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Friday, 9 August 2013

Why Kingfisher Airlines failed. Explained with 5 reasons.

kingfisher


When Beer barron Vijay Mallya launched his own airlines in 2005 on the name of his top selling beer brand Kingfisher, nobody have predicted the crises which Kingfisher is currently facing.

Here we bring a list of 5 reasons for the Kingfisher crises.


1. Problem associated with the Aviation sector - Owing an Airline company can be very sexy but managing it is a very hefty task. Aviation business is one of the world's most riskiest business as the cost involved in it both capital and operational is very huge. None of the Airline company in the world has able to make consistent profits year after year this is because of the operating problems associated with the Aviation sector. Starting from Airplanes purchasing cost, Fuel cost, maintenance cost, interest cost , salaries & wages and many other costs companies has to bear if this is not enough operational problems like weather and technical delays further worsen the condition for aviation companies all these problems makes the aviation business most vulnerable.

2. Faulty business modal of Kingfisher Airlines - Kingfisher Airlines started their proceedings as a premium player in the Indian Aviation sector but soon they stuck in the price war with competing airline companies which leads them to offer their premium services at much reduced prices to the passengers which hurt Kingfisher on both the revenue and the cost side. A luxury airline like Kingfisher was never required for Indian market where less than 1% of the population uses airlines as their mode of transportation but if Kingfisher wanted to make its premium modal a success it should never jumped into the price war and keep charging premium prices for their premium services which can give them good margins but Kingfisher mess up all.



kingfisher


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3. Improper handling of Financials by the company's management - Since its inception in 2005 Kingfisher never earned a single penny and continually increasing its losses year after year even then management of the company took no big step to reduce their cost. The ever increasing Debt is also a major worry for the company. Company's management has failed miserably in handling the financials of the airline.

4. Acquisition of Air Deccan by Kingfisher - In order to enter the 'Low cost airline' business and to get the permission to fly international Kingfisher acquired Air Deccan which is one of the major reason for the financial crisis in which Kingfisher is current in. Air Deccan was itself struggling and incurring huge looses when Kingfisher acquired it. Adding 2 negatives only increase the problems for the company .

5. Vijay Mallya's over enthusiasm killed Kingfisher Airlines - The man behind Kingfisher, Dr. Vijay Mallya himself killed Kingfisher Airline. Dr. Mallya's enthusiasm for his airline to make it best in the world leads him to over spend on the airline. Mr Mallya is not ready to accept his airline's failure and continuously pouring money from the profits of his other ventures and by taking loans which is making conditions worsen for the Kingfisher.

Kingfisher is really going through a disastrous phase which can also lead in the closure of the Airline.


 UPDATE 

Kingfisher is now almost dead as Government of India has cancels its Airline license.



IN INDIA AEROPLANE FUEL IS CHEAPER THAN OUR BIKES FUEL
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