Vijay Mallya Journey

1. 1
Downfall of
Kingfisher Airlines

2. 2
Background
Born - 18 December 1955
Graduation – B.COM(honours)
Parents - Vittal mallya (father)
Lalitha Ramaiah Mallya (mother)
• Vijay Mallya is the son of a famous industrialist Vittal Mallya. He assumed the Chairman of the UB
Group in 1983 and took the company to great heights.
• Under his dynamic leadership the group has grown into a multi-national conglomerate of over sixty
companies. During this process United Beverages acquired several companies abroad.
• The UB Group has diversified business interests ranging from alcoholic beverages to life sciences,
engineering, agriculture, chemicals, information technology and leisure.
• Acquired Berger paints, Best and Crompton in 1988; Mangalore Chemicals and Fertilisers in
1990; The Asian age newspaper and the publisher of film magazines, and Cine Bitz, a Bollywood
magazine in 2001.
• Main potential was in Beer and Liquor business only. Took the business at global level.
• United’s Kingfisher beer has a more than 50% market share in India.
Vittal Mallya

3. 3
Net worth
• Mallya was the former owner of Royal Challengers Bangalore cricket team.
And also the Kingfisher group owned the kingfisher villa. This was more like a
advertisement strategy
• The most regal property of Vijay Mallya is called ‘White House in the Sky’. It
sits as a penthouse on the 32nd and 33rd floor of Kingfisher Towers in UB City,
Bangalore.
• Mallya has a huge mansion in Sausalito, in France, the stunning piece of
property overlooks the Bay Bridge.
• He also bought a plum penthouse apartment in Trump Towers, New York for
$2.4 million.
• Mallya has a huge property in Nettleton Road in South Africa, the sprawling
home overlooks Clifton Beach.
• Mallya is the owner of the Mabula Game Lodge in South Africa, the property is
spread across the lush of 12,000 hectares of land.
• He owns an island property in Monte Carlo, which is sprawled across 800
acres. The prolific entrepreneur also owns thousands of acres of land in the
Himalayas.
• He had a 95 meter long mega-yacht called the Indian Empress with a helipad.
He sold it in 2011 and charters it for a month every year. He has another
vintage yacht, of which he is still an owner, this one is a motor-based one
created in 1906.

4. 4
KingfisherAirlines
• Kingfisher Airlines was established in the year 2003 and owned by the
United Breweries Group which is based in Bengaluru.
• First airline in India to operate with all new aircrafts.
• First airline in the country to order the ‘Airbus 380’, which is the largest
passenger airliner in the world.
• Offers several unique services to its customers.
• First Indian airline to have in-flight entertainment (IFE) systems on every
seat even on domestic flights.
• Alliance was formed with Dish TV to provide live TV in-flight. It provided
world class facilities such as hot meals, comfortable seats, personalized
entertainment and treating passengers as “guests”.
• From 4 flights in 2005, number of flights increased to 104 flights per day by
introducing 17 aircrafts and connecting 16 cities in one year and setting
record in 2005-2007, of fastest airplane induction
• By the year 2006, the Airlines achieved a five-star status and were popular
among the business class travelers.
• In 2008, airline commenced its international operations by connecting
Bengaluru to London
• Kingfisher also became the only airline in India to have 5 star rating in 2008
• In May 2009, Kingfisher Airlines got the highest share in aviation market
among all the airlines in India by carrying more than 1 million passengers.

5. 5
Air Decan-KingfisherDeal
 Acquired Air Deccan for expansion
(Kingfisher Red) to play on
international platforms
 Air deccan was known as low cost
airline
 Changed to Kingfisher
Red
 Travellers shifted from
kingfisher to kingfisher
Red
 Giving same facility
at low cost

6. 6
Reasons for the downfall
1. Acquisition of Air Deccan
That acquisition of Air Deccan marked the end of Kingfisher Airlines,” says a person who worked closely with Mallya during
that phase and who did not want to be named. “At that time, there was excess capacity (more supply of seats than demand) in
the aviation sector and Air Deccan was lowering ticket prices to Re 1, Rs 400 and so on, and that was not viable. In 2007, KFA
merged with Air Deccan that was a low-cost carrier that charges low fares while kingfisher was a high cost carrier that was
known for its luxury.
One important reason to acquire Air Deccan was so that Kingfisher could fly to international destinations. According to DGCA
rules airlines could only fly international if it had 5 years of domestic flying experience. Kingfisher then had less than 5 years of
experience whereas Air Deccan had been flying for longer
After merging with Air Deccan there was introduction of Kingfisher Red in 2008. But this business strategy caused confusion in
consumer’s mind because the KFA passengers were used to the luxury provided like cuisine and lounge access etc. The
merging degraded the brand status of KFA and the company lost its premium value.
Kingfisher also faced stiff competition in this low cost segment from Indigo, Go Air, SpiceJet and its dream of making a fast
buck lay shattered. KFA’s service deteriorated over time, and its customer shifted loyalties to better airlines. The company
incurred a loss of more than 10 billion for 3 years after merging with Air Deccan.
Kingfisher Red was finally shutdown in February 2012 leaving Kingfisher Airlines with a total debt of INR 7,057 Cr and total
losses of Rs 6,000 Cr.

