Kingfisher Airlines pending salaries and downsizing issues

KINGFISHER AIRLINES Page 1
MBA 616: HUMAN RESOURCE
MANAGEMENT
2013-14
Submitted By: Group # 2
Harshit Garg 13125018
Rahul Vermani 13125040
Rohit Sindhwani 13125044
Varun Sharma 13125057
Kingfisher Airlines
Pending Salaries & Downsizing Issues
Submitted to: Professor Rahul Varman

TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................... 3
ABOUT THE COMPANY............................................................................................................. 3
WHY A PROJECT ON KINGFISHER AIRLINES?..................................................................... 4
OUR FOCUS OF THE PROJECT ................................................................................................. 5
METHODOLOGY OF COLLECTING THE DATA .................................................................... 6
DOWNFALL OF KINGFISHER AIRLINES................................................................................ 7
INTERNAL PERSPECTIVES ....................................................................................................... 9
OUTSIDERS’ PERSPECTIVE .................................................................................................... 13
TIMELINE................................................................................................................................ 14
FINDINGS & OUR ANALYSIS- OTHER COMPETITORS..................................................... 18
UPTRON INDIA LTD. ................................................................................................................ 20
KINGFISHER AIRLINES IN FUTURE...................................................................................... 22
LEARNINGS FROM THE PROJECT......................................................................................... 23
APPENDICES .............................................................................................................................. 26
REFERENCES ............................................................................................................................. 32

INTRODUCTION
An organization is the coming together of a set of individuals to create a value to the society and
to them. The value is created by converting raw materials into goods or by providing services.
The nature of the organization and its basic identity may differ in the two cases. An organization
provides a set of framework to properly channelize the knowledge and inputs of all the
individuals. “The whole is a lot more than the sum of the parts” – sums up the logic that goes
behind setting up of an organization. Some of the renowned theorists have even gone to the
extent of calling organizations as living entities. They have also said that not only the actions of
individuals shape up the essence of the organizations but even the organizations influence the
individual identities by teaching the importance of team work.
So essentially, the moment one says organization, the immediate picture that comes to our minds
is that of a group of people working together driven by a common goal of providing value to the
organization. Such is the enormity of this unique group of people that we call employees, that
there is an altogether a different field or a course dedicated to understanding the nuances of the
game. We often call this game as Human Resource Management. The reason that we call this
group as unique is that there are a number of constraints associated with the working of this
group of people. It is commonly said that “only change is constant”, even the workforce in every
organization changes with time. This is a routine activity which is known as layoffs.
ABOUT THE COMPANY
Kingfisher Airlines Limited (KFA) was an airline group based in India. Its head office is in
Andheri (East), Mumbai and registered office in UB City, Bangalore. KFA was established in
2003. It is owned by the Bengaluru based United Breweries Group. The airline started
commercial operations on May 9, 2005 by making its flights operational between Mumbai and
New Delhi. It started its international operations on September 3, 2008 by connecting Bengaluru
with London.
Initially the company started its operations as a premium business class airline but competition in
aviation turned it into economy class premium airline and a low cost carrier (LCC). It continued
to compete on the basis of price. A lack of understanding of customer requirements and basing a

decision that luxury sells in airline was apparent to its competitors. Mr. Vijay Mallya, highly
successful in liquor business, didn’t comprehend the differences in customer preferences within
two industries and this never let company to report profits in its financial sheets.
WHY A PROJECT ON KINGFISHER AIRLINES?
Time and again, we read or hear about a number of ill-fated incidents taking place in a
company’s production centers. Recently, we heard about Toyota treating its workers badly.
Maruti Suzuki Ltd. continues to be in the news because of certain wrong reasons. Why do we
always have management and union of workers on the opposite ends? Can’t we ever have the
management and the workers thinking about each other’s welfare? Why are workers (without
unions) looked upon as the most vulnerable entities in an organization? Why can’t there be a
smooth collective bargaining act? This problem of Extrinsic Incentive Bias is so prevalent
wherein everybody thinks that the others are more driven by the external factors like money &
less by internal factors like respect, recognition, good working conditions etc.
It becomes even more important in the airlines industry which is a service industry. The flight
attendants and air hostesses act as the face of a company. Why did KFA not realize that? If it did,
why didn’t it address their grievances? Wasn’t it looking to get on the profit making path? Was it
planned to leave the airline business without making any effort whatsoever?
The management and the owners run away from the responsibility. There were ways and means
for them to come out of the mess that they had put themselves in. But from our interactions with
some of the employees of KFA, we got to know there was no effort made to resurrect the
fluttering fortunes of the airline and its employees. We could find out that the workers and staff
members were made to pay for the management’s sins.
The irony lies in the fact that in spite of knowing and reading about such facts, it is extremely
difficult for somebody to get rid of his/her preconceived notions.
“You must be the change you want to see in the world.” – Mahatma Gandhi
Unless we realize this, the scenario is not going to change. The change has to be brought about in
the thinking first, only then the actions will change. The KFA’s management went on a firing
spree without thinking about its impact on the employees’ families. Many employees including

those who were fired and those who survived were not paid their salaries on time which
ultimately forced many of them to leave the job. The incident wherein an ex-employee’s family
member committed suicide due to the growing financial crisis in the family was just an example
of the grave situation. We decided to highlight these issues and the impact on the conditions of
people who were at the receiving end of the management’s decisions. Mr. Vijay Mallya had once
made a statement in the media when he was asked about the issue of pending salaries of the
employees – “I don’t have money to pay back the dues”. This year, Mr. Mallya had spent INR
60 crores on his Indian Premier League (IPL) team, the Royal Challengers Bangalore. This
showed highly ignorant & paradoxical attitude of KFA’s owners & management.
OUR FOCUS OF THE PROJECT
“The word organization is a noun, and it is also a myth. If you look for an organization you
won’t find it. What you will find is that there are events linked together, that transpire within
concrete walls and these sequences, their pathways, and their timings are the forms we
erroneously make into substances when we talk about an organization.”- Karl E. Weick
We expect organizations to work very efficiently without any sort of disturbances. We expect
employees to share the burden of their peers and act as a part of a big family. A few years back,
KFA hit the top of popularity charts. It became a household name for frequent flyers, something
which only a government funded airlines Air India could pull off during its golden days. This
was even more pleasing for the fact that KFA was a privately run airline group based in India
which was established in 2005. Throughout its lifetime, KFA lived in the image of its owner, the
liquor baron and the Chairman of United Breweries (UB) group Mr. Vijay Mallya.
Ever since its inception, the airlines spent quite lavishly owing to its owner’s filthy rich
economic background. In its initial years, the moment a passenger would walk in a KFA
airplane, he/she would see pretty young girls and boys dressed up as air hostesses and flight
attendants, something which was completely unheard of before this. Also in 2005, KFA became
the only Indian carrier to have added Boeing Airbuses to its fleet. It was a unique combination by
KFA which provided the best of comforts at an inexpensive price. Everything seemed exciting
about KFA until people observed that the airlines had not made profits even in a single year
since its establishment. After a period of around 5 loss making years, the investors started

