Why Kingfisher Airlines Failed?

Establishing an airlines company is difficult, but maintaining it over the years sustainably is even more strenuous.  Kingfisher, the King Of Good Time, was one of the largest passenger airlines. It was established in 2003 by a Bengaluru-based company called United Breweries Group.  They soon succeeded to be India’s fifth largest passenger airline that provided both national and international flights at flexible fares to its customers. 

Over 1 million people traveled using the services of this airline during the month of May in 2009. This tremendously boosted its market share among other airlines in India. In 2011 Kingfisher also won the Skytrax award for being India’s best airline. But why would this airlines no more reach the sky? 

What happened to the King Of Good Times? 

What went wrong? 

Kingfisher, also known as KFA launched with great fanfare as a premium class airline is no more in function. If you are eager/interested to know why keep reading.  

Vijay Mallya, the owner of Kingfisher was an experienced businessman in the sector of breweries. He has acquired fame as a liquor baron. In spite of his skills in that sector, he lacked experience when it came to managing businesses such as airlines company. Due to this, he was unable to provide inspiring and effective leadership to the Kingfisher team. Two decisions made by him, within a couple of years after launching KFA, have utmost significance. 

Acquisition of Air Deccan 

The first was the acquisition of Air Deccan which was a no-frills service. Though KFA obtained all the aircraft of Air Deccan and its market, the former also inherited its losses. 

Expansion into the International Arena 

Another decision that impacted the efficiency of KFA was the sudden launch of international services. Immediately after acquiring Air Deccan, KFA entered the international arena. This entry into a large market would have been ideal after consolidating the domestic service which had by then captured a large share of the Indian market. 

KFA’s international venture was a thorough failure. Indeed, it was destined to be so. How could a man who lacked experience in running domestic airline survive in the rough waters of international competition? The international skies were dominated by the likes of Emirates and Etihad and each had its diehard fans. Breaking their monopoly was too difficult a task for the nascent KFA, and its international venture misfired shortly after its launch. 

Lack of Stability at the Apex Level of Management 

Another reason attributed to the decline and downfall of KFA is the lack of continuity at the apex level of management. As stated earlier, the owner of KFA was a greenhorn in the airline business, and it was the CEO who guided its course. But no CEO remained with KFA for more than a year. If KFA appointed an experienced CEO like Gopinath of Air Deccan and kept him for a full tenure of five years, things would have been somewhat different. 

Mallay’s business interests were many and desperate apart from breweries and KFA. The breweries were managed by experienced hands, so his liquor business flourished. KFA was not that fortunate. The owner due to his political (Vijay Mallya was a Rajya Sabha MP) and business commitments was not able to give KFA the attention it needed. 

Switching from Premium Class Airline to the Low Budget Segment

KFA took off as a premium class airline catering to the needs of luxury-loving business executives and politicians. It built up its brand systematically over a short period of time. But it lost its sheen when its switched to the low-cost segment. 

Sailing in the low-cost segment was not smooth. The segment was dominated by players like Indigo, Spicejet and others. It was difficult, especially in the domestic sector. KFA faced stiff competition, and its dream of making a fast buck lay shattered. KFA’s service deteriorated over time, and its customer shifted loyalties to better airlines.   

The downfall of KFA from being one of the best airlines in India is due to the lack of effective decision made by the team. Acquiring the loss of Air Deccan, the sudden launch of the service into the international arena and its change in segments which gave rise to competition are major factors which led to its shut down. 

External factors such as the high cost of aviation fuel would also be responsible. KFA’s expenditure on fuel kept mounting. This was experienced by all airlines including KFA’s competitors, but they came up with strategies to overcome the challenge.

Thanks for reading!

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