Wednesday, August 27, 2014

No more Chicken 'n Egg: the rise of mass consumerism in India

It is not s scenario uncommon in India. We don't buy  fancy cars coz the roads are not the ones meant for them. Brands don't want shops in malls with no footfalls and we can't buy brands in our small towns. Some parts of the country have no flights or very few one's with expensive tickets, so we don't prefer to travel. We all might have had these thoughts and the solution we bring in is: Let's do it after someone else improves things for us. But I guess this cycle of 'someone else' has been broken by some sectors. 

There are possibly three things currently in India that rank high in terms of share of voice in news media- e-commerce, mobile handset devices and airlines. While their individual contributions towards boosting the Indian economy might be an interesting point of study; what they are doing in a big way is improving of accessibility of products and services to the far corners of India.

Some definite trends which are emerging though is a rise in mass consumerism across, larger spread in terms of variety and market penetration for businesses which ally with either of these three. What make it further interesting is the fact that e-commerce, mobile devices and airlines are somewhat related symbiotically in each other’s growth.

The airline industry is actually not at its peak; but there definitely frantic activity in the sector over the last 3 months. The first was the fact that Air Asia started operations in the Indian domestic sector from June. The LCC has certainly caused some waves in the segment where Spice Jet and IndiGo started offering heavy discounts. Some more knee jerk action: Tata-Singapore Airline launch a full service brand Vistara and Jet Airways is looking to dump its low cost Jet Konnect and concentrate on being full service again.

Recent news suggested that Air Asia within its first month incurred a loss of Rs. 26 Cr. within its first 18 days. Though the airline is hopeful it will break even by the year end with more operations on the charts; the plan here is to build more connections. So as of now the score is 1-0 in favour is the Indian competition; but how did this happen? Pretty simple, as against 10 years back, most of the tickets today are booked online through ticketing and travel portals instead of travel agents or directly through airlines. The TG that can fly has made booking portals their choice of purchase point and possibly been the earliest and most popular form of e-commerce so far. In turn, it has increased competition and better connectivity across the country for men and materials to move.

The reason is simple; portals offer a wider choice, have a larger database than any single airline has and it has a larger reach and quicker reaction towards announcing discounted fares. Sure I would have loved to see some numbers here; but take this as an example- large size travel agents like Akbar travels offer online ticketing facility. Want more; I always associated Balmer Laurie as the lubricant and grease company who also were CNF agents at ports- they have started an online ticketing portal. So I guess a safe assumption can be made here- airline ticketing has shifted online as more people are having access to internet.

But what has transformed internet in India has been the faster penetration of mobile phone networks across the country. While the network quality is still debatable, it has eliminated the formidable Indian Postal services to a very high extent. And what has definitely changed the internet access mode to mobile devices is the easy access, availability and affordable mobile handsets. The launch of the Firefox based i-Ball handset at Rs 1999 is pretty remarkable as it will further improve on the smart phone device perpetration in the country. It is not uncommon to see that for a lot of people around, the first phone is a smart phone with an internet enabled connection. 

The penetration of these internet enabled mobile devices is boosting internet led transaction as compared to computers largely due to their affordability. The vast array of apps and services on mobiles is surely the driving force. This aspect is being taken seriously by e-commerce sites with launching apps for online shopping, trading and classifieds. What’s more is the number of special offers and discounts offered by Makemytrip, Flipkart, SnapDeal, Amazon exclusive for customers who use their mobile app. Even on standard product offers, there are additional benefits like next day delivery, zero freight charges and additional discounts over and above the standard pricing. The move is definitely aimed at a greater shift to mobile apps which the sites are seeking.

But another angle of the mobile- e-commerce relation is how the e-retail portals are making full use of the internet capabilities to mutually boost their business. With no requirement for a physical presence, mobile companies are now forming exclusive alliances with e-retail companies and creating a shop-in-shop environment in the virtual space.

