Having started the airline with just four Airbus A320 aircraft on May 9, 2005, Mallya set his eyes on acquisition of low cost carrier Air Deccan without first consolidating his business. Mallya did not stop at that. He began acquiring more aircraft on lease in order to expand operations. He had been eying international destinations and, indeed, used his political clout to get the first international destination (Bangalore-London) in September 2008.

Acquisitions only meant higher outgo in terms of leasing costs and payout to pilots and other staff. Within two years of operations, financial strains began to surface.

In order to attract customers, Mallya ordered Kingfisher domestic flights to be equipped with frills like onboard refreshments which none of its low cost competitors provided. Kingfisher flights became popular in a short time and it became the second largest in terms of the domestic market share. But all this was not without a cost. Bottomline of Kingfisher got eroded seriously.

Airline being a heavily capital intensive industry, United Brewery’s 50 per cent stake into the airline business did not suffice to meet the requirement. Soon, Mallya began scouting for bank loans which were offered liberally as it now transpires. The cumulative bank loan to Kingfisher today amounts to a staggering Rs 9000 crore.

Until 2011 end, Kingfisher made it appear as if it was on its ascent even though it was making losses from the beginning. High fuel cost coupled with demanding leasing companies took its toll. Employees were the last on the company radar. But even they became restive after months of non-payment of salaries.

In early 2012, the cat was out of the bag when the previous year’s financial results were out with a loss of Rs 1027 crores. All stakeholders were up in arms following cash crunch and employees agitation. The immediate impact was steep fall in Kingfisher share prices in the Bombay stock exchange. In the meanwhile, the Director General of Civil Aviation (DGCA) got numerous complaints from pilots and employees about non-observance of regulatory norms. On October 20, 2012, the DGCA suspended Kingfisher’s flight certification for all its operations. The company immediately declared a lock out.

Following negotiations, employees agreed to resume operations on October 25, 2012 but it was short lived. Employees could not be paid their wages and agitations began to intensify all over again. The airline was unable to sustain flight operations and the DGCA had to intervene and finally announce withdrawal of flight certifications for all its operations.

The rise and fall of Kingfisher airline has now become history. Having started with just four Airbus A320 aircraft in early 2005, it rose to acquire as many as 64 aircraft at its peak around 2012. Most of the aircraft were on lease from international leasing companies. The aircraft included mostly from the Airbus family with Airbus A320s being in majority. There were a few from the ATR family which were being used for smaller destinations.

Since majority of its Airbus A320s were new, they attracted regular passengers, especially in the New Delhi-Mumbai route although they were also deployed in a number of tier II cities across the country. Overall kingfisher operated in about 25 destinations in the country during its heydays.

Kingfisher had an ambitious plan to expand internationally having had code sharing arrangements with American Airlines, Asiana Airways and Philippines Airlines. It had plans to fly to North America, Europe and Africa.

Indeed, indefatigable Mallya tried his best to contain the damage by seeking to convince the consortium of bankers that a bailout would be beneficial to all. This was despite an Income Tax department order freezing the company’s bank account in early 2012 for non-payment of statutory dues. Mallya could then be seen in the company of high flying ministers of the union cabinet in Parliament House premises on a regular basis.

As word goes, the Government indeed tried to review if the company could be revived. But the die was cast already with no PSU bank coming forward for help after having burnt their fingers.

With the bankers now approaching the Supreme Court in a desperate bid to recover their loan amount, some even demanding revocation of NRI Vijay Mallya’s Indian passport to stop him from fleeing abroad, questions are being asked if his bluff has finally been called. (IPA Service)