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Showing posts with label airline pilots. Show all posts
Showing posts with label airline pilots. Show all posts

Sunday 18 November 2012

Does Kingfisher Airlines Saga reflect India’s Aviation troubles ?




Over the past 10 years, the Indian economy has soared, and with it enterprises such as Vijay Mallya’s Kingfisher Airlines. But now, the super-rich tycoon’s fleet is grounded and debt-ridden. Does it mean the boom-time is over for India?
Drive out of Delhi, across the heavily polluted Yamuna river, turn right and head towards the new $400 million (Dh1.47 billion) Formula One track — India’s first — at Buddh. Take the Noida expressway, a six-lane speedway through what was farmland only a few years ago. Either side, skeletal concrete monoliths rise among the remaining fields. They are apartment blocks, homes for India’s new middle classes. Many projects have names that mix supposed European sophistication with a sense of bucolic rural idyll: Lotus Boulevard, Gardenia Glory, Blossom County. Then, there is the ‘Brys Buzz’, an immense 81-storey glass and steel skyscraper, which is apparently “a dream born out of a vision to give the super-rich the home they deserve”.
In fact, the Indian “super-rich” can afford something a little more exclusive. Vijay Mallya, India’s most flamboyant businessman and the chairman of the vast liquor conglomerate United Breweries, has a sprawling coastal villa in Goa and a dozen or so other properties. Other tycoons live behind high walls and broad green lawns in mansions in the centre of Delhi.
Mukesh Ambani, the chairman of Reliance Industries and India’s richest man, has built himself a home towering above the slums of the commercial capital of Mumbai. With a reported price tag of $1 billion, it is the world’s most expensive private residence.



It is Dr Vijay Mallya who is in the news in India these days. Watching Sahara Force India, the F1 team he leads and co-owns, compete in the country’s second ever grand prix last month, the 56-year-old multimillionaire bullishly rejected any suggestion from reporters that he might have avoided the fixture. After flying in from overseas, he asked: “Was there any doubt about my presence here?”

Well, yes, is the answer. There was plenty of doubt. For Mallya, the self-crowned “king of good times”, has fallen on hard times. His seven-year-old airline has been grounded after authorities suspended its licence to fly on safety concerns. Crippled by debts which may exceed $2 billion, Kingfisher had difficulty paying employees’ salaries. When engineers downed tools, its planes stopped flying. There were even reports, denied by Mallya, that the tycoon’s own private jet might be impounded by Indian airport authorities, which say Kingfisher owes them huge sums. Some suggested that the man described as India’s Richard Branson might choose not to come back at all.
But the Kingfisher saga is about more than just 4,000 jobs, an airline, large amounts of public money and the career of a maverick tycoon. It is about India. Economic growth is slowing — falling below the level seen by economists as necessary to keep up with the fast-growing population — and confidence is faltering. There are huge problems with key parts of the infrastructure — as shown by the three-day power cut that hit hundreds of millions in the summer. Graft is rampant, the currency weaker than it has been for years and public finances fragile.
Cut-price tickets failed to boost tepid sales for the F1, with a third less seats sold than in 2011. The pundits say that is usual for a new grand prix, but like Mallya with his parties, his $95 million yacht and his calendar girls, like the $200 caviar pizza at the new luxury hotel in Delhi, the event already seems part of an earlier time when nothing seemed capable of slowing, let alone halting, the inexorable rise of India. And when everything was possible — even a high-end luxury domestic airline in a country where almost one toddler in two is malnourished.
When it was launched in 2005, Kingfisher Airlines was intended to break the mould of Indian air travel. For decades, Indian travellers had put up with a single national carrier. The economic reforms of the early 1990s that partially dismantled a socialist-style command economy that had limited economic growth to negligible levels in previous decades led to a boom in private air operators. Mallya, who inherited the chairmanship of United Breweries when he was 28, spent the early years of the post-reforms era consolidating its dominance in the liquor market. As well as a talent for self-promotion and a taste for high living, Mallya showed acumen, determination, drive and considerable appetite for risk.
But Kingfisher Airlines was a late addition to a crowded and tough market. Its USP was “glamour”. Flying Kingfisher meant being part of the Kingfisher world, a world of parties, fun and good-looking, wealthy people. It meant being part of the new, booming India. The first wave of private airlines had simply tried to provide a better option to the slow, dirty, run-down train network. Kingfisher went much further. It was aspirational.
Breaking the mould