The first move was when Flipkart and Motorola launched the Moto-G series exclusively through the portal and with no shop retails. Next, Flipkart associated with Xiaomi in the same way and the lot on sale was pre-booked in 5 minutes. Flipkart now has an exclusive push for budget smart phones; a move I believe is to convert the remaining part of the smart phone transition. Today SnapDeal is going in for a similar arrangement with i-Ball for its phones. In fact, they taking things a step further through an exclusive partnership with Tata Value Homes in selling real estate.

In togetherness, this is how the cycle has broken- Thanks to mobile enabled internet physical presence and distance is no longer a hindrance to access the best products and services from any part of India. Goods can now travel rapidly and to your door step due to better connectivity. And the very phones to enable the access are available through the internet at an affordable price. The biggest beneficiary- the end consumer; the result- mass consumerism across India. 

Wednesday, August 20, 2014

Frontline Pakistan

A book by the same name written by Zahid Hussain in 2007 is very close to my heart- it was and remains to date my only published book review for a Pune based newspaper, Maharashtra Herald. A published book review from a person who took pride in accepting his lack of reading interest; it was a pure coincidence. While developing a taste towards reading as a student of media, my liking for politics and history gave me an uncanny urge to read up on war and military operations.

As luck would have it, in December 2007, Pakistan was due for elections, I was reading the book describing the country as its constant state of political turmoil. With the last few pages left- on 27th December 2007, while me and my journalist roommate- Subhajit Sengupta were discussing of what may lie ahead for our neighbours; we got to know that a new twist had come in with Benazir Bhutto assassinated. All it took was for him to push me into writing about the book and getting the daily to publish.

So why am I dwelling on to my personal past today. Honestly, it has been seven years since the day I wrote about a book which described a country with a nuclear arsenal but grappling with political instability almost since its independence. Till 2007, Pakistan had seen more military rulers; each who had annexed power from democratic governments. The person in power then was Gen. Parvez Musharaf, who had forced the prime minister, Nawaz Sherif into exile through a coup. While Musharaf was himself dodging attempts on his life from fundamentalist, 2007 was marked as a year for the state of emergency to end and a return to democracy. But the Bhutto assassination pushed the elections ahead for a few months.

Since March 2008, when the sympathy wave for Bhutto got Gilani elected to the post of the prime minister, Pakistan has had three more prime ministers including Nawaz Sharif while the post of the president since then has been resigned to a ceremonial stature. Overall, there are just too few leaders who have completed a full term in office as an elected non-military representative. More so, almost every government has faced charges of corruption, political misconduct or suspected anti-nationalist sentiment which has over thrown the country.

Today we sit and read of cricketer turned politician Imran Khan and a cleric Dr Tahirul Qadri taking on the current government for possible election malpractices and rigging that took place to get to power. I’m sure political analysts and observers were sitting across the globe were sweating anxiously last night when a protest march of 30,000, with a strong presence of women and children entered the Red Zone in Islamabad demanding Nawaz Sharif to resign. While the leaders of the protest are looking to dwarf Tahrir Square while asking the protesters to be peaceful, it will be interesting to see how things develop.

It seems today evening is a deadline and with 700 armed soldiers guarding the parliament; the protestors plan to take the entire set of ministers hostage within the premises. This situation; as many times in the past, seems to be at a flash point. The tug-of-war between military rule dictatorship and democracy is far from over and the tussle between the political parties and fundamentalists becomes another reason for the military to stage an uprising and seize power. All isn’t quiet on the frontlines within… the Frontline Pakistan.

Monday, August 18, 2014

It’s not just a rum thing

I don’t know who or why or which country actually made 16th August as a National Rum Day. Honestly, I don’t think anyone cares as it is just another reason to gulp down some rum and live life in high spirits. But what I have discovered over the years is that rum is a drink which is popular amongst people of all ages and has a lot of emotional attachment to it.

Man-to-Man, there are very limited options for people to have a good time- no I’m dead serious on this fact. Ever hear that two friends (guys to be precise) met and spoke over a cup at the coffee shop. I don’t even wish to talk of what it can reflect on the two men; but that is the reason we have beer. It’s the kind of brew for bonding guys after a day at work, or just a quiet and peaceful chat. A glass of whiskey is something meant for people when they celebrate achievement. It is difficult to gauge if it’s the advertising that suggests this association or advertising here was inspired by human behaviour. Somehow rum is attached to a feeling of camaraderie between people. Pirates, fox-hole buddies in the army or just college buddies: each one has a certain level of attachment towards rum.

