Why did Kingfisher Red fail?

Owned by Indias biggest liquor baron Mr. Vijay Mallya, Kingfisher Airlines (KFA) is one of the finest luxury airlines of India. Based in Bangalore, the KFA started operations in May 2005 as a wholly owned subsidiary of the United Breweries Holding ltd. It entered the Indian aviation market at a time when the low cost service model had galvanized the market & made air-travel accessible to the Indian middle class. The Kingfisher brand has always been associated with glamour, vibrancy & lifestyle. The KFA always focussed on business class passengers who were willing to spend for premium services. Initially KFA offered unique classes of service Kingfisher 1st & Kingfisher Class. The KFA carved a distinct position for itself by its flamboyant lifestyle image & by offering a great flying experience with comfort seating, personalized entertainment & services to its guests. Thereafter the KFA acquired the then budget carrier Air Deccan in 2007. Initially on its acquisition of Air Deccan, it retained the name Deccan in the new entity because of its tremendous value in the Low cost carrier segment. After a period of time KFA replaced Deccan with Kingfisher Red. Kingfisher Red highlighted the delight of flying in spite of offering Low fares, keeping up KFA brand promise. With the arrival of many more airlines in the Low Cost Carrier segment KFA got battered by huge financial losses & stiff fare competition in the air travel market. KFA announced recently that it has decided to eliminate Kingfisher Red service in an effort to control costs & get a handle on the airlines mounting debts. This move ends a dismal four year experiment in the no frills market for KFA which formed Kingfisher Red after acquiring budget carrier Deccan in 2007. A look at the balance sheet of KFA for the past 3 years does not give the break up for revenues & expenditures incurred on KF Red. In view of the same the explanation given by Mr. Vijay Mallya that Kingfisher Red operations were a bottleneck in the growth of the airline which does not hold good. It has been commented by most analysts that KFA was never run professionally & its dismal performance is on account of its flamboyant style of functioning. The airline has not been able to cope up with the competition from other low cost operators. There has also been a mass exodus of experienced flight crews which clearly demonstrates lack of confidence in the airline & may actually become a bigger problem. The KFA has always been defaulting in payment of fuel charges very frequently. With all this happenings the KFAs optimistic plans appears to be a gamble against impossible odds. Its only a matter of time now that KFA might be eventually put on sale or may go into liquidation on account of other factors also like mounting of debts & inability to service them promptly.