The lowering of expected growth in the Indian airlines doubled with rush and the resultant severe competition between airlines resulted in almost all the Indian airlines, including Air Deccan, running into heavy losses.
After initially trying to get in fresh capital for running the airline, Captain Gopinath eventually fell to pressures for consolidation. On 19 December 2007, it was announced that Air Deccan would merge with Kingfisher Airlines.
Since Indian aviation regulations prohibited domestic airlines from flying on international routes until they had operated in the domestic market for five years,instead of merging Kingfisher Airlines into Deccan Aviation, the Deccan Aviation would be renamed as Kingfisher Airlines. This was because Air Deccan was the older of the two airlines, and therefore would be the first to qualify for flying on international routes.The merger became effective on April 2008, with Vijay Mallya becoming the chairman and CEO of the new company.
Now the Kingfisher airlines has all ended. Faced with one more crisis mixing its affliction- growing safety concerns following a strike by its engineers.Pushed into a corner by a string of troubles, Vijay Mallya, chairman of Kingfisher Airlines told.”This (the partial lockout) was necessitated because of the intolerable violent behavior by a section of the staff against all those who want to work.” He said.
In which was a major pressure to Mallya, Ajith Singh issued a solid warning saying: “I will not hesitate to shut down Kingfisher Airlines if there is any question of it being a safety problem”. “There can be no compromise on safety of air passengers; their safety is paramount. We had asked DGCA for an airworthiness audit, at that time things were okay. This was one week back,” he explained.
Now the engineers have stopped working, the value of airlines cannot be certified and it is a matter of concern. It is a free market and passengers have to decide themselves, for this puts the airline in peril. Issues between pilots and management are internal issues but the management holder Mallya is destructing the fame and continuity of Kingfisher airlines.Meanwhile, Kingfisher shares decreased to 4.78 percent in the Mumbai stock exchange soon after the opening of trade to touch the lower circuit limit of Rs 15.35 on the Bombay Stock Exchange.
Aviation sector expert Jitendra Bhargava said there is no future for Kingfisher Airlines.The airline have been closed by now. Mr Mallya comes from a liquor business industry which has a huge margin of 35 per cent, but airlines have a thinner margin of around 2 per cent. He followed a wrong business model. The airline earlier said it will focus on the upscale market.
They could not understand the economics of the sector and never took necessary corrective action.In Mumbai, a team of engineers and pilots had a meeting with executive vice-president of Kingfisher Hitesh Patel who, according to the employees, said it would be difficult to pay salaries till some restructuring happened and new investors, including foreign ones, showed interest.
Kingfisher has been saddled with a huge loss of 8000 crore and a debt of another Rs 8.037 crore which it has not serviced since January. These have been categorised as bad loans by banks.Several of its aircraft have been either taken away by its lessors or grounded by the Airports Authority of India for non-payment of dues during the past few months.