Another fact is the fewer brands of rum; which in my opinion is the degree of brand loyalty amongst rum drinkers. The choice for beer in India is pretty wide; ranging from mild to strong, lager to ale or stout. Same with whiskey: fancy names ranging from Officer’s Choice to Blender’s Pride, professions as wide as a Bagpiper to Teachers and all kind of coloured labels. Not to forget, the Johnny Walkers, Jim Beams, Peter Scot, Glen Fiddich etc. Rum somehow is a very sharp category- global biggies like Bacardi, Malibu, Captain Morgan against local biggies like Old Monk or McDowells… a few more local names and that’s all where the list will end. Bottom line, it is actually easy to pick a brand of rum which might go well with everyone.

Another big advantage- Old Monk. If the brand has survived for 60 years with no advertising and still finds avid lovers across all legal drinking age groups; it deserves an applause. In India, if someone has had a swig of rum in his life; a good chance is that it was Old Monk. Though McDowells recently became the largest selling brand in India, Old Monk has the charm which connects across. In fact I’m yet to meet someone who rates McDowells above Old Monk. Apart from being cheap, Old Monk has the rare distinction to be carried around in a bottle of cola and maintain its taste. It’s a groupie thing: there’s cola and there’s ‘The’ cola which is passed around in a group.

One thing I have observed amongst rum drinkers is that there is no barrier to move across segments and one can drink any brand on a night without being judged. A person who has reached a Blue Label of Johnny Walker will never have a Black Dog out of choice. It is surprisingly easy to have an Old Monk even if your choice might have been a Bacardi on any other day… needless to say, this gesture is likely to be accompanied with an anecdote sounding like, ‘I was in college/ travelling to/ sitting at… and had a quart of Old Monk in my bag and…’- Its true… rum brings out the buddy from a daddy.

Rum actually falls under a category of Indian made foreign liquor as it does not qualify as fenny or taadi which are traditionally Indian. This is actually surprising as molasses from sugarcane is as native to India as it is to the Caribbean or Cuba which give us Bacardi or Malibu. But one thing is for sure, it definitely has a sweet ‘n warm feeling when rushing down the throat. So much for calling it the best medicine against cold (both: the temperature and the condition)

No matter if it reminds one of the days on Siachen or an engineering college down south; invokes pirate songs singing session or just made a cola taste better; rum is more than just alcohol. It brings people together, creates memorable moments and spreads that feeling of happiness. Drink and forget; it not just a rum thing!

Saturday, August 16, 2014

Independence and Social Media

So for the 68th time in the Indian history, the prime minister gave his customary address from the Red Fort in Delhi on occasion of the Independence Day. While most of it was like a ritual, what was a noticeable though was Modi bringing up aspects of social development through the most basic civil conduct. Actually, it was quite strange when he made it a point that we still lack basic civic sense when it comes to cleanliness and sanitation- the basic elements that build up a society. What can be disturbing though is the fact that we are at this stage when India is somewhere in between when it comes to being a developing and developed nation on this planet.

If looked upon in all of truth and honesty; the social structure we exist in today is one of vast ironies. Social structures move from an individual to a family to a community and finally a nation and aspects of cleanliness and sanitation actually exist at the initial steps of self and family. It is an individual who litters or ignores his garbage disposal; or an individual or family that first thinks about sanitation in and around the house. In most cases this is an issue which has not been addressed so far as we see filth and garbage all across- not to mention use of open spaces to defecate. I believe it was

What was surprising though was response of people on social media where Modi was applauded for not sheltering behind the bullet proof enclosure; but also getting critical of his lack of mention for women’s safety and gender rights or inflation while on the dais. But even if the move to curb down the freedom to litter and pee anywhere is like a rhetoric on moral responsibility of every citizen; Modi would not be averse to some comments on social media… in a big way; it is one reason the wave spread so rapid and won him the top post.

