ETHICAL & CORPORATE GOVERNANCE DILEMMA OF

KING FISHER AIRLINES

INTRODUCTION: Vijay Mallya, entrepreneur, born on 18 December 1955 in Bantwal,
Karnataka to the parents of ShriVittal Mallya and Smt. Lalitha Mallaya , popularly renowned as
“Liquor Baron of India” has started his journey from nowhere to most wanted in the businesses
that whatever he stepped into. The choice of selection of his businesses has given him a
tremendous rise in his career. Infatuation of Mallya towards his luxurious and comfort life
landed him into a nutshell of troubles by doing irreparable damage to his image identity and
declining of his name in the society. This incident grabbed the eye of the world and keeping the
country in a negative look with corporate structure failure.
PROBLEM STATEMENT: The main problem in the case study revolves around the
failure in the ethical and corporate governance structure of the system in the country.
SWOT ANALYSIS OF KINGFISHER AIRLINES

STRENGTHS
• Strong brand value and reputation in the
minds of the consumer
• UB group as the parent company
• First Indian airline to have a new fleet of
planes
• Quality service and innovation More than 80
destinations
• Less than 100 people (employees) per
aircraft
• Add 1 million passenger created a year
WEAKNESSES
• Still in RED (still to Break Even) (An
outstanding of 950crs only to oil
marketing companies till may end)
• High ticket pricing (KF First & Class)
• Tough competition from Indian as well
as international players
• Financial issue due to heavy Debt
• Overspending of funds.
• Unable to generate expected returns on
investment done
• Laying off employees caused a bad
image.

OPPORTUNITIES THREATS
• If able to survive for a couple of years, then • Falling demand
can have a big market share • Over capacity in the skies
• Untapped International Markets • ATF prices
• Untapped cargo market • Economic slowdown
• Expanding tourism business • Infrastructure issues
• The Indian aviation industry is growing at a • Rising fuel cost
rate of 24% per year • Government. Policies
• Large number of domestic untapped routes • Least cost carrier
• Disposable income especially in middle
class has increases.
MAJOR FACTS: The major facts related in this case study are:
1. Increasing Debts
2. Employee Retention
3. Declining Trust
4. Brand Conflict
5. Acquisition during poor financial health to but Air Deccan Services
6. Economic Slow Down
7. Failure to focus on ‘Points of parity ’to deliver services at affordable cost
8. Maintain punctuality
9. Lack of Strategy
10. Lack of Delegation
11. Recession
12. High Operational Costs.
13. Frequent Change in Business Models
MINOR FACTS: The major facts related in this case study are:
1. The ethical system in the country is too late to respond on the financial issues
2. Misuse of Power as a celebrity
3. Non-disclosure of financial statements & status of the company
4. Creation of Ethical Chaos causing disruption to the promoters, investors and stakeholders
of the company.
5. Granting of loans by the banks without proper authentication and verification of the
persons.
6. Creating ethical dilemmas in the minds of the customers due to these types of problems.
SUGGESTIONS/RECOMMENDATIONS: The suggestions /recommendations
suitable to this case are:
1. Make-believe
2. Decentralization in authority
3. Management should be given to different or new system
4. Change the entire board of directors
5. Change the management
6. leasing out their planes (unused or minimally used planes) to other carriers
7. cancelling all orders of airplanes •
 8. Focus on tier II ND tier III cities where other airlines may n have made considerable
inroads and judge the operating costs of the same
9. FDI in aviation must be permitted
QUESTIONS:
1. How do you consider the journey of King Fisher?
A. The journey of King Fisher is like falling from “Riches to Rags” which is the apt
sentence because of the following reasons:
1. Assessment about the industry is not proper
2. Delayed decision making
3. Reacting to the situation is cumbersome and slow
4. Communication is weak in terms of reaching to the employees and customers
5. Credibility of the word Kingfisher is no more existed in the market
6. Distrust caused to the stake holders.
2. What measures do you suggest to solve this issue?
A. In my view, the following measures should be taken to revive back the Kingfisher
Airlines:
1. Assess brand viability
2. Depersonalize the brand
3. Maintain vigil on cost-effectiveness
4. Concentrate on core business
5. Cut your losses
6. Transparency and confidence building measures firstly amongst its own employees and
then the customers
7. Cut costs by not flying to expensive sectors and airports resulting in huge parking costs
and low returns
CONCLUSION: Indian airline business has seen ideal growth and revolution which will go
on in coming years. Many airlines come and go while the others have gained a strong
ground in this business. The grand and ambitious Kingfisher Airline’s project suffered
huge downtime due to improper strategic decisions and mismanagement by the group.
Instead of trying to utilize this grand airline project opportunity, Vijay Mallya focused to achieve
a glamorous status. The airline became for the luxurious design, food and ambience
including big goals for settling in international market but neglected the basic economic class.
The strategy practiced by Vijay Mallya could not sustain for long and proved to be a great
threat at a large scale to both, sustainability and stabilization of the aviation sector. Mallya
is now the only board member left holding on to the brand.
For a business to be successful the main focus should be on creating an efficient work-frame,
taking appropriate decisions, establishing healthy competitive environment, improving
quality of service and standing in unity to find best solutions to problems.