By no stretch of imagination can one expect the airline, with a debt and losses of about Rs 16,000 crore, to be able submit a credible revival plan to the regulator.
And even if it starts flying, the dynamics of the aviation business is changing fast. Passenger traffic has been declining steadily over the last few months.
According to a report in Mint today, the decline in passengers is turning out to be a bigger villain than the jet fuel cost for the industry.
A sharp increase in airfares pulled down the domestic traffic by 0.87 percent on year in May, 3.84 percent in June, 3.7 percent in August, 12.4 percent in September, 15.7 percent in October and 7.28 percent in November, according to the report.
During the period, jet fuel prices have declined nearly 2 percent, the report said.
Apart from this is the doubt whether Kingfisher, which is likely to remain financially strained for some more months after the operations are restarted, will be able to cop up with the prevailing fierce competition.
The expected foreign investment, which it has been desperately seeking for the last few months, is also likely to remain an unfulfilled dream. There is no reason for anybody to invest in a company with thousands of crores in dues, debt and loss.
And company Chairman Vijay Mallya knows this more than anybody else. That is the reason for his complacency, even at the face of flying licence cancellation.
Aviation ministry officials in charge of Kingfisher as saying that they “do not see any urgency” from the company management to raise the much-needed funds to restart the operations.
According to the report, DGCA Arun Mishra called Vice-President Hitesh Patel on 29 December and briefed him about the loopholes in the plan submitted by the airline.
It was aimed at giving enough time for the promoters to give a credible revival plan before 31 December, the day the licence was to expire.
“The airline management just gave an unsatisfactory plan and did not even bother to find out what our response to that was,” the report quoted an aviation official as saying.
It is clear that the company management is least bothered about the fate of the company. But then why is the government so worried.
Aviation Minister Ajit Singh has said Kingfisher should survive for the sake of the employees, passengers, banks and stakeholders, who, he thinks, will be the collateral damage if it did not fly again.
It may just be the news Kingfisher was waiting for. But will the decision to allow foreign carriers to buy up to 49% stake in Indian airlines work to its advantage? Who would want to touch an airline which is drowning under so much debt? The airline has been a sinking ship for quite a while now. Sad, considering it started as a premium brand with high expectations and was the airline of choice for many passengers.
The figures tell a sorry tale. From 67 planes, its fleet has been drastically reduced to 11. With a debt burden of over Rs 7,000 crore, banks and other debtors snapping at its heels and pilots leaving in droves for Indian and foreign airlines, why would any foreign investor or carrier want to take on this heavy load after investing a fortune in it? It would need an investor with very deep pockets running into millions of dollars and nerves of steel to turn this airline around.
In fact, when Tony Fernandes, CEO of AirAsia, was asked last year if he would like to have a stake in any airline in India, he said no, as there was too much to do to turn around any of the existing Indian carriers. He said many lacked focus, haven’t stuck to one model and were trying to do too many things at the same time. Asked if he had any advice for Vijay Mallya, he laughed and said he should hire him, as given full control, he would be able to make his airline profitable.
To be fair to Kingfisher, market forces and its own high premium brand which didn't work in Indian conditions, were some of the reasons for its slow downfall. But what's galling for most people is the way its employees have been treated. Fed with a steady supply of false promises and no pay for months, most have nowhere to go in a market where most domestic airlines are themselves in a bad shape. Imagine the condition of the lower staff as they try to make ends meet with no salaries. And this has been going on for months. Then there are young pilots who have taken huge loans as they embarked on what seemed a promising career. Most airlines wouldn't want them when they can get experienced and senior pilots. What's worse is that if they leave, there will be no hope of getting any dues from the airline.
For many, it would have been difficult to see their owner living his flamboyant life when they didn't know where their next meal was coming from. Leaders are made of a different fibre. They look after their staff first even if it hurts them in the process. But when you have friends in high places, perhaps these niceties don’t matter. It was reported that Kingfisher air hostesses who were taken by other airlines asked for a meagre salary advance as they were so broke. The employees who still remain in Kingfisher hoping for the dawn of a new day may be heaving a sigh of relief now. For their sake, we hope Kingfisher gets a good investor with a mighty heart.
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