Kingfisher Airlines was established in 2003. It was owned by the Bengaluru based United Breweries Group. The airline started commercial operations on 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight from Mumbai to Delhi.It started its international operations on 3 September 2008 by connecting Bengaluru with
Kingfisher airlines achieved success in gaining customer satisfaction by offering the great and comfortable flying experience to its passengers. However, in the Indian aviation sector, Kingfisher Airlines had a short but lasting impression. By the end of 2011, Kingfisher Airlines suffered a huge financial crisis. Kingfisher Airlines, UB Holdings Ltd. was provided loan by many private and public sector banks in India, considering the reputation of its CMD. He was unable to repay loans to many public sector banks, however, private banks recovered all loans. This paper describes the downfall of Kingfisher Airlines and the study of the financial condition of United Breweries Holdings. Here, we have tried to understand the business of Kingfisher Airlines and studied the role of banks in extending loans and recovery attempts. Moreover, we have attempted to emphasize the reasons behind the financial failure of the company from the point of view of mistakes in strategic decision making.
Economic slowdown in 2008 is another external factor for downfall of the Kingfisher. In 2008, first international route from Bangalore to London was set up. Because of downturn, fuel prices of airplanes raised landing charges at international airport which highly impacted Kingfisher airlines.
Lack of Proper Management
The frequent change of CEO for more than once in a year and malfunctioning of top level management, which Mr. Vijay Mallya never took any serious intervention in day-to-day operations. Later airline was gifted to Siddarth Mallya (son of Vijay Mallya) by his father on birthday. He lacked the maturity to handle such a big airlines business and so, lack of correct proficiency and experience in the airline industry, kingfisher airlines suffered severe downfall due to lack of proper management.
According to a report generated by “The Indian Express” in November 2015, Mr. Mallya suffered a total loss of Rs 9,091.40 crore. He took loan from 17 banks. His highest debt was with State Bank of India of Rs. 1600 crore. From the above data the airline owes Rs 800 crore each to Punjab National Bank and IDBI Bank. It also owes Rs 650 crore to Bank of India, Rs 550 crore to Bank of Baroda, Rs 410 crore to Central Bank, Rs 320 crore to UCO Bank, Rs 310 crore to Corporation Bank and Rs 430 crore to United Bank of India, among others, data showed.
Indian airline business has seen ideal growth and revolution which will go on in coming years. Many airlines come and go while the others have gained a strong ground in this business. The grand and ambitious Kingfisher Airline’s project suffered huge downtime due to improper strategic decisions and mismanagement by the group. Instead of trying to utilize this grand airline project opportunity, Vijay Mallya focused to achieve a glamorous status. The airline became for the luxurious design, food and ambience including big goals for settling in international market but neglected the basic economic class. The strategy practiced by Vijay Mallya could not sustain for long and proved to be a great threat at a large scale to both, sustainability and stabilization of the aviation sector. Mallya is now the only board member left holding on to the brand. For a business to be successful the main focus should be on creating an efficient work-frame, taking appropriate decisions, establishing healthy competitive environment, improving quality of service and standing in unity to find best solutions to problems.
Aircrews Aviation Pvt Ltdwww.AircrewsAviation.com