withdrawing their money from KFA leading to more pressure to curb the costs. But in spite of
that additional pressure, the airlines continued its strange ways by announcing its flights to
Europe. Despite these non-sensical plans of the airlines, people had hopes that the airlines would
bounce back. Most of these hopes were based on the strong economic background of Mr. Mallya.
But, as is the case with most of the crisis ridden businesses, the pressure was transferred to the
employees by first holding their salaries for months, then by laying them off in numbers &
finally the airlines succumbed to all the pressure around it. With it drowned the hopes of all its
employees who till then had been waging a patient battle for their pending dues. However, the
battle is still on in the Indian Judicial System, but going by the reputation of Indian judiciary &
powerful connections of Mr. Mallya, we can say that the result is highly unlikely in next few
years.
One of the reasons behind choosing this particular topic was our excitement and curiosity that
surfaced once we read about the ease with which the owner of the KFA, Mr. Vijay Mallya,
rubbed his hands off the whole matter (consequence of Limited Liability ownership) and
continued to invest heavily in his other businesses like IPL. Another reason was that since it was
pretty challenging to get to know about this particular organization as only one side of the issue
was presented more often in the media, we hardly got to listen to the workers’ and fired staff
members’ side of story. Due to the sensitivity of the matter, it made us even more inquisitive to
take up this organization & study its policies by knowing the first hand experiences of the
involved people.
We mainly focused in knowing the real life experiences (not the secondary data) and relate the
concepts learnt during sessions on Human Resource Management to those situations. Over the
next few pages, we will look at various facets like the effect of long time pending salaries,
layoffs and company closure on the employees and how does it impact the working environment
in the organization.
METHODOLOGY OF COLLECTING THE DATA
Initially after finalizing the project on “Pending Salaries and downsizing in KFA”, we adopted
the exploratory approach & focused on primary sources i.e. current KFA employees as well as
those who either lost their job due to downsizing or left the job due to pending salaries. We

contacted a large number of people through Facebook and LinkedIn, out of which only five
responded in positive. At first, these people also seemed a bit reluctant to give information as
they thought that we were there to study some technical aspects of their organization. We wrote a
formal letter (Exhibit 1) to these people mentioning about the focus of our project. Two of the
contacted employees are still working in KFA and two others moved on while one is still jobless.
Three out of five people responded on telephone and other two were comfortable in writing their
responses. We prepared a list of about twenty one open ended questions (Exhibit 2) and e-
mailed it to them.
There was one common thing that we observed in all our interviews. The entire episode of KFA
chapter has left deep scars on their memories. Due to the severity and recency of the event, they
wanted to avoid any sort of formal discussion related to KFA. It was extremely difficult to get
information from them.
After getting responses from these people, we moved towards secondary sources such as annual
reports, news papers (The Economic Times, The Hindu, Times of India, etc), social media
groups (“Kingfisher Airlines Employee Pending Salary” Facebook group, “Kingfisher Airlines
Employees” Facebook page, “Fly Kingfisher” LinkedIn group, etc), online forums and aviation
industry analysis report. In analyzing various parameters, data from 2007 to 2012 was collected.
The focus has been confined to study the various reasons behind the failure of KFA, how
problems prevailed and what impact the decisions made at that time, had on employees & their
families.
Our team had regular discussions, listened to each other’s arguments and shared the project
report among each other regularly. Throughout our project, we used Internet to verify facts and
figures.
DOWNFALL OF KINGFISHER AIRLINES
Although KFA was set up in 2003 but till date it hasn't seen even a single year of profit. The
downfall of KFA started with reporting of a net loss of INR 418.77 crores during the second
quarter of the fiscal year 2009-10. In view of the huge losses and capacity reduction, KFA
decided to lay off nearly 100 pilots. But, despite incurring operating losses, Kingfisher kept on
announcing luring packages to its customers. The airline with a debt of around INR 6,500 crores

till 2011, looked at cutting costs and took several steps to face the challenging times. Many
employees were laid off and salaries of many were delayed. The company started losing number
of prime flying slots from the airports. Travel agents immediately stopped booking tickets in
March 2012 on the private airline's behalf for failure in settling dues since February. Further
trouble arose when employees protested delays in salary payment, many of the higher officials
resigned and KFA announced curtailing of its international operations. The crisis going inside
the KFA can be realized by the press statement from KFA on 12 March 2012 that highlights the
challenges:
“The flight loads have reduced because of our limited distribution ability caused by IATA
suspension. We are therefore combining some of our flights. Also, some of the flights are being
cancelled as a result of employee agitation on account of delayed salaries. This situation has
arisen as a consequence of our bank accounts having been frozen by the tax authorities. We are
making all possible efforts to remedy this temporary situation.”
In April 2012, some employees, including pilots and engineers, received salaries after a delay of
nearly four months. But, still many employees remained unpaid. On July 14, 2012, a section of
pilots went on strike but they were back at work after some assurance by the upper management.
On August 18, 2012, a section of pilots of the near-bankrupt airlines went on strike, second time
in a month, demanding immediate payment of March salaries, leading to cancellation of seven
flights from Mumbai. On September 6, 2012, company’s engineers went on strike demanding
payment of salaries. The carrier declared partial lock-out following a strike by a section of its
employees in October, 2012 but uncertainties continued over KFA resuming its operations.
Although salaries of May were paid to some of the low salaried employees but carrier lost its
flying license as the Directorate General of Civil Aviation (DGCA) refused to renew its Air
Operator Permit (AOP) in December 2012. In October 2013, Mr. Mallya was ranked 84th in
Forbes Richest Indian’s list. The irony surfaced when he refused to pay the employees’ salaries
due to his limited liability stake in the airlines. Finally, only employees had to suffer and some of
them are still waiting for some political or legal equations to turn in their favor.

