Where do you think you are going honey?!

ZEE BUSINESS BEST B SCHOOL SURVEY

As if the problems with global fuel prices weren’t enough, Kingfisher has gone ahead and undertaken strategies that only seem a do ‘and’ die effort. How is Mallya even sustaining the unbelievable losses quarter after quarter? B&E’s Shashank Tripathi and Angshuman Paul meet Vijay Mallya and other top Kingfisher executives and investigate...

We know why you stopped by this page [Surely, not because of your killing enthusiasm to understand complicated structural factors affecting the Indian aviation industry, huh!]. We call it the 3G of aviation. Glamour, girls and gizmos! Mallya was counting on the same three factors to ensure that passengers ‘stop by’ his airline. Well, passengers, like yours truly, did stop by in the thousands, but unfortunately, rather than striking the metaphoric gold, all that Mallya struck were three pathetic more Gs! Global fuel prices, government regulations and gadzillion godforsaken losses! Check the figures out! While the global aviation industry is expected to cross the $6.2 billion mark this year, the Indian aviation industry is expected to cross a loss of Rs.9,000 crore at the minimum, more than 33% of global losses. Forget forecasts, for the last financial year (FY07-08), the Centre for Asia Pacific Aviation (CAPA) has estimated the Kingfisher Airlines losses to be at a killing $500 million, or Rs.2,100 crore! If you add Air Deccan’s FY07-08 losses of Rs.834 crore to that, the combined loss comes to close to Rs.3,000 crore! That’s more than 33% of the Indian aviation industry’s losses!

When we met Vijay Mallya just a handful of months back, and had asked him the logic of such a business, Mallya had confidently parried, “I think other business leaders think of many strategies before investing into certain businesses; but for me, it’s just passion that drives me.” But really, can just passion make any group withstand such humongous and gut wrenching losses? Kingfisher’s Executive Vice President, Hitesh Patel, confesses to us, “We are just looking for survival first, and everything rest would follow.” It’s a serious question we ask now – Can Kingfisher Airlines really be sustained? Can it, in short, survive?

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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).


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