I’m sometimes amazed at what social media can throw up as a response to every move that happens across the world. It might be also one social aspect of today that India is not lagging behind in- Social Media. It is kind of funny how the fundamental rights of expression has found a way to open up by means of social media. Yes, however fundamental it might have been as a right, media has always been sceptic to carry anything that can be drawing them into any kind of controversy of draw a backlash from the people or the government. Believe it or not, social media has been a revelation or sorts.

May be not so refined and rapid as today, but pen friend networks, chain mails, topical chat rooms and SMS forwards were the first forms of social networks I have known. Then came Gtalk status messages before twitter and Facebook took over. Honestly all these are inexpensive modes as getting someone outing together words never needs big budgets. But an astonishing fact has been the rise and rise of YouTube communities which put up videos especially created for mass consumption on social media.

Today, YouTube is flooded with videos specially designed and produced for internet sharing and the number of such channels is on a high. Initially, there was The Viral Fever (TVF) and All India Bakchod (AIB) which I had subscribed. But soon there have been lots more like East India Comedy (EIC) and Being Indian which have all come up. What is significant is that initially, they were all platforms to mock people and politicians. The biggest advantage, there is little or no moderation on the content. So if you wish to pay your regards to mothers and sisters or explore the universe on the other end of Uranus, you can do so without bothering too much on how it portrays you.

But I would like to believe that within a short span, these channels have also realised that mocking alone is not likely to retain their audiences. So while they still maintain a quirky outlook towards what people and politicians do, they have also built a new perspective to voice the public opinion. In recent times, these channels have voiced the general opinion on the social outlook towards women, their safety, what people feel about censorship or just mock sex education in schools.

The fact that they find sponsors in e-retailers like SnapDeal also speaks that the brand really is not worried about any kind of backlash it can have based on the opinions expressed in the content or mocking of the country’s leadership. In fact, given that the audience is mostly the young and the impulse driven shoppers; it is smart business sense.

I would say this is a new level of Independence which has found its voice through Social media. It doesn’t matter if a certain channel or newspaper will hear your voice; you can do it yourself. If you talk for the moment- it is looking highly impactful. But as always; how it will remain so and how less it has adverse effects will only be decided by time and self-regulations people demonstrate in its use during the course. 

Sunday, August 10, 2014

Mobi-Wars: The attack of the clones

The cycle of who gains supremacy in the mobile phone handset market has taken a fantastic turn and this time Samsung; the world leader in terms of market share, is on the receiving end this time. On terms of sheer numbers, China and India are the largest markets for mobile handsets and local companies from both countries: Xiaomi and Micromax, have taken control as market leaders respectively. While both markets are fast upgrading to smart phones, the erstwhile leaders: Samsung and Apple are headed towards choppy waters.

Xiaomi; the new king of the market in China is just 4 years old and direct entrant with Android based smart phones. Its MIUI firmware was dubbed to be an aping of Samsung and Apple, but its flagship Mi series has definitely caught the frenzy of people. With over 10Mn Mi-2 models sold in 11 months leading up to September ’13, Xiaomi has captured the Chinese and East Asian markets in a serious and rapid. The company is unknown in Europe or the Americas- but its sales from Chinese mainland and parts of East Asia are good enough to make it the 5th largest smart phone vendor in the world.

Xiaomi is a case study in itself of how a goal oriented approach of a company which began with no manufacturing or sourcing avenues has risen to take up a gigantic shape. To gauge why this is something worth knowing, just put in perspective the following; Made in China: Cheap and unreliable. Though 90% of electronics vendors are from China but have contracts with bigger players who invest in their facilities and so the manufacturing is closed door and customised to their needs. As many as 85% vendors rejected the offer to associate with Xiaomi. So how do you win against such odds?

Founder Lei Jun, who was an already established entrepreneur and billionaire from his previous ventures in the 1990’s, hired a set of executives from Google, Motorola and Microsoft. Their efforts in developing the MIUI Android platform ensured newer capabilities every week. A strong feedback loop from beta users and other customers helped them evolve faster and at lower cost. A tie up for touchscreens with Sharp Japan in 2011 was a boost at a time when business with post Fukushima Japan was at its lowest. The faith by Qualcomm in the MIUI platform and the assembler of Apple; Foxconn agreed to set up assembly for Xiaomi.