INTERNAL PERSPECTIVES
Employee 1
Ms. Ashwini Wadekar (name changed to hide the identity), a flight attendant in KFA, admitted
that lack of interest of Mr. Vijay Mallya into receiving lack of vision on the part of management
of KFA and over-ambitious decisions like acquiring the loss-making Air Deccan, as mentioned
earlier, were among the major reasons that led to its downfall sending its employees into an
extended period of depression. If we look at the Needs Hierarchy Model given by Mr. Abraham
H. Maslow, we get to know that a person tries to fulfill his/her physiological needs before
wishing his/her other needs to be fulfilled. By not receiving the employees’ salaries for eighteen
months, even those basic needs were not fulfilled. It is the minimum that the employees can
expect from their organization. Mr. Mallya used to say that all the employees and management
were a part of a single community, but he didn’t keep his words. The result, as mentioned earlier,
was the incident of committing suicide by one of the employees’ family member.
“If any employee would enquire about the delayed salaries or the status of the company to the
higher staff, the employee would get a warning to not to do the same and eventually would be
asked to leave the company (Quoting the higher staff: "if you are unable to cope up with the
situation of the company, you are free to leave”).”
Ms. Wadekar even went on to say that by firing many employees, the management of KFA
didn’t address the security needs of the employees either. After a while, the existing employees
started feeling insecure about their jobs which affected their productivity. Since many employees
were laid off in a short span and there wasn’t any significant additional hiring done to share the
burden, the extra burden was shared by the remaining employees (the number was close to
3000). For instance, a pilot now had to fly more number of airplanes than before which lead to an
inherent fear among the members of the flight crew about their safety at work. Ms. Wadekar
confessed on witnessing many of her peers literally praying to God before their flights used to
take off. We wonder the situation that the passengers would have been in.
In spite of the agony and the pain that she had undergone, Ms. Wadekar, remembering the
golden days of KFA, vouched for the facilities that were once provided by her employer to the
employees and the customers.

“I continued to work and intended to work for long hoping the company would bounce back. As
I had mentioned earlier we used to get assurance by the CEO Mr. Sanjay Aggarwal and Mr.
Mallya that the company is not going to shut down and we are trying our best to revive it. They
requested us to stick to the company. So most of my colleagues stuck to it including me and the
people who couldn’t afford to stay back chose to change the company.”
Ms. Wadekar regret her decision of trusting the CEO’s words and staying with KFA for a longer
period as it affected (read it as severely affected) her future as well.
“There was a huge effect on our careers after we got separated from Kingfisher Airlines’
community as the other companies were uncertain as to why we chose to stick to the company for
so long. And yes it did affect our packages too. But let me inform many of us are still unemployed
and looking for jobs, as it got very difficult for us to change our working fields.”
Employee 2
Mr. Ramesh Srivastava (name disguised) has been working in KFA for over 7 years now. Last
checked, he was Team Lead of Guest Services in Hyderabad.
According to him, almost the entire staff of KFA ranging from support staff and ground staff to
pilots was affected by the management’s decision to shut down the operations. When asked
about the reasons of shutting down the operations, he said -
“It is basically lack of funds to back operations added to mismanagement of funds and excessive
marketing. In my opinion when KF started, VJM (Vijay Mallya) had dreamt to achieve a stage in
5 years and after he had achieved he had stopped funding further. He is still looking for an
investor so that he can sell of KFA.”
KFA management didn’t give any formal notice to its employees before the shutdown. In his
words -
“It started with delayed salaries, non-payments to various agencies thereby reducing operations.
When salaries were outstanding up to 5- 6 month, Engineers refused to sign Tech log which is
mandatory to certify that aircraft is fit to fly before every flight. When this was brought to the
notice of DGCA, they suspended KFA license to fly. There was no formal notice given.”

Also, there has been no formal shutdown of KFA. Only the operations have been shut and the
carrier’s license to fly is suspended. According to him, employees were shattered by this move
and salaries were due from the month of April. Last salary was given for June 2012 that too was
paid during the first half of 2013. The company’s operations were entirely stopped in October
2013.
When asked about HR policies in KFA, he said -
“Yes, we had HR in our corporate office at Mumbai who used to take care of entire operations
both domestic and International across globe. Appraisal was done every 6 months and
promotions carried out as and when required. Based on appraisals salary was revised every 1
year.”
“Recruitment was carried out by HR executive, every department required a particular skill set
and qualification. The basic thing the HR looked was for Passion, good communication and
ability to perform in the department with the skill set required.”
When asked about the work environment of KFA, he overwhelmingly replied -
“We always enjoyed working with KFA. Till date we don’t regret any day working there. The
main reason we can say was the people around working as colleagues and the environment.”
When asked about the frequency with which Mr. Vijay Mallya addressing the employees of KFA
during the crisis, he said -
“He just tried to pacify so that revolt and agitations don’t happen. He always mailed saying the
company is working on a revival plan.”
Employee 3
During an IPL-6 league match in Bangalore, employees of the grounded KFA held a silent ten-
minute protest in front of the Mahatma Gandhi statue, adjacent to the cricket stadium. The police
cut short the protest and noted the names of the protesters and let them go on the assurance that
no mass gathering would take place without prior police permissions. One of the protesters, Mr.
Arun Raj (name disguised), an irate KFA pilot said -

