KINGFISHER AIRLINES

The beginning of the end for Mallya

2017-0mallya

Though liquor baron Vijay Mallya may have been successful in getting bail after his arrest in the UK, a former UB group supervisory board member and some other experts with whom THE WEEK spoke to repeatedly stress that Mallya himself is to be blamed for all the mess he has created. The former UB Group supervisory board member, who had worked with Mallya for several years and had closely observed his style of functioning, says that Mallya had a fascination for aircraft, and nursed a desire to start an airlines business much before Kingfisher. This board member along with others had always advised him against the move. Though it worked for many years, finally Mallya ventured into the airlines business against their advice.

“Mallya is very ambitious and did not foresee his downfall in the airlines business. I, along with many other board members, repeatedly use to advise him against his airline venture. In fact, I helped him start his first aircraft venture known as UB Air and had helped him in acquiring a couple of aircraft for it. I had told him that airline is a difficult business and he will surely fail in that venture. But Mallya is Mallya and sometimes his ambitions score over his senses and he overlooked the board advice. The timing was very wrong and a completely wrong decision was made by Mallya and thus was born Kingfisher,” he said.

This board member further said that another disastrous move was to acquire the bleeding Air Deccan which had a very different business model and its merger with the full service airline like Kingfisher was expected to fail. “The merger of the low cost airline such as Air Deccan did not pan out as expected. Two airlines had completely different ideologies and their style of functioning was totally different. While Kingfisher was already loosing money the addition of Air Deccan to its kitty added fuel to the fire and ruined Mallya's ambitious venture,” added this former board member.

He further feels that the acquisition of Air Deccan was a blind decision by Mallya without forethought. “I feel that a proper due diligence should had been conducted by Mallya and the pros and cons should have been studied in minutest of details before taking such a decision. Capt Gopinath wanted to get rid of Air Deccan as it was bleeding and lucky for him that he sold it off to such an individual who was hell bent on expanding the aviation business irrespective of the challenges associated with it. This move was a blind one by Mallya and yes it was the beginning of the end for him,” said this former board member.

Experts such as Kris Lakshmikanth, the co founder of the recruitment firm Head Hunters Limted who had helped Mallya in the recruitment of some senior executives at Kingfisher Airlines, feels that the airlines business is not profitable and can give returns only if government offers some subsidies on the fuel price. Also, the government should back the airlines by buying certain percentage of seats in a flight like what is done in some countries, he feels.

“Unless you have heavy funding you cannot run an airlines business just on the basis of bank loans. Moreover, many of the routes on which Air Deccan was flying were non profitable and it is due to such routes Kingfisher Airlines lost a lot of money. Sometimes success goes into people's head. Mallya had made a lot of money in liquor. He thought that he will achieve the same here but it turned out to be the opposite. Mallya wanted to become the Richard Branson of India but aviation business is such that one bleeds and needs a strong government backing. Even Branson had to sell the US part of the Virgin Airlines,” said Lakshmikanth.

He feels that there are a lot of other defaulters who owe much more money to the banks but nothing has been done about it. “There is a possibility that Mallya may be extradited to India in the future because the government wants to portray that it is pro poor and it has done a great job by bringing back a defaulter to India. No one will side with him now as Mallya has received negative publicity all over,” adds Lakshmikanth.

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Topics : #Vijay Mallya

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