Crisis of kingfisher airlines

It listed shares on stock exchanges last year after raising a truckload of money. Kingfisher Airlines has grounded an empire—the UB Group—and has not taken to the air since

Crisis of kingfisher airlines

Mar 02, Flights of fancy It takes a brave man to buy an airline. And it takes a braver man to keep running Crisis of kingfisher airlines into the ground. Ask liquor baron Vijay Mallya, who has been running Kingfisher Airlines for a while now. The airline now has accumulated losses running into more than Rs crore, having never made money since its launch in But that is hardly surprising, given that most airlines make losses rather than profits.

Warren Buffett explained this in a letter he wrote to the shareholders of Berkshire Hathaway in February Here, a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favour by shooting Orville down.

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This, despite the evidence of the sector making huge losses because of the very high capital required to start it, tough competition and the rising price of oil over the last few years. Interestingly, the only airline to make profits consistently over the years is Southwest Airlines.

The low-cost airline has made profits year after year since it started operating inthough in the recent past its profits have come more from successful bets on oil derivatives rather than passenger revenue.

The reason airlines constantly lose money is because it is one business where companies really have no way to control their costs. The primary expense in running an airline a company doesn't always have to buy the aircrafts, it can lease them is oil.

Airline companies have no control over this price. The higher it goes, the higher is their expenditure in running the airline and given the competition that prevails, they are not always in a position to pass on the increasing cost to the customer. Hence, airlines are specialised businesses which require full time attention.

Mallya's business interests are too diverse to allow him the time and attention required to manage Kingfisher, busy as he is running his diverse businesses and doing other things. What clearly did not help was his decision to take over Deccan Aviation which he shut down a few months ago.

A premium brand like Kingfisher operating a low-cost airline, by buying Air Deccan and rebranding it as Kingfisher Red, was a big mistake in the first place. Also his other primary business interests are in the fields of alcohol and now real estate.

There isn't really any link among these businesses. Businesses over the years have become more complicated. And just because a company has been good at one particular business doesn't mean it will be good at another totally unrelated business.

Several big businessmen have learnt this in the recent past, the hard way. Reliance's attempts at the retail business haven't gone anywhere. Bharti recently exited the insurance business it had started with much fanfare.

NDTV's attempts in the general entertainment business by launching the Imagine channel came a cropper. Marketing guru Al Ries has said in the past "Focus is the essence of marketing and branding.

And it's time Mallya learnt that lesson. The good times last as long as you stick to what you know.Kingfisher Airlines merged Deccan Aviation Ltd, which ran Air Deccan, with itself in April Initially, Mallya rebranded Air Deccan, which was a household name then, to Simplifly Deccan and.

Vijay Mallya asked the Government of India to bail out the company from the crisis, the government of India refused to bailout the private company, because government airlines Air India itself is running with losses.

Reasons For The Downfall Of Kingfisher Airlines. Frequent Changes On Focus. Kingfisher first launched all economy class with. Sep 13,  · Kingfisher Airlines crisis News: Latest and Breaking News on Kingfisher Airlines crisis.

Explore Kingfisher Airlines crisis profile at Times of India for photos, videos and latest news of. Fugitive businessman rues ‘poster boy of defaulters’ tag. FINANCIAL CRISIS The Kingfisher Airlines financial crisis refers to a series of events that led to severe disruptions within Kingfisher Airlines.

Ever since the airline commenced operations in , it has been reporting losses. After acquiring Air Deccan, Kingfisher suffered a loss of over 1, crore for three consecutive years.

Crisis of kingfisher airlines

By early CRISIS OF KINGFISHER AIRLINES 2 Introduction: Kingfisher airlines is based in India with the headquarter in Andheri (east), Mumbai called The Cube. and their registered office is in UB city, Bangalore. Airlines was established in and owned by Bengaluru based United Breweries Group.

Kingfisher Airlines had 50% stake in low cost carrier Kingfisher Red.

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