“Each time Mallya has an entertainment event, he gives some token salary so that we keep
quiet."
He compared such acts of management with management violence that usually takes the form of
bullying or aggression against union organizers or sympathizers or non-management employees
in the workplace. It is rarely seen if ever delivered by employers or senior managers directly, but
by front-line managers or by other employees incited by management. In a number of well-
known cases, however, violent action has been taken against unions and unions have charged
that this was at the instigation of management or of government bodies sympathetic to
management's aims.
On being asked about the management’s note to the employees regarding payment of pending
salaries, he added -
“Our salary dues are pending since August 2012. The management misled us by saying that it
does not have funds and it is looking for investors. But, we employees are the only sufferers
under such situations. Vijay Mallya has no interest in reviving the airlines nor is he intended to
pay our salaries rather his concentration is mainly towards his other businesses of fashion, food
and fun. I and my colleagues have also appealed to cricketer Yuvraj Singh not to play for Royal
Challengers Bangalore (RCB) in the forthcoming edition of the IPL on "moral grounds".”
The statement is self explanatory that workers are angry but forlorn and tired of the KFA’s
falsehood and trying out all possible ways to get their money back.
Employee 4
Ms. Aarti Mehta (name disguised) has always been the topper in all her ventures. “Beauty with
Brains” is an apt title for her as she aced the toughest interview panel of KFA to get recruited as
a management trainee by the firm in 2006. This is what she had to say about her experiences in
KFA -
“I was given a lot of freedom to try out new ideas at the terminal managing Kingfisher Airlines
staff. The liberal atmosphere helped me to pursue Kingfisher Airlines beauty pageant which I
won in Bangalore. We had a dinner with Mr. Vijay Mallya and I vaguely remember that I had
completed 10 months in the organisation on that same day. This was also the time when KFA
acquired the low cost carrier, “Air Deccan”.

Shortly afterwards I was sailing through the Bay of Bengal for my first official visit to Thailand
on company’s expense. I had already been promoted as the in flight manager and my motivation
levels was sky high as was my salary! I subsequently married on December 2009.
This was in the mid 2011 that we realised that the company’s misfortunes will be transferred to
its employees. My first salary cut was in October 2011, yet the gravity of company’s troubles
only donned upon us in December 2011 when our performance appraisals reflected negative
signs. Were we liable to pay the company? This question became clear to us the very next year
when our salary was completely dissolved and what we received was perks and fringe benefits.
By the end of October 2012, we had lost all hope in the company and dismay percolated the
hierarchy of Kingfisher Airlines staff. The company had been declared as a SICK unit by its
owners and around 2500 of us were left stranded without a job. I subsequently left the company
in December that year. Though I always carried a positive attitude before the crisis, but the
company’s conditions had caused turbulence in my personal life. I am happy that my husband
supported me in tough times and I was lucky enough to get a new job after 6 months of leaving
Kingfisher Airlines.”
OUTSIDERS’ PERSPECTIVE
Although it has been over 18 months now since employees last received their salaries, there
seems to be no specific body to address their agonies. Many of them, including pilots and
engineers, have left the company to try their luck somewhere else; while many others are still
with the company, hoping that it would revive. The pending salaries have forced many to sell
their assets and even take loans to make both ends meet. According to an article published [1] in
October 2013 -
“Mahesh Deshmukh (name changed to hide the identity) and his wife served Kingfisher Airlines
as pilots for more than six years. Over the past one year he sold his house, car and even his
wife’s jewellery to meet his family’s expenses. The airline owes Deshmukh alone INR 70 lakh (13
months of salary as on October 2013).
When asked why he hasn’t left the company, Deshmukh said, “The one reason why many of us
haven’t left the job is that this is a lot of money to let go off. Those who have quit haven’t got
their dues.”

TIMELINE
According to sources [2], the employees’ unrest first started on March 12, 2012 when employees
started protesting delays in salary payment. The trouble further escalated when employees were
not paid salary for March and they threatened to go on strike on April 2, 2012, demanding
payment of salary dues. The standoff was ended next day after being given assurance by Mr.
Mallya. The employees’ composure again dismantled when pilot’s anger busted on July 14, 2012
and they went on strike against the non-payment of wages for almost five months. Mr. Mallya
pacified the pilots by assuring them the payment of salary dues and pilots somehow agreed to
resume their work. Again, a section of employees went on strike on August 8, 2012 due to which
15 flights were cancelled and company’s operations were effected heavily. Here forth, things
never improved, company couldn’t improve its operations and debt kept on increasing
exponentially. The next strike was from a section of pilots who protested second time in a month
on August 18, 2012, this time demanding immediate payment of March salaries which further
led to cancellation of seven flights from Mumbai.
After a series of protests, one of the biggest protest happened on October 1, 2012 wherein almost
all the unpaid staff started protesting in Delhi, Mumbai and other airports, and engineers didn’t
certify the planes to fly which led to cancellation of almost all of the Kingfisher’s flights from all
stations. According to an article published on October 1, 2012,
“Most employees have not got their salaries from March, and have been reporting to work with
the hope that the situation would improve once foreign airlines are allowed to invest in Indian
carriers. But now hope is fading away as the airline’s owner Vijay Mallya has not been able to
rope in a partner.
Kingfisher Airlines, in a statement, said, “A section of employees has not been reporting to work
over the last fortnight, and over the past two days, they have been threatening and even
manhandling other employees who are reporting to work as usual. We are anticipating
disruptions and/or delays of flights across our network. With a view to mitigating the impact of
these anticipated disruptions, we are cancelling several flights across our network for October 1,
2012. We are monitoring the situation and continue to engage with employees.

He (Mr. Mallya) has been only assuring. Now we realise he was giving us false hopes. How
someone can run a family without pay for so long?” asked an agitated employee.
We want an explanation. This time nobody has written to us clarifying the stance. Mr. Mallya
has the money, but is not willing to pay us,” said an angry pilot.”
Next day, the carrier declared partial lockout giving a statement that -
“We have been forced to declare a “partial lock-out” following a series of “protracted and
unabated incidents of violence, criminal intimidation, assault, wrongful restraint and other
illegal acts” including refraining from attending work, by a small section of “recalcitrant”
employees.
The actions by the recalcitrant employees who have regrettably chosen to take law into their own
hands forcing a complete paralysis of operations were all “unnecessary and unprovoked”.
It has been decided that flight operations will be suspended for the next 3 days, i.e. until October
4, 2012.”
The working staff didn’t return to work even on October 4, 2012 despite the management’s
efforts to persuade them by offering the March Salary and promising them to pay the remaining
six months’ salary once the airline is recapitalized. The employees (engineers and pilots) had
turned down this offer. Owing to this, the partial lockout was extended until October 12, 2012
which was further revised until October 20, 2012.
On October 20, 2012, when DGCA had suspended the license of KFA, it was loaded with a debt
of around INR 7000 crores and experts said [2] that Mr. Mallya’s United Breweries (UB) group
needed to pump in over INR 3000 crores to get KFA airborne again as no foreign operator would
come forward to invest in the airline in its present state. Five days after the incidence, engineers,
technicians and pilots called off their 26-day strike and agreed to join work immediately by
accepting the management’s offer of disbursal of three months’ salary. The employees were paid
the salary for March at the same day, while April salary was paid on November 1, 2012. Further,
the employees with low salaries (below INR 20000 per month) were only paid their May wage

