Vijay Mallya – King of Unaffordable Goodtimes

Within a week of Jet and Kingfisher airline illegal alliance and firing drama, Jet and Kingfisher airlines get government’s help in geting better credit terms for purchase of fuel, more time to pay for their current outstanding with respect to fuel outstanding and also in the ATF prices which will now be revised every fortnight. Now let us look at what is wrong with this picture.

One, if the airlines do not pass on the benefit to the customers then the benefit arising from these concessions will basically go to the airlines. This means that the government is basically contributing to the airline’s profit or helping them reduce its losses. It is taking money from the government owned oil companies and giving it to private airlines, When Vijay Mallya nad Naresh Goyal were asking for all kinds of concessions, I thought the idea was to lower overall prices of air travel so that the number of passengers will go up thus enabling them to increase their load factor. However, this does not seem to be true. How long can the government support airlines in the current economic situation? What about other companies that land up into trouble? I don’t think there would be any end to this.

Now let us put some numbers on the benefit that Jet and Kingfisher airlines will get from these concessions. Kingfisher owes around Rs. 1000 crores for fuel purchases. 30 days additional credits will save him nearly Rs. 8 crores a month or Rs. 96 crores a year. The “King of Good Times” knows how to have a good time on other people’s money.

The above also seems illogical when one considers the following:

(a) ARF prices have come down by 21% in the last two months.
(b) Go Air and Spicejet have announced fare cut. They have removed the Rs. 150 surcharge imposed on each ticket. Air India never imposed it. Jet and Kingfisher still charge this surcharge. SpiceJet has announced 15% cut in fares and is also offering Rs. 99 fare all across its network. SpiceJet and Go Air are also offering better terms in terms of cancellation charges etc. It is surprising that Jet and Kingfisher are asking for all kinds of government help while non of the other airlines are managing their business without making much noise about it.
(c) Mallya’s United Spirits made a profit of Rs. 90 crores in the second quarter. I am sure he can finance his airline without government’s help.
(d) It seems most of the airlines were paying on time. The three major culprits are Jet, Kingfisher and Air India/Indian are the major defaulters. The incentives that the 3 defaulting airlines are receiving is unfair to those airlines who have paid on time. Needless to say, now these airlines are also asking for incentives from the oil companies.
(e) The price of oil is dropping.
(f) Air Arabia has started a new flight – Hyd-Sharjah and AirAsia will fly to Trichy for the first time in India. It seems that most airlines in India are managing their business. The only private airlines crying wolf is Jet and Kingfisher. The reason for these two getting into trouble were their over ambitious and expensive plans to buy other airlines.

Now Kingfisher and Jet have used their influence and high drama to get concessions from the government. They have been given unfair advantage because of their influence and connections. However, both these airlines also owe huge amounts to the Airport Authority of India (AAI). Kingfisher owes Rs. 255 crores and Jet Rs. 36.63 crores. Does Mr. Praful Patel intends to assist his freinds in this matter also.

As I have advocated before, taxes on ATF should be rationalized so that the cost of air travel comes down thus increasing the number of passengers and the load factor for airlines.

I believe that the left’s charge is correct, at least in this case. It has helped Jet and Kingfisher in an unfair manner. People who have managed their business effectively with financial prudence have been punished while those managing their business with much pomp and show with total disregard to the size of their pocket have been rewarded. I hope the media will hence forth not call Vijay Mallya as KING of GOODTIMES.

Hey this gives me an idea. How about coming up with a suitable alternative title for Vijay Mallya to replace “King of Goodtimes.” How about “King of UNAFFORDABLE GOODTIMES.”

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.

Comments

Well, the latest is that Vijay Mallya of Kingfisher Airline and our “King of Unaffordable Goodtimes” is keeping up with the new branding and positioning that we have established for him. Not only that he doesn’t owe money to oil companies and the airport authority, he is having some problem with lease payments for his airplanes. It was reported that he has entered into a legal battle with GE for the lease payments.

I think its time that Vijay Mallya took actions to bring his house in financial order. I am sure he has assets that he can sell to clear his debts. However, he is an influential man with influential friends. Maybe Shri Praful Patel will convince GE to forgo a couple of installments for his buddy.

I wish all of us had friends like Praful Patel.

Reply

More on the King of Unaffordable GOODTIMES, Lord Vijay Mallya. His financial problems are creating a rift between the airline and the his various suppliers. He is finding excuses not to make full payment to his creditors.

First, Kingfisher didn’t pay for the lease of aircrafts to GE. The matter, I think, has landed up in court. Yesterday, he made payment to NACIL after making deductions. Kingfisher has claimed deficiency of service and has deducted money for the equipment they had to purchase to maintain their aircrafts. How is it that every company he owes money to is somehow doing something or the other wrong? Oh, I forgot that the KING is always right.

By the way, Vijay Mallya is setting a wrong precedent for himself. So next time you fly his airline and the flight is delayed, you can rent a jet and bill Mallya for the same. Why rent it, you can buy a new one and claim the money from the King of Unaffordable GOODTIMES.

Reply

$ 105 Million USD – that’s the price of the Indian Empress which needs to go first…. Then the private jets ….. which is another $ 34 Mil USD ….. then a couple of houses (Mumbai, Goa, Bangalore & Frisco) …. say $ 26 Mil USD…..Then ….. hmmmm…. lemme see…. probably a couple of blocks of the UB city …. say $ 100 Mil USD – and we should get our money back…. read: TAX PAYERS MONEY…….

I think Vijay will and should just be satisfied with the IPL & the F1 Team…. and a couple of bottle of bubbly from Tattinger!!! :)

Reply

Read ADI MISHRA’s blog on Mallya

http://adimishra.blogspot.com/search?q=mallya

btw he blows up about 400 crores on personal expenses plus F1 team expenses!

Good luck to his share holders / investors!

Now there is a fool on Face Book who has started a group for Vijay Mallya as CM of Karnataka!! what a joke!

Reply

thats about 400 crores each year !!

Reply

Vijay Mallya is trully The King of Goog Times

Reply

[...] Vijay Mallya – King of Unaffordable Goodtimes [...]

Leave a comment

(required)

(required)