Mallya put his own persona at the heart of the brand. The traditional Indian businessman had been reclusive, hardworking, traditional and often pious. Mallya’s own father was low-key, gritty and obsessed with accountancy. Many of the country’s richest men — Ambani or NR Narayana Murthy, the co-founder of IT giant Infosys — are still in that mould. Mallya was very different, and represented a very different India. The influence of decades of socialist ideology, of Gandhi and his asceticism, of a generalised distaste for conspicuous consumption have waned rapidly. Other hierarchies beyond those dependent simply on money, such as caste differences, inherited prestige, title or office, have become less sure too.
“India had never had a leader, especially in business, who had been unapologetic about his wealth and enjoying his wealth,” said Saritha Rai, a columnist for the Indian Express who has written extensively on Mallya. “New younger Indians see wealth as a gauge of status. They are more westernised and more materialistic.”
They are also wealthier. In 1992, according to the World Bank, India’s gross national income per head of population (GNI) was around $350. By 2005, when Kingfisher was launched, it had reached $700. Much of this new money was concentrated in the “super rich” — one recent study found that billionaires’ wealth comprised less than 1 per cent of national income in India in 1996 and more than 20 per cent in 2008 — but even in a country where “middle class” really means “not desperately poor”, there was much more cash being spent.
“India is the youngest nation in the world,” Mallya told an interviewer in 2007. “We have 500 million people under 25, and 400 million under 20. India has 1 million university graduates each year. Today, these people are getting jobs in industries that didn’t exist in my time, in software and biotech. They want to live like kids in Europe with satellite TV, cars, bars and restaurants.” They also wanted to fly.
But did they want to fly Kingfisher, with its owner who welcomed passengers in pre-takeoff videos, boasting in a plummy drawl of “personally picking” cabin staff and instructing them to treat customers “as if you were a guest in my own home”? At first, it seemed so.
Good times for the carrier
For several years, everything went as planned — even if Kingfisher never actually made a profit. The airline expanded rapidly, with a new top-of-the-range aircraft joining the fleet every month. In May 2009, Kingfisher carried more than a million passengers, giving it the highest market share in India. An international service was launched. By 2011, India’s GNI per capita had doubled again to more than $1,400, and Mallya was being hailed as a standard bearer for the new wave of swashbuckling Indian entrepreneurs set to sweep the global board — all while having fun.
“It was a time when he could not put a step wrong. The champagne was flowing and no one asked: who’s going to ride these planes?” said Rohit Bansal, a former aviation journalist and business consultant.
Kingfisher’s link with high living was reinforced at every possible opportunity. Mallya bought a franchise to run a team in the brash new Indian Premier League, a TV-friendly rapid-fire cricket tournament which is another flashy, glamorous, lucrative recent Indian creation, guaranteeing further publicity in a sports-mad nation. The Mallya Collection, “comprised of hundreds of cars in over 10 countries owned by sports enthusiast Dr Vijay Mallya,” got its own slick website. Images of the tycoon, diamonds in his ears and his wrists, mane of greying blond hair swept back, posing with bikini-clad calendar models or Bollywood celebrities filled the society pages.
But there was trouble brewing. The first warning sign was a series of unexpected flight cancellations at the end of last year. The company blamed technical issues but the problems rapidly worsened. In a cut-throat business with wafer-thin profit margins, Kingfisher’s glamour simply did not make money. Indeed, the airline was losing huge amounts of money, even before it became clear that India’s economic growth had started to slow, and with it people’s willingness to pay over the odds for luxury. Kingfisher soon had difficulties paying for fuel, particularly as costs were inflated by surging oil prices and punitive government levies. Tax demands began mounting up. So too did claims for airport fees. Salaries went unpaid. Through this spring and summer, further flights were cut.
Expensively leased planes stood idle. Key staff repeatedly walked out. A Kingfisher store manager’s wife killed herself, leaving a note blaming financial worries for her decision. Almost all employees stopped work. Shortly after the company’s licence was suspended by regulators on October 20, civil aviation minister Ajit Singh told a TV channel: “It is unrealistic to expect Kingfisher to fly again.”
Irresponible lending
The question immediately asked was: how did it come to this? Many blame the imprudence of Mallya himself, arguing that his emotional attachment to the airline blinded him to hard economic reality. Others point to a broader responsibility, asking why the banks and the regulators failed to act sooner. According to the campaigning magazine Tehelka, “The Kingfisher episode, with its high-octane mix of politics and business and smell of cronyism, has raised questions about the independence...of India’s banking system”.
In fact, although Mallya sits in parliament as an independent senator and is known to have had good relations with a string of civil aviation ministers and regulators, his networking is barely worthy of comment by current Indian standards. Recent years have seen corruption scandals involving collusion between officials, bureaucrats and businessmen costing the public exchequer tens of billions of dollars but even in a country where allegations of graft are common, no one is alleging any wrongdoing by Mallya.
Anyway, the money came easily without any illegality. In the past five years, the debt of the 10 biggest corporate houses in the country to banks has risen fivefold. Now, more than an eighth of all bank loans in the country are to these family firms. Mallya’s companies are not among them, but the tendency of Indian public lending institutions to lend vast sums on comfortable terms to people who are already extremely wealthy, rather than to small businessmen and entrepreneurs, is well established.
“The banks’ mantra is to recapitalise those who already have massive net worth, often without real collateral,” said Bansal, the consultant. This cosy relationship is a key reason for the extraordinary wealth of many of India’s super-rich, recent studies have concluded. It is at the heart of the nation’s distinctive economic system, dubbed “curry capitalism” by some commentators.
The considerable leeway offered to Mallya, particularly by public banks that may now lose very large amounts of taxpayers’ money, may also simply have been due to an almost irrational collective desire to see Mallya succeed, at all costs. Mallya’s victories were, and still are, to a certain degree, those of his country. “We thought that India was impregnable and Vijay Mallya was the embodiment of that India,” said Bansal, speaking of the boom times at the end of the last decade. Well before launching Kingfisher, Mallya had established his credentials as a patriot by spending millions of his own money to bring the sword of 18th-century warrior king Tipu Sultan, seized by the British after a bloody war, back to India from the UK. Though the champagne has long stopped flowing, Anjun Kumar Deveshwar, a 33-year-old Kingfisher maintenance engineer who had not received his monthly wage since March, recently described Mallya to the Guardian as “an Indian hero”.
Living vicariously
It is perhaps only when living in India that such adulation becomes comprehensible. “There are tens of millions of people who are living vicariously through Mallya,” Saritha Rai, the columnist, said. “They know they could never reach his level of wealth but still think, maybe one day, it’s possible they might just have a little bit of his lifestyle.” Add the gratification that comes with flexing new emerging power muscles, particularly when the west is in such economic trouble, and the Mallya phenomenon makes more sense. The tycoon has 1.46 million followers on Twitter, 50,000-odd more than Oprah Winfrey.
Criticism has instead been directed on Mallya’s 25-year-old son Siddhartha, known as Sid, who has been groomed as the tycoon’s successor at the head of the family business. Sid’s onerous task in recent weeks has been to scour the world for models for the next Kingfisher calendar. Like his father, he is a fan of social networking. Recent tweets have given some clue to how he has been spending his time: “Nothing beats the post 5’oclock pub rush in London — best atmosphere ever!!” one read; “Just spent the morning playing volleyball with 12 bikini-clad models on the beach — now I understand why people hate me. HA!”, ran another.
There is a chance that Mallya senior may just yet bring things round. He has just sold a huge chunk of his liquor empire and could potentially use some of the $1 billion the deal generated to get Kingfisher Airlines flying again. The Indian government recently eased restrictions on foreign investment in domestic air businesses, which could, perhaps, see a new infusion of capital from a big international carrier. As Kingfisher’s licence was suspended, not cancelled, its planes can fly as soon as financing and safety issues have been resolved. A deal with the unpaid staff by which some of the arrears in salaries will be paid in coming weeks has, at least for now, ended the walkouts.
One recent Mallya tweet spoke of relief at being relegated from the Forbes list of Indian billionaires — he is now worth a mere $800 million — as his new status will mean less “jealousy” and “wrongful attacks”. Another tweet pointed to a degree, if not of contrition, then of somewhat embittered regret. “I have learnt the hard way that in India, wealth should not be displayed. Better to be a multibillionaire politician dressed in khadi [homespun cotton],” it read.
On the Sunday of the Indian Grand Prix, the tycoon was at the F1 track, cigar in hand, watching the race. Vast advertising hoardings on circuit approach roads, urging “C’mon India, raise the flag!”, declared Mallya’s drivers to be the only ones “powered by the hopes of a billion people”. The claim was hyperbole, of course. Most people in India have never heard of motorsports and would have little interest in them even if they had. But it was not entirely unjustified. The hopes are certainly there. And it would take more than the failure of a single airline, “glamorous” or otherwise, to dampen them.