on November 16, 2012.Accroding to the sources, “Salary for May could not be credited as per
promise due to some “unavoidable circumstances.””
The matter further worsened when the carrier lost its flying license on December 31, 2012 as the
DGCA refused to renew its Air Operator Permit (AOP). On January 9, 2013, employees
registered their trade union “Kingfisher Maintenance Welfare Association” which would deal
with matters like pending salary bill of all the employees that was over INR 120 crores by that
time. The employees also threatened to head to court, had the carrier not given the time-line on
clearing all the dues. According to employees’ statements [3],
“We have asked the management to share with us their strategy on re-capitalization and the time
frame on restart of operation. We want to know as to when they would clear our dues. If we
don’t get a satisfactory reply, we will move the court to recover our dues,” said an employee
asking not to be named.
“All these days the management did not share anything with us about operations. Top officials
are not taking our calls. They need to re-assure us. Our salary from June is pending and the
management has gone back on its commitment,” said another employee.”
The employees, who haven’t been paid since July 2012, received two months’ salary in the first
week of April 2013, just because of the fact that IPL was about to begin from April 5, 2013
wherein Mr. Mallya owned Royal Challengers, Bangalore was part of the tournament. The
engineer of the alleged carrier made a statement [4],
“But what about the pending eight months’ salary? We are not asking for charity. We only want
the money for the labor that we put in.”
Another engineer said –
“These few months have been a fight for survival for us. I have been looking for other jobs, but
there is so much uncertainty in our lives. We are even scared to fall sick.”
Despite the so-called relief provided by Mr. Mallya to KFA employees, over 50 employees
protested outside the stadium minutes before the inception of the IPL season 6 demanding the
immediate release of their pending salaries. An angry employee made a statement -

“Vijay Mallya seems to have money for everything except the airlines. We wanted to protest
outside the stadium to attract the attention of the authorities in any way possible.”
A pilot said that the company had not given them any written assurances. He also pointed out
that this had created “distress” among the employees.
“We don’t trust our company anymore. From what we hear, they have not even responded to the
Labour Department’s directive.”
The pilot added –
“While pilots have a higher pay scale, they are able to survive with some savings. But for others,
like the ground staff or the engineers, they need to be paid every month in order to survive. Most
of them have families that are dependent on them.”
The KFA staff’s dreams faded away when Mr. Mallya made an official statement to a delegation
of 14 employees on June 8, 2013, saying that he could not pay them. An employee who attended
the meeting made a statement -
“Mr. Mallya said he has no money to pay us. He said all bank accounts of Kingfisher have been
attached by the banks and even if he puts some money in those accounts, salary cannot be
credited. He said, as per the Karnataka High Court’s directive, money from the Diageo deal can
only come to UB Holdings and cannot be utilized for any other business including payment of
salaries of Kingfisher Employees.”
Also KFA employees’ plea was rejected when some employees sought alternate employment in
the UB group.
“Mr. Mallya said we cannot be transferred to another company’s pay rolls. He asked us to
approach the High Court to release part of the Diageo deal money for payment of our salary on
humanitarian grounds”, the employee added.
After Mr. Mallya’s statement, there was a huge unrest among the employees and they started
planning to move the court to get their dues. The employees started making distressed statements
against the KFA owner. One of the employees made an appeal publicly to all the employees of
KFA -

“We are appealing all 2700 employees to contribute to a fund so that we can take legal recourse
to get our dues. We know Mr. Mallya has very powerful lawyers and has deep pockets to drag
the case for years, but we cannot remain silent.”
The most recent news came on January 7, 2014, when employees having not been paid for the
last 17 months started an indefinite hunger strike at Jantar Mantar in New Delhi. The employees
also filed a complaint with the police regarding the repeated failure of the management to keep
its promise and consistently misleading the employees with their false promises. Among other
initiatives, employees wrote to the Prime Minister’s Office (PMO) seeking intervention, they had
approached trade unions and noted young parties like Aam Aadmi Party to mediate the issue.
Mr. G.B. Rathore (name changed to hide the identity), Aircraft Maintenance Engineer, KFA,
made a statement [5],
“Most of us tried our best to get jobs outside and move on. But jobs are not available. It is really
tough time to manage the families. We have sold all our gold and exhausted all means of
borrowing from friends and relatives.”
Recently, ahead of International Women’s Day, women employee of KFA wrote an open letter
to Mr. Mallya condemning his deeds and his lack of concern for the staff of KFA (Exhibit 4).
FINDINGS & OUR ANALYSIS- OTHER COMPETITORS
During the time of crisis, it came to the notice of the management of KFA that employees were
actually causing harm to the company because they measured that company’s profitability was
being affected because of their salaries. Such was the debt that KFA had taken that in spite of a
stable year of 2010 when most of the companies including KFA were having a stable growth of
gross margin, the company got bogged down and required an urgent cash surplus of $ 400
million. The company was also looking forward to have a new CEO and COO who could
manage the tatters.
As far as the competitors are concerned, the major Indian companies venturing in this industry
had already devised their revival plans. The acquisition of Air India Inc. by another Government
Airlines company Indian Airlines was complete by November 2010. But, the problems related to
merger and operational activities continued and this led to the government airlines company to

