How Mallya Killed King­fisher

Tehelka - - 20 -

ON 4 OC­TO­BER, 45-year-old Sush­mita, wife of King­fisher Air­lines Store Man­ager, Manas Chakravarti, hanged her­self to death at her res­i­dence in Manglapuri, New Delhi. Her sui­cide note, writ­ten in Bangla, pur­port­edly said: “My hus­band works with King­fisher, where they have not paid him for the last six months. We are in acute fi­nan­cial cri­sis and so I am com­mit­ting sui­cide.” As di­rect as that.

This was the first in­stance of the King­fisher Air­lines’ fi­nan­cial cri­sis claim­ing a hu­man life. In what has been a long six-seven months of em­ploy­ees not get­ting salaries and fre­quent flight can­cel­la­tions, the King­fisher Air­lines cri­sis has spilled over from the draw­ing board to peo­ples’ houses. There are nu­mer­ous sto­ries of em­ploy­ees in dis­tress, some even sell­ing fam­ily jew­ellery to keep their stoves burn­ing. The pitch on the in­ci­dent has been pushed up by politi­cians join­ing the cho­rus. JD(U) leader Sharad Ya­dav has al­ready de­manded send­ing King­fisher Chair­man Vi­jay Mallya to jail for abet­ting Sush­mita’s sui­cide.

That the air­line has hit rock bot­tom is ev­i­dent by the Union Civil Avi­a­tion Min­is­ter Ajit Singh’s state­ment: “If they (King­fisher em­ploy­ees) don’t get salaries for seven months it will def­i­nitely lead to prob­lems. De­spite that they were work­ing as they had hope that the air­line may get re­vived and their jobs may be re­tained... but the developments in the last few days in­di­cate that any such hopes have faded.” Notice the past tense the min­is­ter uses.

What made things come to such a head? Did Vi­jay Mallya put ego be­fore pru­dence? Were the banks and reg­u­la­tors blinded by Mallya’s pul­chri­tude? Did the banks take it easy? Many such ques­tions arise in the ex­am­i­na­tion of the events that led to the King­fisher fi­asco.

Turn back time to 2005, when King­fisher Air­lines ( KFA) was launched amid much fan­fare. News­pa­per head­lines and TV bites flashed Vi­jay Mallya pos­ing with air hostesses atop

Who’s to blame for the sui­cide of the wife of a King­fisher Air­lines em­ployee?

The man­age­ment, the banks, the reg­u­la­tors? Or all of them?

the wings of the planes that would rule the skies. Mallya was called a game-changer, In­dia’s ver­sion of Richard Bran­son. But to any­one will­ing to forego the mo­men­tary aura, this story had flaws even from its early days.

Mallya be­gan the air­line with a rush to buy planes. He started with four-five planes but or­dered a lot more, and fast. For the rest of 2005, KFA got one Air­bus A-320 ev­ery month un­til March 2012, when the air­line had about 92 planes fly­ing and or­ders pend­ing for over 60 more. In his quest for do­ing ev­ery­thing in trade­mark style, Mallya adopted the “cus­tomer-atany-cost” ap­proach. From air-hostesses to food and in-flight en­ter­tain­ment, the cost per pas­sen­ger as a whole was “dou­ble of what Jet Air­ways was of­fer­ing”. It was a per­fect case of ex­cesses over fi­nan­cial dis­ci­pline. Food served in KFA, re­calls an avi­a­tion sec­tor CEO, was about 700-800 per pas­sen­ger com­pared to 300 of Jet’s.

For all of Mallya’s tall claims, KFA could never be clear about what it stood for. Two years af­ter it went op­er­a­tional, the al­le­con­omy air­line came up with a busi­ness-class plan with a big shift to lux­ury. In short, KFA went from high-end econ­omy-class travel to an un­sus­tain­able-lux­ury-busi­ness-class air­line, leav­ing in­vestors con­fused.

The chair­man’s de­sire to take the air­line over­seas added to the mess — a move that earned much criticism for the baron for hav­ing put ego be­fore prac­ti­cal busi­ness sense. He wanted KFA to go neck-to-neck with Naresh Goyal’s Jet Air­ways, which had al­ready launched its global op­er­a­tions. Since the rules re­quire an air­line to com­plete five years of do­mes­tic op­er­a­tions be­fore it can take flight in­ter­na­tion­ally, Mallya de­cided to take the short­cut in 2007 by buy­ing Air Dec­can, run by Cap­tain Gopinath, which had com­pleted five years of op­er­a­tion. The deal was a dream for Dec­can and a dead­weight for Mallya who spent 550 crore for 26 per­cent stake, valu­ing the bud­get air­line at 2,200 crore. Com­pare this with about 1,450 crore that Jet paid for the whole of Sa­hara in an ear­lier avi­a­tion deal.

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