'King of Good Times' trying to keep his crown

Several summers ago, the Indian tycoon Vijay Mallya threw a party for 100 or so people at his cliff-top home in Goa. Golf buggies were used to transport guests who arrived at the gates of his Aguada property to the lawns where a barbecue of the freshest seafood awaited them. Mr Mallya, dressed in a trademark colourful shirt, was a generous and gracious host, chatting with everyone and mingling at his private bar. The beer he served was chilled Kingfisher.

In New Zealand, Kingfisher is brewed under licence by Papakura-based Independent Liquor, which is pushing to sell the Indian beer brand on tap.

For many years, Mr Mallya, the man who models himself as the King of Good Times, has been inseparable from his Kingfisher brand; be it his ubiquitous beer, his Formula 1 racing cars or his airline. It is said he personally interviewed the young women who would serve as stewardesses. And for most of that time, the strategy and flamboyance have served him well.

Now, however, the 55-year-old finds himself in front of the media for different reasons: trying to explain why his airline is not enjoying good times. It has been forced to restructure debt and look for an injection of capital after it posted quarterly losses of 4.7 billion rupees ($1.1 billion).

He has been forced to address the situation not simply of the bad figures, but of his decision to cancel dozens of flights as part of a restructuring that will see his budget airline business, Kingfisher Red, scrapped for a refocus on the more profitable, full-fare market. This will require a reconfiguration of many of his planes.

The low-cost end of the industry, he said, was likely to turn into a "bloodbath".

In explanation, Mr Mallya and Ravi Nedungadi, the chief financial officer of United Breweries Group, the parent company, blamed soaring jet fuel prices and high taxes levied by state governments. Another factor, Mr Mallya said, was the weakness of the rupee.

They outlined a plan to raise about 10 billion rupees in new loans for Kingfisher, including 1.5 billion rupees for overhauling aircraft. He said he had even considered importing jet fuel to avoid high taxes.

"The state governments are enjoying windfall profits directly at the cost of the aviation industry," he said. Yet he also scolded reporters, saying: "To write the epitaph of Kingfisher Airlines constantly is not fair".

It is unlikely that Mr Mallya is going to be forced to sell off his Goan home or his £63 million ($127 million) yacht, the Indian Empress, which he sails in the Arabian Sea.

Likewise, there is no sign that Mr Mallya intends to offload his cricket team, the Royal Challengers of Bangalore, which perform in the hugely successful Indian Premier League, and which the tycoon bought in 2008 for £70 million.

His main cash cow, the distillery and brewery business UB Group, which includes his purchase of Whyte & Mackay, continues to be very healthy. Recently the spirits arm of the company claimed a 46 per cent rise in profits for the six months to the end of September.

But Mr Mallya's Kingfisher troubles, and his apparent frustration with the media, whom he keeps accusing of misreporting events, certainly appear to highlight the challenge of the airline industry in India and the danger confronted by those who seek to expand quickly.

One business analyst, who asked not be named, said Mr Mallya had been hit by the high fixed-costs faced by all airlines, in particular that of jet fuel.

"Whether you are flying richer, business travellers or poorer farmers, these fixed costs are the same," he said.

The analyst said Mr Mallya had made the 2008 purchase of Air Deccan, which became Kingfisher Red, at the top of the market.

Since then, the environment had been tough for all operators, particularly those who were seeking to expand.

Kingfisher started flying to London three years ago and secured the number two position in the Indian airline business.

"Business opportunities are big and operators feel the need to expand quickly to get a large slice, rather than focusing on a narrow share," he said.

Mr Mallya appears upbeat. One report suggested he was close to sealing two deals worth a total of £235 million; one with a private Indian investor and the second with a consortium of 14 banks, led by the State Bank of India. On Twitter, Mr Mallya subsequently said the report was "factually wrong" though he did not provide further details.

Over the weekend, Mr Mallya declined several requests for an interview and a spokesman for Kingfisher failed to answer questions about the airline's future. The spokesman said Mr Mallya had a busy schedule but the truth may have been a little more nuanced.

Over the weekend, he took again to Twitter to announce: "Enjoying a chilled Kingfisher in a Goan shack. Overwhelmed with affection [and] good wishes from so many people despite murderous media reports.

- INDEPENDENT