continuously seek fresh capital from the Government of India (GoI). The working capital was
acute for the company, yet, the support of the Government was enough to keep the company
afloat.
As far as the requirement of the customers is concerned, KFA was providing low airfare to its
customers in spite of the growing debt. The market share was highly distributed among the
airlines companies and the price war caused a highly competitive market scenario. The airline
industry had witnessed a lot of turmoil in 2009. All the major air carriers had run into heavy
financial losses over the year. Air carriers were also burdened with high rates of sales tax on
Aviation Turbine Fuel, under-utilization of capacity and employee discontent, among other
issues.
This was very much evident from this response of KFA’s In-flight Manager, Ms. Aparna
Ganguly (name disguised) –
“We were asked to provide the best services to our customers inspite of the losses made by the
company for the past four years. Our best in class airlines which had become synonymous with
high quality was now the major reason for our continuously increasing debts. Naturally, there
was no way in which the company could sustain such a spending as majority of the competitors
focused on new ways to reduce expenditure.”
The other major airlines carriers had thus managed to surpass KFA with Jet Airways becoming
the market leader and capturing around 25% of the market share in 2010. Despite the demand
from the customers, the competitive environment in which the seven major airline carriers
namely, KFA, IndiGo, Jet Airways, Air India, JetLite, Goair and SpiceJet were working caused
the downfall of KFA. As far as international operations were concerned, the foreign airline
companies like Qatar Airways, Emirates and Etihad Airways were now serving the main hubs in
Middle East Asia further affecting the business of KFA.
As Ms. Aparna Ganguly rightly mentioned here, the perception of employees towards KFA had
changed within a year’s time -
“...Majority of the staff were now increasingly becoming restless and the uncertain environment
had pulled down even the most motivated workforce. Inspite of a stable first quarter(2010), our

work culture had deteriorated and a lack of communication from top management further
aggravated the whole situation.”
UPTRON INDIA LTD.
The condition of Uptron India Ltd. 10 years back in 2000 was quite similar to what KFA’s
employees faced. Even though Uptron India Ltd was a state run company, during the time of
crisis, the company had to give a large number of its Employees Voluntary Retirement through
its VRS scheme. Majority of the employees were in fact forced to take this decision as the
company showcased a very dismal picture.
This was a letter transcript that one of the employees sent to the Managing Director of Uptron
India Ltd in 2010:
“..At the time of relieving an amount of Rs 2,25,000/- was due to me towards pending salary for
the previous 2 years. Your then MD, assured us through written commitment, that this pending
salary will be paid within 3 months from the date of relieving an employee. Ever since, I have
been contacting your office personally as well as through letters and mail. But even after 10 long
years not single paisa is paid. I request you to kindly look into it and arrange to release my
pending salary with reasonable rate of interest.”
The company went in a turmoil during the initial phase of 1997 when the main cathode ray tube
started failing in bulk. The company being a state run firm was working on an in-house
manufacturing and design. Thus, major technology was not tapped by the employees of the
company. This resulted in hampering of the growth of Uptron India Ltd and also its competitors,
including foreign electronics giants like LG, Samsung who were reaping the benefits of Foreign
Direct Investment.
The company also forced its employees to work extra hours in order to meet the servicing needs
of the customers. The major problems that the customers faced were not being handled
efficiently by Uptron’s Management and this led to an increasing number of cases of customers
lodging complaints in the Judicial Courts of India. The company’s image was tarnished and
majority of those cases forced the company to incur huge losses in order to keep company’s
image intact.

By the end of 1999, the demand for Uptron products had plummeted and the company was trying
to stay afloat by providing short term benefits to its consumers. Also, the salaries of employees
were reduced in the past 18 months and it had become a part of the sales of Uptron products. The
family conditions of these employees had worsened which was aptly mentioned by one of the
employees -
“We were facing difficulties managing our finances and my wife decided to help out by starting a
coaching institute for the students. The amount I got from Uptron was based on company’s
performance in that month and it was thus not enough to feed my two children and ourselves. By
the time I took VRS, the company was still holding my two years’ salary and the provident fund
for that period. With meager resources, we had to manage our finances by saving whatever little
we had.”
Even after 13 years of the company’s closure, the issue of pending salaries of these employees
remains unaddressed. The employees did make a plea to the Supreme Court (Exhibit 3) in the
year 2006 but the court rejected their plea on the grounds that Uptron India Ltd. was not liable to
pay its employees as it did not have money to do so. In fact, the employee union even tried to
bring this matter in the Lok Sabha Debate but the debacle over pending salaries still continues.
This condition of Uptron India Ltd. is quite similar to KFA when it comes to the pending
salaries. Though one is a state government firm and the other is a private firm, yet when it comes
to the welfare of the employees, the companies are majorly concerned about their profit margins.
Despite a major movement by the employee union against such practices of the firms and laws
which support them, the companies still manage to force their way out of difficult situations.
Considering that the government policies and the movement of KFA remain in line with that of
the case of Uptron India Ltd., we can assume that the issue of pending salaries might follow
similar trend in the future. As it is evident that KFA’s employees are following legal
proceedings, we can forecast that it can be in line with the verdict of Supreme Court in 2006 for
Uptron India Ltd. employee union.

KINGFISHER AIRLINES IN FUTURE
The road ahead for KFA and its employees is both complex and filled with uncertainty. There is
no doubt that majority of the employees have left the company, yet the number of staff that is
still present is in fact facing very tough times. When we contacted one such employee, Ms. Priya
Bhandari (name disguised) who is still on the payroll of KFA, we witnessed a very different
approach to the whole situation. Ms. Bhandari mentioned that she was unwilling to fill our
response sheet of questions and said that legal constraints prevented her from even answering
simple questions like motivation towards work, etc. We inferred from this incident, how a firm
can force its employee to live in the shadow of fear and uncertainty where even their
fundamental rights towards their own well-being are being compensated by the organizations’
perspective. Even though Ms. Bhandari was reluctant to answer our queries, still she took
courage to mention that those who are currently in the company are really not aware of what is
happening or what is going to happen. Also, she said that the situation is pretty messed up right
now.
The cloud of uncertainty, that pervades the minds of current and previous employees of KFA
over their respective issues related to salaries, do not seem to be getting solved in the near future.
Majority of the people have lost hope and moved on to newer domains. One such employee by
the name of Mr. Malai Chamy (name changed), who was a Ground Staff at KFA, has started his
own fitness consulting in Kerala. Considering that the skillset needed for these ground staff
employees is not that big, we can deduce that these individuals are those who are the worst
sufferers of such shutdowns of firms. They neither have the support of the unions nor do they
have the necessary skills or the resources to fight for their cause. We can witness such people in
restaurants as waiters, in fitness centers as somebody like Mr. Chamy, in factories as contract
workers doing physical labor for insignificant wages, etc.
As far as the company or its owner is concerned, the information reveals that the owners are
meant to take out the maximum return out of their ventures and once their venture starts spiraling
down, the only way out is to leave the sick industry in its condition and venture into profitable
avenues. Quite obviously, large number of employees who dedicate their lives and their family
time towards the company’s fortunes are left with insignificant returns for the hard work. KFA

