being the pivotal point here.

Vijay Mallya had managed to copy Richard Branson on his style, and that’s about it.
Kingfisher chairman Vijay Mallya

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Live to love and love to live. The motto that I held on my entire life. Just a regular guy who loves what I am passionate in life. A song writer and producer. Living life on the move. From Malaysia to The States, New Zealand to Singapore. With the companion of great people in life. In and out from the music industry. Taking everything one step at a time. 
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