Someone might argue that you can capture a market if you have a product at an affordable price; in Xiaomi’s case- roughly half of what an Apple or Samsung sells. But unless there is a decent level of quality offered, no one can succeed in a mature market where consumers are informed. From the launch of its first phone in August 2011, Xiaomi surged past Apple by end of 2013 and had Samsung under its heel by August 2014- yes, just 3 years.

The story in neighbouring India with Micromax is equally enthralling though. It started off as a software company in 2000 and got into mobile phones only by 2010, much the same as Xiaomi. While the urban Indian was spoilt for choice with Samsung, Nokia, LG and Blackberry, Micromax went after the bottom of the pyramid. Its co-founder, Rahul Sharma was inspired to counteract the power outages in rural India. Micromax X1 was the first phone launched with a battery capacity of 30 days.

This was a time when some 26 mobile phone brands came into India in a span of 12 months with a similar model of manufacturing hubs in China and aim to capture the low spending-high volume end of Indian market. But Micromax made a distinction for itself by offering Indians not a low end Nokia or Samsung look alike sporting a T9 keypad but the experience of a QWERTY and dual SIM options. While rural was a focus, Bling- a swivel QWERTY phone with Swarovski crystals and a mirror became an instant hit with urban women. Bling was one of Micromax's highest selling models. It was also high on experimenting with the Android platform and came up with the Canvas phablet range in 2011.

Micromax did everything right when it came to marketing itself and can be a great example of the bottom-to-top approach. Hiring Akshay Kumar as its brand ambassador, sponsoring cricket tournaments etc. built awareness for the brand across consumer bands, while a slow and steady build-up of ground network of retailers and service centres built market visibility. The carrot they offered; better margins than anyone else. If the Apple and Samsung’s of the world were out of the pocket range and the Nokia and Blackberry empires was crumbling under the Android wave, Micromax was one of the better known so called low end look- alike and do-alike in the market which enjoyed the retailer push and cost a third of a Samsung of the same specifications.  

When Canvas was launched, the advertising was one with an international look which was boasted then by Samsung and LG. This was a stage when the brand built an image suggesting that it could offer the functionality of a bigger brand at a smaller price tag. But the use of international star like Huge Jackman in its ads gave a sign that Micromax meant business and washed away its me-too perception in the market. With the launch of their assembly unit at Uttarakhand in 2013, the ‘Made in China’ tag is also soon to be cleared off its phones.

The two Asian giants are likely to encounter each other head on very soon. Micromax has gone global with Russia and SAARC, while Xiaomi after East Asia has entered India. Xiaomi’s launch on Flipkart saw its sticks wiped off the shelf in under a minute- which kind of talks of its level of awareness in India already. But one thing is for sure; even if Samsung might refute the survey figures and claims to have not lost its market share, the brands once termed the clones have attacked and the ground is set for them to assume clear leadership soon. 

Tuesday, August 5, 2014

G-means- the true taste of India

India is a big country- both by size and by population. Another fact is the vast diversity in terms of people and cultures that are found in India. Every region has their own food and ways and means to cook the same; resulting in a very typical taste. This would just elaborate how difficult it is to have anything single food product that can appeal to the entire Indian palette. Something which can be found in every nook and corner of the country, affordable to every Indian, nutritious and can be rated as the safest food possible.

Humko pata hai G; Sabko pata hai G- it is the modest pack of Parle-G biscuits

In case not known that Parle-G is the single largest selling biscuit in the world by volume. In 2013, Parle-G became India's first domestic FMCG brand to cross the INR 5,000 crore in retail sales. While India is the biggest market for biscuits in the world with 22% of the consumption pie; the United States comes a distant second at 13% with Mexico and China followed.  To put things in perspective, as per 2011 figures, the volume sales of for Parle-G outruns the total biscuit consumption volumes for China. How about that?