and Mr. Vijay Mallya might be repeating the above trend and are thus not concerned for stranded
employees who have been cheated and deprived of their basic amenities.
Though the present looks gloomy, yet there is hope that a difference can be made in future by the
intervention of the State and the Centre. Monetary requirements of the employees are minimal if
we compare it with what Mr. Vijay Mallya has spent on his IPL ventures till date. The strength
of these policies though pervades the entire system of political leadership and is therefore much
hard to resolve at the ground level. Yet, with the intervention of the Judicial Courts of our
country, we can finalize on policy changes that for the past many years affected the people with
limited resources. We also need to make sure that the synergy of public and private partnerships
are not lost when it comes to policy formulation like what we saw in the case of Air India which
were provided aid by the Centre. Naturally, those who are having the bigger pie will find it hard
to digest these losses, yet such action is the need of the hour.
LEARNINGS FROM THE PROJECT
It was really fascinating to know the incidents that took place behind the scenes in KFA (read as
the end of Mr. Mallya’s Good Times). But even more than that, we felt really bad to know the
agony that the employees of KFA had to undergo. Their side of the story was rarely brought to
the front by the media probably due to the deep pockets of Mr. Mallya and his Public Relations
team. One similar and recent incident that we can think of is the case of disappearance of
Malaysia Airlines where we could rarely see the name of Boeing in the media. It made us believe
even more in the fact that power lies in the hands of only a few people.
Unless we had taken up this organization for study, we could not have got to explore these
unknown territories. We tried to apply the classroom knowledge acquired during HRM sessions
to our project.
Both the employees and the employer have a social and moral responsibility towards each other.
The employees of KFA, realizing this, continued to work for the airlines, but the airlines didn’t
bother to care for its employees. KFA, which was presented by Mr. Mallya to his son, Mr.
Siddhartha Mallya on his birthday, was side lined in Mr. Mallya’s vision. He didn’t even appear
in front of the media when KFA’s license was suspended by DGCA in October 2012.

Meanwhile, Mr. Siddhartha Mallya was busy tweeting about playing Volleyball with girls
dressed in skimpy dresses.
There is another perspective that we learnt from the information that we got about Mr. Sanjay
Aggarwal, the CEO of KFA who resigned recently on February 17, 2014. Mr. Aggarwal had
joined KFA on June 2010 after he left SpiceJet as its CEO. Mr. Aggarwal was involved in the
affairs of KFA when the crisis had hit the company in late 2011. It is interesting to note that Mr.
Aggarwal was always speaking the words of higher management whereas Mr. Mallya, the owner
of the company was nowhere to be seen. In fact, his condition after February 2014 is quite
similar to what we learnt from the case of Commute to Nowhere. In spite of serving KFA and
SpiceJet as a CEO, the company’s condition has brought Mr. Aggarwal to the crossroads in his
career and now he has nowhere to go. The tarnished image of KFA will follow him throughout
his life just because he served the company as the CEO during the time of crisis. Commute to
Nowhere can also be linked to other board members of KFA who resigned in the recent past.
“Kingfisher Maintenance Welfare Association” is another facet of the company that we could
link to “The Maruti Way.” It is important to note that the Manesar union was formed only
because it was the need of the hour as the union in Gurgaon could not cater to the needs of the
employees of Manesar. Similar is the case with “Kingfisher Maintenance Welfare Association”
which was registered by the employees on January, 2013 over the matter of pending salary of
INR 120 crores. “The two faces of unionism” also mentions the pros and cons of having a union
and how the management tries to prevent such actions by its employees. Thus, our study helped
us analyze the real life issues of these employees and what forced them to register a union for
their rights.
We didn’t have to go far to find out the things that could have been changed in order to avoid the
crisis that KFA now finds it in. We tried to compare the culture prevalent in these two
organizations which was not possible earlier due to the fact that the other side of the story (that
of employees of KFA) was rarely brought to the front by the media. It was clearly evident in
Southwest Airlines (SWA) that KFA went on an aggressive approach in contrast to the
conservative approach of SWA. We understand that an organization can’t have the best of both
the worlds i.e. it can’t have a low fare model and provide the best-in-class facilities to its
customers at the same time. The adjustment has to be made somewhere. SWA made its

employees feel like a part of a family. For them, firing employees was never an option, but for
KFA which showed the short term vision of KFA’s management. As mentioned in Exhibit 4,
KFA made its women employees to dance in the parties thrown by Mr. Mallya. The self-esteem
needs of its employees were severely affected. Due to the financial crisis that KFA faced, it
needed to undergo some change in its strategy. The employees were never engaged in any sort of
decision making, no proper explanation was given to the employees from KFA management and
the employees could not understand what was expected from them. Clearly Fair Practices were
not a part of KFA’s culture. Fair Practices can lead to voluntary cooperation from employees
which is the key to success of a company in a knowledge based economy. Although KFA was
lucky for it had employees (like Ms. Wadekar) who admitted that given a chance, she would love
to work again for the organization, still it could not use it to resurrect its fluttering fortunes as
Mr. Mallya did not infuse money into its operations.

