How Mallya Killed Kingfisher
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.