THE KINGFISHER airlines received relentless criticism about how it had managed to financially bungle up an airline that many in the country, and from abroad, preferred to travel. Black humour blogs and Facebook groups calling themselves, 'Save Kingfisher Airlines Give Vijay Mallya Money', appeared overnight to mock the amount of money Mallya needed to 'fly'. While figures of hundreds of crores in losses were tossed about in Kingfisher's face, thousands of satisfied customers supported efforts to revive the ailing airline with government help. Many who had flown the airline, commented on social media and on television channels that the airline may be guilty of administrative and financial mismanagement - but their flying experience with Kingfisher had been the best - surpassing Jet Airways and even some international airlines. Other supporters said that the government could chose not to apply the ruthless rules of capitalism and the market economy - especially when Kingfisher was somewhat of a 'first among many' airlines of the country, and a posh brand that people loved to associate with.
In fact, there seems to be light, insignificant as it may be, at the end of the long tunnel that Kingfisher is grinding away to cross. The origin of the light is Kingfisher's holding company UB Holdings, which has beaten all market expectations, and has recorded healthy profits. As Kingfisher had given aircraft lessors and bankers corporate guarantees via UB Holdings, the lenders are invoking the same. In fact, Economic Times reports that Rs 835.77 has already been invoked. What's more, the UB Group is giving cash support amounting to more than Rs 750 crore to Kingfisher to meet immediate cash flow needs. Mallya has not lost hope - far from it - he is in talks with financial investors to infuse Kingfisher with fresh capital.
The last-ditch effort may be a long shot, but perhaps Kingfisher may not need a government bailout after all - even though opinion among analysts continues to be one of 'let the market decide'. This citizen journalist spoke with Jacob K Philip, who edits Indian Aviation News Net, a small group of websites and blog on Indian aviation. Based on his two decades of experience in reporting and writing on aviation, Jacob says that the Indian government should stay from any bailout option for Kingfisher, and let the airline learn the hard way.
CJ: The Indian private airline industry, while growing, also faces high cost of operations. The private airline Kingfisher is running record losses, and is bankrupt. Do you think Kingfisher should be financially supported by the Indian government, and given another chance?
Jacob K Philip: No airline, which includes Air India also, should be supported financially by the Government.
CJ: Saving or rescuing Kingfisher is a call that's also being made by professionals from within the industry - as the remaining pilots, crew, technical and administrative staff working for Kingfisher are doing so at a huge risk of not getting paid for their services. In such a situation, how should the Indian government react?
Jacob K Philip: Pilots and cabin crew remaining unpaid is never reason enough for the government to keep the airline alive by pumping in public money. Primarily because the government has no effective control over the airline to make sure that the company would not go bankrupt again, mismanaging the funds. Though airlines in India are facing a common crisis of sort, had Mallya managed his company a little better, Kingfisher would never have ended up in a soup this terrible. It will not be just to spend the money of the people to give this airline a second chance.
I think we should allow the market to stabilize itself. If Kingfisher is closed down tomorrow, other airlines will naturally jump in to grab the market share. That means, they will have to operate more flights. More flights mean more aircrafts, and more aircrafts mean more cockpit and cabin crew. The Kingfisher employees will naturally be absorbed in those airlines.
CJ: Kingfisher has debts mounting by the day, and their recovery seems impossible. Do you think saving the airline with cash infusion and strict managerial and financial conditions will not only help pay back creditors but also give the airline a chance to again be profitable? The re-capitalizing of General Motors and AIG in the US being recent examples of a government bailout.
Jacob K Philip: We just can't compare General Motors with Kingfisher. Though the two are private entities, the situation in which the US government bailed out GM was entirely different. It was was when the recession was looming large over the US economy, that the government took this step - not to help the GM but to help the US economy as a whole, or to stop the alarm spreading in disastrous proportions. Because GM was a kind of a symbol of US advancement in the automobile industry.
Had the GM collapsed then, it would have affected many more auto industrial houses around the world such as Suzuki, in which GM had considerable share holding. Kingfisher's collapse would never affect our aviation industry or the economy in any considerable way- in similar proportions. If anything, it would only help to trim the Indian skies of unnecessary capacity. There are two obvious reasons for this: Kingfisher is no way our national symbol of any kind. The airline industry is not facing doom as a whole. Indigo is consistently making reasonable profit, and lastly, SpiceJet and Jet Airways have also reached the safe zone this quarter.
CJ: Kingfisher is, and was not, an ordinary airline. At its height of popularity, it had a great brand and introduced many types of value-added services for the entire spectrum of passengers - from Economy to Business. Much of it is being used by the current crop of airlines. Is this a good reason for the airline to be propped up?
Jacob K Philip: Just because an airline had introduced some fancy frills as part of its service, why should it be kept alive at the expense of the public? Just as you said, other airlines have already have copied those services. I don't think people got that addicted to the Kingfisher sort of services that they would suffer some withdrawal symptoms once the airline ceases to fly.
CJ: Thousands of people in India and those from abroad have goodwill for the airline - being past satisfied customers. There was a time when Kingfisher was considered equal to many of the best airlines in the world. Shouldn't India's ministry of civil aviation consider these positive sentiments to revive Kingfisher?
Jacob K Philip: Mallya is not some rare kind of businessman facing the threat of extinction that we should try hard to preserve him. We have many, many smart people around. Just have a look at Indigo.
CJ: What's the global standard operating procedure when a good airline loses its way and experiences heavy financial losses - calling for its revival?
Jacob K Philip: No way. Only the fittest would survive. Global aviation industry is littered with so many fallen airlines, many of them the coziest in their era.
CJ: What kind of message will be sent out if Kingfisher is not re-capitalized?
Jacob K Philip: Just this much: Only those good enough and smart enough would and should survive.
CJ: Did you have a chance to fly Kingfisher? How was your experience?
Jacob K Philip: Flying in its essence is only this much - reaching point B from point A in the shortest time with minimum hassles. At the end of the day, nothing beyond this matters. My experience with any airline doesn't alter this fact.
(Jacob K Philip edits Indian Aviation News Net, a small group of websites and blog on Indian aviation. A B.Tech in Civil Engineering, he has more than two decades of experience in reporting and writing aviation for India's largest regional language daily, Malayala Manorama. In 2010, he left the daily to join as Senior Project Engineer with the Aviation Division of KITCO, a public sector consultancy organization based in Kerala.)
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