Does Kingfisher saga reflect India's troubles?
gulfnews.com
Does Kingfisher saga reflect India's troubles? Vijay Mallya, once the embodiment of the middle class' aspirations, has fallen on hard times. By Jason Burke, Guardian News & Media Ltd. Published: 21:00 November 17, 2012; Gulf News. Image Credit: ...
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The beleaguered Kingfisher Airlines on Saturday started paying the May salaries. Some of the ground staff and cabin crew have been paid and the remaining employees are expected to be paid in the next few days. “Some ground staff and cabin crew whose ...
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High school football: Kingfisher quarterback, running back too much for Tuttle
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Valspar Expands Global Consumer Paint Business with B+Q Deal
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Kingfisher staff fail to get May salary
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Kingfisher Airline's management has failed to live up to its promise of paying employees their May 2012 salaries before Diwali. Kingfisher employees told to Business Line late on Monday night that they had not been paid till 9 p.m. Kingfisherofficials ...
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Hindu Business Line
Kingfisher staff demand four months' pay at one go by Friday
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Prolonging the deadlock over payment of salary dues, Kingfisher Airlines employees on Wednesday rejected the management's fresh offer and demanded payment of four months' backlog in lumpsum before Friday. “The chief executive's (Sanjay Aggarwal) ...
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