APPENDICES

EXHIBIT 3: Some important excerpts from the Supreme Court judgement in case of
Uptron India Ltd.
Petitioner: State Of U.P. And Anr.
Respondent: Uptron Employees' Union Cmd-I And Ors.
Date Of Judgment: 26/04/2006
Bench: B.P. Singh & Altamas Kabir
Judgement: B.P. Singh, J.
......In all the appeals before us the submission urged on behalf of the State of Uttar Pradesh is
that the BIFR had no jurisdiction in a proceeding under SICA to make a direction to the State
Government to pay the wages due to the workers of a sick company. It has also been the stand of
State of Uttar Pradesh that M/s. UPTRON India Ltd. is a subsidiary of U.P. Electronics
Corporation Limited, which is a company wholly owned and controlled by the State of Uttar
Pradesh. In any event, it was submitted that there was no provision in the SICA which authorises
the BIFR to pass an order directing the State of Uttar Pradesh to pay the salaries/wages of the
employees of a sick company in regard to which an inquiry is pending before the BIFR.
....In view of the submissions urged before us it is necessary to notice the relevant provisions of
the SICA. There is no dispute about the fact that M/s. UPTRON is a sick company within
the meaning of that term in SICA. A "sick industrial company" has been defined under
Section 3(0) of the Act to mean, an industrial company (being a company registered for not
less than five years) which has at the end of any financial year accumulated losses equal to
or exceeding its entire net worth. There is no dispute that the net worth of M/s. UPTRON is
negative. Under Section 15 of SICA if any industrial company has become sick an obligation is
cast upon its Board of Directors to make a Reference to the BIFR for determination of the
measures which shall be adopted with respect to the company. This has to be done in the manner
and within the period prescribed by Section 15. On receiving such a Reference, the BIFR is
required by Section 16 of the Act to make such inquiry as it may deem fit for determining
whether any industrial company has become a sick industrial company....

EXHIBIT 4: The Open Letter written to Mallya: SHAME MALLYA (Date: March 7,
2014)
Published in: news.oneindia.in
Link:http://news.oneindia.in/india/kingfisher-airlines-women-employees-open-letter-to-vijay-
mallya-1408044.html
We the women folk of KFA are forced to write this open letter to you today .We have served the
organization for years making it one of the most renowned airline in the world but today as
things stand we find even our association with the airlines so very pathetic. Never though that a
man who posed to be so business committed and god fearing would behave in such an
unprofessional, inhuman and uninterested fashion. While people warned us that you are still a
spoilt brat and whimsical person, not serious about any business. We were told that even UB
group is being taken care of by a few people close to your father; if they withdraw it will
collapse in no time. We ignored them having faith in you. You betrayed us and our faith as you
did with MCF employees.
Women force has been an integral part of the KFA culture. Today as we stand in trying
circumstances we wish to put forward certain question to you:
1. Have you ever bothered to enquire how we have been making both ends meet without salary
for 18 months?
2. Have you ever bothered to know that some of us are only working member of our family?
3. Why you ruined our family as well as our career by keeping us in dark, when you were not
interested in serious business like airline why you kept on giving us false hopes? We are finding
it very difficult to find a new job. You also created a dilemma in the aviation now new
companies are finding it difficult to acquire planes and they are being charged hugely because of
the distrust created by you in them towards India. You are guilty of whole nation. You have done
a irreparable damage to the image of our country that too being an M.P.
4. Do you even understand what it means being mother and how we feel when we have to deny
our kids even the most genuine demands? You also have a mother do you have the guts to ask
her that what you are doing to us is right? Do you have respect for her or you just show off your
respect to her in front of media when your win Rajya Sabha seat and seek her blessings. We are

sure if she is aware of your apathy and callousness towards us, she must have told you what is
right. It's now up to you to ignore her or follow her advice.
5. We understand corporates like you feel elated by looting public banks and other institution but
why you never thought twice before denying us our wages and why did you not terminated us
when you had no investor and intention of running the show as you proudly say for your other
silly ventures" show must continue". Why you are not yet able to find investor, now you don't
even talk about one. When you are not investing in the airline, how can you expect others to
invest in this company mismanaged by you.
6. Do you have any respect for women or you just believe in commodification of them for your
selfish and nasty purposes. You tweeted and advocated fast track courts for Delhi rape victim
Damini. Please advise which court shall we approach as no one is ready to help us. Please note
she got liberated and left this cruel world but our condition is worse and far more harrowing than
her as it is a continuous and never ending torture by you for us.
7. Is it not true that some of the cabin crews were forced to serve in your nasty parties and your
guests like you use to misbehave with them and whoever didn't agree to this she was tortured and
harassed. If this is not true please come forward and deny this in front of the whole world.
8. You keep on retweeting about IPL, Hi Blitz, Sahara force India but never about KFA and its
employees. Why? You say you don't have money and you are helpless but the fact is you are not
at all guilty. How your conscience permits all this. Please note law is catching up with your
partner sahara shri. Do you wish to face the same humiliation or want to amend yourself?
9. Why were you not moved by the suicide of the wife of your employee due to non-payment of
salary and why no case was filed against you for abetment of suicide like Gopal Kanda inspite of
the fact that her suicide note clearly indicated that. Did you bribe Delhi police? We hope one day
Home ministry/Delhi police would re-open the case and punish you for your crime.
You have been always busy in your other ventures. Never skipped any KFA calendar but did you
realize the yearly problems that your work force went through as we tried to recover our
company thinking you are doing your best on your end but now we realised that you only
exploited and used us.

So, while the world may celebrate women's day, for us there is no celebration, in fact it's even
demeaning to even think of the day considering the ignorance and hardships that we faced and
are still facing.
Your plush lifestyle, ways and business ventures have been known to the world. It's laughable
then to listen to your excuses. We wonder at times how a person can be so insensitive to human
feelings and emotions.
Mr. Mallya if there is any shame left in you then come and meet us and have a first-hand look at
the kind of lives that we are leading. It will surely then make u realize that a human existence is
far more important than breeding horses or running your emotions in the F1 track or playing your
luck through the IPL players.
Our KFA experience has been the worst experience of our life, while you buried all your worries
under the influence of alcohol but remember alcohol can make you forget your
problems/commitments temporarily but can't solve them for you. Come out of the imaginary
world, be on earth.... We hope and pray you will get well soon and shed your ego and apathy
towards us.
-Women Employees of so called Kingfisher Airlines

REFERENCES
[1].http://www.topnews.in/kingfisher-employees-struggling-make-both-ends-meet-2384217
[2].http://www.thehindu.com/business/Industry/kingfisher-airlines-crisis-
timeline/article4636635.ece
[3].http://www.thehindu.com/business/companies/kingfisher-flies-into-more-
trouble/article4291166.ece
[4].http://www.thehindu.com/news/cities/bangalore/kingfisher-airlines-staff-take-out-protest-in-
bangalore/article4581765.ece
[5].http://www.thehindu.com/business/Industry/kingfisher-staff-harden-
stance/article5550178.ece
[6].http://news.oneindia.in/india/kingfisher-airlines-women-employees-open-letter-to-vijay-
mallya-1408044.html

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