7. 7
Reasons for the downfall
2. Increasing fuel prices
As oil prices started to climb (an average of $72.68 a dollar between 2005 and 2010) and the company struggled to run a
business that included a full-service airline and a low-cost carrier, its finances floundered and its debt burden and losses
surged. By the end of March 2008, Kingfisher’s debt had mounted to Rs 934 crore. A year later, it had multiplied to Rs 5,665
crore. Its net losses widened from Rs 188 crore in 2007-08 to Rs 1,608 crore the following financial year.
Rise in Fuel Prices Due to rising demand for fuel and competition among various airlines there was continuous increase in the
price of jet fuel and KFA was not able to pay the bills of fuel consumed. Also the Aviation Turbine Fuel is taxed heavily by
Government of India. In India ATF is priced approx. 51% higher than the international standard.

8. 8
Reasons for the downfall
3. High operational cost
• The maintenance, navigation, landing cost of KFA in 2012 was about 10.86% of the total revenue generated and 3% more
than that of Jet Airways the second best full service airline at that time.
• The employee cost of KFA was also higher than any other airlines.
• The cost of Value added Services (VAS) by KFA was also very high and also they paid less attention on cleanliness,
connectivity, scheduling and low prices that were the basic requirements of Indian customers.
4. Strategic Mismanagement
The breweries of Kingfisher was managed by experienced professionals in liquor field, so his liquor business was able to
flourish. Kingfisher Airlines was not that fortunate. The owner due to his political (Vijay Mallya was a Rajya Sabha MP) and
other business commitments was not able to give KFA the attention it needed and no CEO remained with Kingfisher Airlines
for more than a year.
Kingfisher Airlines despite of all the challenges continued to order diversified aircrafts. This led to extra training and spares
and maintenance costs. The airlines ordered Airbus A380-800 for its international business and was the only airlines
company to do so in India.
The Airline didn’t understand the customer needs properly as well. While customers are usually willing to pay more for better
service, transportation sector is highly price sensitive. Also, people rate services such as on time departure and arrival,
cleanliness and legroom over and above services such as training of flight crew and their uniforms. So, when fuel prices
soared in 2008 people shifted to other airlines which put final nail in the coffin of Kingfisher Airlines.

9. 9
Reasons for the downfall
5. Economic Slowdown
Economic slowdown in 2008 is another external factor for downfall of the Kingfisher. Recession occurred in 2008 when
the first international route from Bangalore to London was set up. This led to reduced demand of international as well
as domestic travel.
6. High Ticket Price
Landing charges, Fuel
charges
FDI-ETIHAD
Non-Payment of employee
salaries
Closed and License was
cancelled

10. 10
Falling stock price
• For the September quarter, Kingfisher’s operating losses are higher than the other two, with Jet’s
operating loss being far lower. Kingfisher’s fuel and interest expense (Kingfisher’s debt is also probably
costlier than that of Jet Airways) as a percentage of revenue is higher than that of Jet.
• A higher interest cost, coupled with higher operating losses, has led to pressure on Kingfisher’s ability to
service its interest and debt obligations. Further, Kingfisher’s current liabilities have increased by 23% in
September from March (an indication that it may be
• Stretching payments to suppliers). Naturally, Kingfisher seems to be the worst affected of all the three.
• Revenue growth for Kingfisher domestically was very weak, falling 3% to Rs. 1,184 Crore from Rs. 1,227
Crore
• International Revenue growth was even worse, falling 9% to Rs. 363 Crore from Rs. 398 Crore Passengers
carried fell 15% to 2.63 million; antithetical to general market trends.
• Domestic Passenger Yield fell 3% to Rs. 3,804 despite capacity discipline.
• International Passenger Yield rose 5% to Rs. 10, 864.
• EBTIDAR Profit (which measures operating results before taxes, interest, depreciation , loan amortization,
and rents) of Rs. 125 Crore (Rs. 284 Crore in Q3 10-11), EBITDAR profit of Rs. 161 Crore on Domestic (Profit
of Rs. 225 Crore in Q3 10-11), and EBITDAR loss of Rs. 36 Crore on International (Rs. 59 Crore profit in Q3
10-11)
• Kingfisher deferred almost 213.4 Crores worth of losses into future taxes under “Deferred Tax Asset”
• There was a onetime special item of almost Rs. 79.25 crore that contributed to the loss.

11. 11
Highlosses for two PSUs

12. 12
Debt restructuring HDFC and ICICI

13. 13
Current Scenario
• 2018 April month- After the suit filled against Vijay Mallya in previous year 2018
in April for the Money laundering and is said as a wilful defaulter.
• 2019 8th April- UK government approved the extradition of Vijay Mallya.
• 2019 2nd July- Vijay Mallya was Allowed by London Court to appeal against
extradition order.
• 2019 18th July- Vijay Mallya’s UK High Court extradition appeal to be heard in
February 2020
• 2019 23rd July- Indian banks win UK court order to seek details of Vijay Mallya’s
asset ownership.

14. 14
Thank
you