Why Vijay Mallya will not shut down Kingfisher Airlines

It was 2005, and Vijay Mallya had just completed a tough acquisition of arch rival Shaw Wallace after nail-biting negotiations. This was clearly a huge high for the flamboyant, self-styled king of good times. Relaxing in his yacht with his close friends, just off the Mumbai coast, Mallya was also giving interviews to journalists about the acquisition that would make him an even bigger player in the liquor business.

In his inimitable style, beer can in hand, Mallya explained to journalists how he manoeuvred tough negotiations and eventually managed to convince the late Manu Chhabria’s family to sell Shaw Wallace to him. “Shobai choley gelo, sheshey aami dekhlam eka dariye achhi (everyone moved away, and in the end it was I who remained in the fray),” Mallya explained in fluent Bengali, a language he has known since his early days in Calcutta.

[caption id=“attachment_224512” align=“alignleft” width=“380” caption=“The airline Vijay Mallya launched with much fanfare, where he appeared personally in videos promising guests - not passengers - the finest service Indian skies have seen, is now teetering on the edge of disaster.AFP”]  [/caption]

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Clearly, Vijay Mallya was pleased with his new acquisition. And he loved being in the limelight. His next big move was round the corner - he was about to launch his aviation foray with Kingfisher Airlines, which he said would change the rules of the game in the Indian aviation space with the quality of fleet and services on offer.

Eyes lighting up like a child, Mallya proudly showed us the first pictures of the colour combinations he was looking at for the airline’s dcor and branding and the first aircraft he had ordered. On the yacht, good friend designer Manoviraj Khosla was also speaking to him on the colours the crew would be wearing, with Mallya giving his inputs and also joking with Khosla.

This was a man on a high, having marked his stamp on the liquor business and now setting his eyes on the skies. Why did he have to get into aviation?

Mallya was clear that since his core liquor business had serious constrains in terms of advertising, the airline would also be a major extension which would be hugely beneficial for Kingfisher as a brand. And he was equally blas about his well-known flamboyant lifestyle. “I cannot advertise, so I have to live my brand,” he said.

Cut to 2012. The airline Vijay Mallya launched with much fanfare, where he appeared personally in videos promising guests - not passengers - the finest service Indian skies have seen, is now teetering on the edge of disaster.

Cancelled flights, huge losses, mounting dues to the authorities and thousands of harried customers later, Mallya’s Kingfisher Airlines is still attempting to keep its head above water in what appears to be a losing battle.

A Business Standard report says banks have refused to throw in a much-needed lifeline to the airline, the I-T department is knocking on its doors and even stocks of banks which have exposure to the airline are taking a beating on the bourses. Mallya’s Kingfisher dream is falling apart rapidly.

For a man who admits to living his brand through his lifestyle, this is a huge comedown. His UB Group stocks have taken body blows ever since the Kingfisher fracas escalated, and the dent to its image with customers has reached a stage where jokes about the airline are circulating on SMSes and social media.

But interestingly, while Mallya did give a personal guarantee in December to get the airline out of the mess, a report in Business Standard on February 24 says he has rejected the demand from a clutch of banks when asked to do so a second time. The report, however, does not confirm this from Mallya’s end.

But Mallya has never believed in giving up without a fight. And so, he carries on, swearing he will not shut down the airline as long as he gets help from the banking system. The proud industrialist that he has always been, he even clarifies that this wouldn’t be a bailout, since his airline is important in the national interest. “Help is not bailout,” is his reasoning, while seeking greater working capital support from banks already facing shareholder wrath for their exposure to Kingfisher.

It is this belief that will be at the core of what Vijay Mallya will do next with Kingfisher. Having launched what he thought would be India’s dream airline - with a firm belief that only he could make that happen - Vijay Mallya has put his entire reputation on the line this time.

Worse, he has even hypothecated the ‘Kingfisher’ brand, something the liquor baron values enormously. And though Mallya believes his airline is too important to be shut down, some aviation industry experts feel that may not be the case.

In the Karan Thapar-hosted television programme “The Last Word” on CNN-IBN on Thursday night, Kapil Kaul of Centre for Asia Pacific Aviation (CAPA) said shutting down the airline would not endanger the system and create a demand-supply imbalance in the market. Others like former Air India executive director Jitendra Bhargava also feel that while initially there was some hope of turning the airline around, there’s hardly any future for it now, given the mess it is in.

However, there’s one aspect other than the financial which needs to be considered when it’s Vijay Mallya: pride. Oftentimes, the best of businessmen find it hard to let go of companies they have created because their ego and pride get in the way. Financial imperatives are then given the go-by and the industrialists try to hang on to what they have created.

For someone who, till a while ago, did deliver on the promise of creating an airline which offered high-class service, Vijay Mallya will find it very, very tough to let Kingfisher die. Not to forget that the airline carries the brand his UB Group itself is synonymous with.

Mallya will be concerned with the huge damage the Kingfisher brand, valued at Rs 4,000 crore plus, will suffer if he is to take the call he has been avoiding assiduously so far and the fallout of that on the rest of his business.

But for the passengers who have been left stranded at airports thanks to cancelled Kingfisher flights, UB shareholders who are suffering loss of wealth owing to the mess and the banks who are left with little option but to pull the plug from the airline, the value of the Kingfisher brand will be the least of their concerns.

Vijay Mallya’s Kingfisher, unfortunately, is facing a battle for survival. This time, the fabled Mallya spirit may not be enough.