One of the many wonderful things about beer is its ability to wake up dozing brains and shake up dormant thinking. One more reason why I think beer is god’s gift to mankind!
But this article is not about beer. This is not even about someone having beer. This is about a beer that had one too many. Brand extensions, that is.
I am talking about Kingfisher Airlines. This strong beer brand had painstakingly frothed up enough sales to become the leader. And what does its princely owner, Mr. Mallya, do? He extends its name to an airline he launches with much fanfare.
Why name an airline Kingfisher to fly high. A few Kingfisher bottles would have done that happily! Never mind.
Kingfisher is ‘the king of good times’. Kingfisher Airlines is ‘fun in the sky’. Screw No.1.
And then Mr. Mallya goes out and buys Air Deccan – an extremely successful low cost airline till then – for around Rs.1,000 crores and renames it Kingfisher Red. Why? Maybe he wanted multiples! Who said men can’t?
Kingfisher Class is the premium airline. Kingfisher Red is the low cost one. Clearly distinctive offerings; to satisfy the flying urge of a growing nation. Another of those marketing theories preached in all business schools and academic books with disastrous results.
But the consumer has other plans. He looks at things a wee bit differently. Kingfisher is beer. He found Kingfisher Airlines a bit too strong to his liking. Even worse, Kingfisher is premium. And when you dilute that by extending the name to a low cost product – even if it’s an airline - the consumer is not willing to gulp any of it.
Need proof? Accumulated losses of Kingfisher Airlines are a staggering Rs. 5,000 crores and its total debt a stunning Rs. 6,000 crores. If I am not mistaken, that’s a lot of money and a lot of losses. Enough to give a spectacular hangover!
Before you say all airlines are bleeding, I would like to point out two things: One, in a capital intensive industry like airlines, I agree it takes times to break even. Yet, Spice Jet, Indigo and Go Air are on the ascent and can see light at the end of the proverbial tunnel. Two, Jet Airways used to be profitable till they too were bitten by the extension bug and launched Jet Lite, Jet Connect apart from its flagship Jet Airways. And flew into turbulence ever since. That nasty cold called extension causing the sneeze again!
Coming back to Kingfisher, Mr. Mallya has now decided to kill Kingfisher Red and focus only on the premium Kingfisher Class. So, what about the Rs.1,000 crores he spent on Air Deccan? Swept under the carpet. What about the killing of a successful low-cost airline concept? Flushed down the toilet.
Importantly, what has all this done to the premium Kingfisher brand image? Royally screwed…….. Mallya style!
7 comments:
Mallya rox!
Needless to say, a wonderful article...I actually had to read through it twice to actually register what you were trying to say....No no, I don't mean to say your article was complicated but I wanted to make sure I read the article right before I threw in any comments....I really love your usage of words...mind blowing!
Believe me, I hadn't paid so much attention to Kingfisher Airlines till I actually read your article....Okay, I just knew Kingfisher airlines was owned by Vijay Mallya the king of beer and that most of his leading ladies ( read as air hostesses) being very pretty indeed.....
After I read ur article, I went to Wikiedia and read through all on Kinngfisher airlines...it took me a while to figure out who was red, blue and green and what not ( just kidding)....
As I read throough the article where he mentioned his reasons for closing down Kingfisher Red, I actually couldn't help smiling...He mentions there are enough guests or customers who wish to travel Kingfisher Class To quote Mr. Mallya..."We believe that there are more than enough guests who prefer to travel Kingfisher Class, which even shows through our performance because the load factor in Kingfisher Class is more than Kingfisher Red".
If this were to be true then what could be the reason behind the airlines not even breaking even till now, salaries of July not yet being paid , fuel dues to HPCL and BPCL, Lease default and AAI default.....
Anyways while you are here exposing Vijay Mallya's careless harsh mistakes, guess he must be happily sipping beer...:) Mr. Mallya watch out your cup is overflowing, this time not with beer though but with woes....!
That said, you keep writing.....your articles are indeed a pleasure to read and so glad to see that you're keeping up your promise of being regular....:))
Agreed about the loss.
But still Air Deccan acquisition is
for entering into International Market
Correct me if I am Wrong
A fine read Sir
Fine read..
Hi sir,
Deccan airways acquisition and converting the name to kingfisher red was only to get international flying license.. Deccan was in air from 2003 and Kingfisher from 2005...As per Indian aviation laws... To get an international license you need to be in domestic market for at least 5 years, as kingfisher needs 2 more years mallya acquired Deccan and started international operation 2 years ahead... Coming to losses... Because of losses he is not paying any money to oil companies and parking charges at airports... To me it seems like one more Mallya strategy to show them in losses so he can avoid all the rents and taxes...
I wonder what exactly went wrong with Kingfisher Airlines, why the huge loss and what do Mallya and company plan to do about it. Maybe they will close it as they did with UB Air.
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