Sunday, April 19, 2009

As if the problems with global fuel prices weren’t enough, Kingfisher has gone ahead and undertaken strategies that only seem a do ‘and’ die effort.

ZEE BUSINESS BEST B SCHOOL SURVEY

Where do you think you are going honey?!

It’s not that such a situation suddenly crept up on Mallya. Various reports estimate that Kingfisher posted Rs.240 crore of losses in FY05-06, Rs.577 crore losses in FY06-07; and Air Deccan – India’s largest publicly listed loss making company – was never a profitable company in the near past! And one cannot forget that Mallya had spent a huge Rs.975 crore approximately of his invaluable cash to purchase 46% stake in Air Deccan in FY 07-08! All airlines in India, for that matter, are in losses and are bleeding bad. Where Jet has been facing a daily loss of almost over Rs.9 crore, Air India is expected to post well over Rs.4,000 crore losses in the current fiscal year as compared to net losses of Rs.2,144 crore in FY08.

All this has badly affected in-flight services and airlines are now even planning to charge for the water they serve on board. Would such process moves help Kingfisher? We found the question pretty hilarious. The per passenger loss for the combined entity of Kingfisher and Deccan is a confounding Rs.2,400! What help can charging for one bottle of water or even a meal help? So why can’t Kingfisher simply increase ticket prices?

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Source :
IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and
Arindam Chaudhuri (Renowned Management Guru and Economist).


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