The best decision Vijay Mallya has made so far
Vijay Mallya has finally made a wise decision. He has decided to get rid of Kingfisher Red. As I have mentioned earlier, the biggest mistake that Vijay Mallya made was to buy Air Deccan. You cannot have a low cost airline and a premium airline run by the same company. Jet made the same mistake and so did Vijay Mallya. While branding, we have to give up something to get something. We cannot be everything to everybody.
Our obsession – building scale
Businesses all over the world are obsessed with achieving market leadership, building scale to achieve economies of scale and last but not the least, consistently clocking high growth rate. However, the obsession of businesses with the above objectives invariably lands them in trouble. Why? Primarily because they have not only misunderstood the concepts behind these objectives but have also misunderstood how these objectives should be achieved. As such, I feel that there is a strong need to clarify what our obsessions mean so that we can avoid the pitfalls and run our businesses successfully. Today, I will discuss our obsession with building scale.
This is how Vijay Mallaya wants to serve the country
I was watching Vijay Mallya being interviewed by Vir Sanghvi on his show, the Tycoon. Vir Sanghvi asked Vijay Mallya as to why did he join politics. Pat came the reply, “I want to serve my country.”
Now Airlines want to be in travel business
It has been reported in Economic Times that Kingfisher, SpiceJet and Indigo want to launch a travel portal in order to save on commission. Somehow, it is difficult for me to understand the obsession of airlines to save on travel agent’s commission as if that is the primary reason for the troubles of airlines. It seems that all the airlines think that they will be all become profitable just by eliminating the travel agent’s and travel portal’s commission.
Vijay Mallaya should learn from Paramount
I had earlier written that Vijay Mallaya should learn from Paramount how to run an airline. Today, when Kingfisher is in trouble and Vijay Mallaya owes huge amounts to oil and hotel companies, Paramount Airlines is hiring 80 foreign pilots and 200 local pilots in the current year. Paramount needs pilots because it is adding 10 aircrafts to its existing fleet of six planes and increasing the number of flights from 1800 to 2500 per month by October 2009. It is also expanding slowly and steadily. Last month it launched flights in the eastern region.
Why is the government financing Kingfisher Airline?
Indian Oil Corporation (IOC) has invoked Rs. 50 crore guarantee of Kingfisher after a cheque issued by Kingfisher bounced. It was further reported that Kingfisher owes nearly Rs. 785 crores to the oil companies. I simply do not understand why Vijay Mallaya is getting such heavy credit from the government. The daily interest on Rs. 785 crores at just 12% works out to be Rs. 25 lakhs. Vijay Mallaya is saving this amount. He needs to sell his shares in the company ot sell any of his assets and pay the oil companies. When he owes so much of money, why did he go buy Gandhiji’s articles for Rs. 9 crores?
King of Good Times has become King of Sorrowful Times
Well, it seems that Vijay Mallaya is losing his title of King of Good Times fast. I read in Mint newspaper that his airline Kingfisher owes a lot of money to the hotels his crew members etc used to stay in. I believe he owes nearly Rs. 8 crores to them. It was hinted in the article that the airline was putting pressure on the hotels to give them more discounts. Isn’t this what people call as blackmailing?
Vijay Mallya cannot be trusted
In all my posts on the airlines industry, I have stated that the government should not help Vijay Mallya or listen to him because he cannot be trusted. After getting the benefit of delayed payments (savings of crores of rupees on interest) to the oil companies and oil prices coming down, he is refusing to bring down the prices. He is using delaying tactics so that he can recover huge amount of money in the meantime. I think the government should withdraw the benefits given to Kingfisher and Jet Airlines. They should be made to pay their oil bills and Airport Authority charges immediately.
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