Biscuits are not a part of the traditional Indian food plate and have predominantly entered the Indian household by virtue of the British. Though we can say that some savouries like nankhatai or maska khari came into India by virtue of Mughal- Persian influence, tea time snack as a concept is so very English. Today, the cup may be having tea or coffee, but I doubt if anyone in India has yet enjoyed dipping in a Parle-G in it. The familiar package with yellow lines on white, the Parle G girl and Parle written in the red pentagon is possibly the first brand every child in India might recognise. 

It is impressive to know that Parle-G has been in production since 1939 from a factory at Vile Parle in Mumbai and not much seems to have changed since. The biscuit still rolls out from the same facility (along with a dozen more across the country) and almost entire area around the Parle East-West flyover and passing trains on the Western Railway are treated to its sweet aroma.

From the time I have known the biscuit, the only change I have seen is that the pack used to be of wax paper which has now changed to a plastic wrap. But as far as packaging is concerned, I have seen them being served from biscuit tins in my school, my PG roommate having a 800gms pack in the pantry, a `15 pack which is most popular with trekkers and small packs of `5 which is available in most retail and corporate canteen as a snack with tea. In fact, I have even seen a `1 pack with just 4 biscuits which a roadside tea stall offered.

I saw a small interview of Ajay Chauhan, the Executive Director of Parle Products Ltd on a BBC show called Made in India, and some of the things he mentioned about Parle-G which are so very true. This was not their first product and started almost 10 years after the company started. It was simple and packed with energy; the reason why during the WW II, all the Parle-G stock was diverted away from the domestic market to feed the Allied forces fighting across the globe.

Today, it is a mass product which finds it rightful place in the urban as well as rural markets; thanks to its affordable price. This is a conscious decision to ensure the value-for-money proposition never fails. By virtue of more plants to reduce transport costs, operational efficiency and waste reduction, the company ensured the price was constant for almost 10 years. So etched is the brand in the minds of people that it is not unusual that after anyone donates blood; he is first greeted with a beverage and a few Parle-G biscuits as an SOS nutrition replenishment.

Today, the market has many glucose biscuits like Priya Gold, Britannia Tiger, ITC etc. but none have managed to reach the iconic status of Parle-G. In my living memory, the competition has used celebrity endorsements ranging from actors to cricketers to push their sales; but have seen only four sparingly used, campaigns from Parle-G. While one featured Parle-G as the choice of the biscuit for the young and the old, one featured Mukesh Khanna aka Shaktiman. A feature led ad was when the wax packaging changed to plastic wraps which kept moisture away. The last seen was the ‘G- means Genius’ campaign. Even without heavy advertising, 400 Mn Parle-G biscuits are made every day and sold across 6 Mn outlets in various packaging.

While Parle-G is an endearing sight for Indian expat population each time they visit an Indian store in their vicinity, it has appealed even to non-Indians. I had a reference shared of a Japanese businessman carrying a whole bag of Parle-G back home just because it was one of the memories he had working on-site at a project while in India. In the US, a 418 gms pack is sold at 99 cents while a 80 gms snack pack for as low as 15 cents.

Parle-G is truly an iconic brand from India, which has won numerous awards globally for its quality and taste. In my opinion, biscuits many not be of Indian origins; but Parle-G rightfully is the ‘taste of India’ unlike any other. 

Sunday, August 3, 2014

Kingfisher- the flightless airline

It has been an interesting few days considering the week before saw some 3 commercial airliners and a military chopper fall out of the sky for various reasons. Today the newspapers had two headlines featuring two Indian airline companies for two different reasons- Spice Jet asked to reimburse passengers on a flight delayed for over 5 hours due to technical issues and the other being a bank statement on the loan defaults of Kingfisher Airlines.

Considering the number of discount fares for far off future being offered each month, I have my suspicions on the available operating cash reserves with Spice Jet. Sadly, Kingfisher Airlines is a living case study of what can eventually happen to an airline in a high debt ridden civil aviation sector in India. Each time I fly, I see Kingfisher planes, baggage trollies, ladders, etc. parked away in remote corners of almost all major airports. The check-in counters which once boasted of a staff worthy of being ramp models are empty and as we all know; they either migrated to the hospitality industry or are rendered jobless.

