It is difficult to establish an airline company, but it is even more challenging to sustain it over time. Kingfisher, also known as the King of Good Times, was a major passenger airline. It was founded in 2003 by United Breweries Group, a Bengaluru-based company. It quickly grew to become India’s fifth-largest passenger airline, offering both domestic and international flights at competitive prices to its customers.
In May 2009, over 1 million people used the services of this airline. It significantly increased its market share in India compared to other airlines. In 2011, Kingfisher was also named India’s best airline by Skytrax. But why would these airlines cease to exist?
What happened to ‘The King of Good Times?’
Where did things go wrong?
What triggered Kingfisher Airlines failure?
Kingfisher, also known as KFA, which debuted with great fanfare as a premium-class airline, is no longer in service. If you’re curious about why continue reading.
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Why Kingfisher Failed?
Vijay Mallya, the owner of Kingfisher, was a seasoned businessman in the brewing industry. He is well-known as a liquor tycoon. Despite his expertise in that field, he lacked experience in managing businesses such as airlines. As a result, he was unable to provide the Kingfisher team with inspiring and effective leadership. Two decisions he made within a few years of launching KFA are crucial.
Acquisition of Air Deccan
The first was the purchase of Air Deccan, a no-frills service. Even though KFA acquired all of Air Deccan’s aircraft and market, the latter also inherited its losses.
Expansion into the International Arena
The sudden launch of international services was another decision that had an impact on KFA’s efficiency. KFA entered the international arena shortly after acquiring Air Deccan. After consolidating the domestic service, which had captured a large share of the Indian market, this entry into a large market would have been ideal.
The international venture of KFA was a complete failure. It was always going to be that way. How could a man without domestic airline experience survive in the choppy waters of international competition? Emirates and Etihad, for example, dominated the international skies, and each had a devoted following. The nascent KFA found it too difficult to break its monopoly, and its international venture failed soon after it was launched.
Lack of Stability at the Top Level of Management
Another factor contributing to KFA’s decline and demise is a lack of continuity at the highest levels of management. As previously stated, KFA’s owner was a newcomer to the airline industry, and it was the CEO who set the company’s course. However, no CEO stayed with KFA for more than a year. Things might have turned out differently if KFA had appointed an experienced CEO, such as Gopinath of Air Deccan, and kept him for the full five-year term.
Apart from breweries and KFA, Mallya’s business interests were numerous and desperate. His liquor business thrived because the breweries were managed by experienced hands. KFA, on the other hand, was not so fortunate. Due to his political (Vijay Mallya was a Rajya Sabha MP) and business commitments, the owner was unable to give KFA the attention it required.
Switching from Premium Class Airline to the Low Budget Segment
KFA took off as a premium class airline serving the needs of business executives and politicians who enjoy the finer things in life. It systematically built its brand over a short period. However, it lost its luster when it transitioned to the low-cost segment.
Sailing in the low-cost segment was not without incident. Indigo, Spicejet, and other players dominated the segment. It was challenging, particularly in the domestic sector. KFA was up against the stiff competition, and its dream of making a quick buck was shattered. Over time, KFA’s service deteriorated, and its customers shifted their loyalty to better airlines.
KFA’s demise as one of India’s best airlines is due to the team’s inability to make effective decisions. Acquiring the loss of Air Deccan, the sudden launch of the service into the international arena, and its change in segments, which increased competition, were all prominent factors in its demise.
External factors such as high aviation fuel prices would also be to blame. KFA’s fuel costs continued to rise. All airlines, including KFA’s competitors, experienced this, but they devised strategies to overcome the challenge.
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