📆 Day 8 of 100: Kingfisher Airlines Case study
Hello readers, hope you all are very well.
Today we will discuss an interesting case study of history, “Kingfisher Airlines”.
How the Kingfisher was started, operated and how it collapsed. We will cover all the interesting facts about Kingfisher Airlines in this blog.
Introduction -
“Vittal Mallya” was an Indian entrepreneur. He was the founder of “United Breweries Limited”. The company was in the business of alcohol. After his death, his son “Vijay Mallya” who was studying in US returned to India to take over his empire. Vijay Mallya took full control of the business and he was doing very well in that.
After doing very well in breweries, Vijay then wished for a new sector which is aviation. He decided to start an airline company and thus in the year 2003 “Kingfisher Airlines” was established.
Initially, they started with domestic travel and after being successful in that they aimed to be International. 2000’s was the era when the major players of the industry were just focusing on cost-cutting measures to attract customers. On the contrary of Kingfisher Airlines was just focusing on providing premium and top-notch services in their class.
For going international, they acquired “Air Deccan” which was run by “Captain Gopinath”.
In 2008, during the time of the subprime crisis, they started facing problems.
Major corporate governance failures in the company -
Diversion of funds to unrelated purposes:
They didn’t do properly the end use of the loan. They borrowed the money from the bank for business but the money was not utilized in that.
Management was not well qualified:
The airline business is the highly skilled. It demands high skill and experience and Vijay Mallya did not have any experience in the airline industry.
Excessive remuneration:
Kingfisher was paying excessive remuneration to the management and the employees in comparison to the industry.
GAAP was not being followed by the company.
Board of Directors were also not independent in the company.
In conclusion, the rise and fall of Kingfisher Airlines serve as a poignant reminder of entrepreneurial ambition tempered by operational challenges and economic downturns. Founded on the dreams of Vijay Mallya to revolutionize Indian aviation with luxury and service, the airline soared briefly before succumbing to financial mismanagement, corporate governance lapses, and industry pressures.
Despite its grand ambitions and initial success, Kingfisher Airlines ultimately became a cautionary tale of unchecked expansion, misallocated resources, and regulatory complacency. Its legacy underscores the importance of prudent financial practices, industry expertise, and adaptability in the volatile airline industry.
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Rohit Kumar Yadav