An airline which was once the Captain Pompous in the Indian skies has definitely left a bad taste for employees, investors, vendors and suppliers and the travellers alike. It has indirectly affected the overall business environment as the name or the brand of any company no longer has the capacity to command over vendors. Human resource policies where employees were not paid for months together but also not allowed to change over to other jobs without forfeiting their part claims have set a very bad example. As for the airline industry, it has set a benchmark of what can happen if profitability through operations get ignored.

Kingfisher Airlines and its acquisition Air Deccan both had been ground breaking concepts in Indian aviation. Jet Airways had established a leadership position against Indian Airlines and Sahara- the three emerging as the survivors of the first batch of open skies after ModiLuft, East West Airlines, Damania shut shop. Air Deccan was the first low cost airline in India and it can be said that the skies have been never the same again. While Deccan enabled the common man to fly, Kingfisher changed the flying experience with a young and vibrant appeal and also introduced the economy passenger to services like in-flight entertainment (IFE); a service rendered only to first class passengers so far.

Deccan and Kingfisher were riding on what Southwest and Virgin Atlantic had successfully shown the world. Both these airlines had an impact on the aviation industry to a fair extent. It was evident from the fact that Jet and Indian Airlines also offered IFE and on board catering got revamped. Kingfisher also prompted some rather rash moves like Paramount Air which had a 100% first class concept. Deccan on the other hand set off a string of low cost airlines like Indigo, Spice Jet and Go Air.

This triggered a price war in an industry which was already grappling with high airport tariffs and fuel bills. In 2007, while Jet and Indian were surviving with profitability on international routes, Sahara was plagued with low occupancy and went up for sale. Deccan was also grappling with a high debt crisis and sustainability became difficult. This was possibly the place where Kingfisher pushed things a little beyond its grasp. While Jet was all set to take over Sahara, Kingfisher attempted to challenge its rival by staking claim for Deccan. The move was motivated for the international flying license granted only after 5 years in service; which Kingfisher would get 3 years in advance by virtue of the merger. Sadly, what it brought along was a lot of debt as well.

I guess it was ambition driven rash decisions which led to the downfall of Kingfisher. IFE on planes is heavy on its set up cost and has an even higher running cost. Suppose a flight has 3 channels and every seat pays Rs 150 as royalty to the content owners, a plane with 180 seats will be paying about Rs. 27000 per flight for just IFE. And let me tell you, this is a very conservative estimate. Not to forget, with IFE came the IFE equipment which adds in weight, plus cost for head phones and maintenance. What all can you push back to the customer when the market is bleeding in a price war?

Kingfisher believed that going international was the way to get into profits. The biggest reason to believe was Jet Airways could garner profits in a cut-throat scenario. Sadly, it was operational efficiency that works in the aviation sector. Both Deccan and Kingfisher were failing to achieve it. Kingfisher was notorious for attracting pilots with lucrative salaries and high incentives, lavishness across the board and thanks to the owner- sponsorship on Formula 1 cars. Sadly, all this was adding to the debt and not so much to the revenues. Then it was the ego and arrogance of Mallya- where he pledged his personal assets and his flagship UB Spirits to keep the airline afloat. His political weight also ensured that the airline; though bankrupt, was not grounded.

The license for Kingfisher was finally revoked in 2012, but the airline still is a willful defaulter on the list of its lending banks. The highly paid staff is yet to be paid their dues and has been practically rendered jobless. Those who had invested in assets against a high income at one point are fighting for survival. And as for Kingfisher, apart from loss of credibility, the group also came on the brink of losing its majority stake in its flagship companies. 

Every industry has their skeletons and ghosts which haunt their working for months and years after they happened. Kingfisher is going to be one such ghost for the aviation sector; and when I come across a discount ticket sale for tickets as much as 6 months in future, it triggers a thought on the cash-flow situation for the airlines. It is also going to be a standing example for every vendor and also employees as a brand where by virtue of its clout defaulted on payments and set arm twisting business terms.