Finally, the inevitable happened yesterday. Unable to give a clear roadmap, KFA has got its license to operate flights suspended by the DGCA, putting the future of the airline in serious jeopardy. With 7000 crore in liabilities, the lender banks, led by SBI, will be in a tizzy. And with over 15000 crores in accumulated losses and debt, a very agitated staff, and inability to even maintain flights in the air, it seems very unlikely that KFA will get an investor to bail it out soon.
An example of bad times for a great business, or an example of a sham without any real financial success right from the beginning?
When KFA started operations, Mallya proudly claimed his planes didn't have a separate first/business class, because every seat was business class. The smartly dressed air hostesses were the prettiest, and every air hostess was rumoured to have been chosen by Mallya himself. The food served on board was delicious, the in-flight entertainment was amazing.
So what went wrong? It is unimaginable that the airline would fall out of favour with its customers, because it definitely offered one of the best experiences. But was the glitz and glamour on offer out of tune with its pricing and profitability? Seems like that was the case! As long as Mallya could pull it off, he did. But it's like riding a tiger's back... once you get on, it's an amazing ride. But when it's over, it's really over.
Time will tell if one of India's most charismatic business leaders can pull a rabbit out of his hat, and get the proud KFA logo back in the air....
Until then, it will be interesting to watch how Flipkart, another of India's poster boy manages to shake off it's own problems and turn the leaf into profitability. Every time I order from Flipkart, I wonder, am I actually doing them a disfavour?
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