From Kingfisher To Go First: The History Of Airline Failures In India

New airlines faced the same problem of little control over excesses of running a full-service airline in a price sensitive market.

<div class="paragraphs"><p>(Source: Company website)</p></div>
(Source: Company website)

Low-cost carrier Go First's decision to suspend operations and file for bankruptcy has once again brought into focus the risks of running an airline in India.

With several instances of private airlines shutting operations, India's aviation history is dotted with ownership changes, failed mergers, and government interventions, despite it being a huge market with a booming demand for air travel.

From the fall of East-West Airlines and Damania Airways in the 1990s, after the deregulation of the civil aviation sector, to Kingfisher Airlines and Jet Airways folding up operations, even the most influential corporate groups have found it difficult to churn profits in this industry.

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Similarly, Jet Airways, in competition with the recently launched Kingfisher Airlines, got caught up in a takeover bid for Air Sahara. In the following years, Jet Airways' efforts and money spent on reviving Air Sahara were understood to be the reason that it had to sell nearly a quarter of the company's stake to Etihad Airways.

The worsening operating environment, with high crude oil prices and a weakening rupee, proved to be too much for Jet Airways in the following years.

While both Kingfisher Airlines and Jet Airways may have erred by trying to take over a low-cost airline, industry participants saw Jet as more of a serious player with a plan to sustain operations.

With excesses, including unprofitable routes and offering goodies to passengers, Kingfisher Airlines' journey resembled that of its owner Mallya's exuberant and maverick ways.

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A Precarious Start

East-West Airlines and Damania Airways were launched to disrupt the fixed-price Air India-dominated industry. However, both airlines shut down operations just four to five years after their launch.

East-West Airlines completely closed down due to mounting losses and a lack of a clear succession plan after Thakiyudeen Wahid, the owner of the airline, was shot dead.

Damania Airways was sold to Chennai-based NEPC Airlines, which also shut shop months after it bought the former.

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New Millenia, Old Problems

The hope that a new set of airlines launched in the 2000s would manage to turn the industry's fortunes around was also short-lived.

With the industry's history replete with failures, new airlines continued to face the same problems of having little control over the excesses of running a full-service airline in an extremely price-sensitive market.

For instance, Damania Airways was run like a five-star hotel in the sky, luring customers with freebies and serving liquor on domestic flights before it was banned.

Kingfisher Airlines, spearheaded by the flamboyant Vijay Mallya, fell prey to the idea of expanding its network. The near Rs 1,000 crore it poured into the takeover of Air Deccan eventually led the airline to a financial crunch.

Rising Like Phoenix

While several airlines have come to a grinding halt, others have risen from the ashes largely through ownership changes.

SpiceJet, which was itself started by Ajay Singh after acquiring the defunct airline ModiLuft—a partnership between SK Modi and Lufthansa Group—faced an existential threat in 2014 after the debt spiralled out of control.

Singh, who had ceded control of the airline to Tamil Nadu-based billionaire Kalanithi Maran in 2010, made a comeback to rescue the airline and bought the controlling stake.

SpiceJet has since encountered several air pockets but has made a name for itself as a low-cost carrier that just refused to die.

However, the low-cost carrier has not been the only airline to do so.

The most recent example of this is Air India, which was recently bought back by the Tata Group after its nationalisation in 1953.

The Union government's decision to nationalise the airlines and club them under two public sector entities, named Indian Airlines and Air India International, is one of the most criticised decisions in Indian aviation history.

Even when Air India was showing signs of improvement, the government again erroneously decided to merge it with Indian Airlines in 2007, leading to inefficiencies and eventual mounting losses.

After several debacles, the government finally decided that it was imperative to privatise Air India if the airline had to survive.

In 2022, the company's reins were taken over by the Tata Group after it won the bid for the airline. Since then, the management has introduced several measures to execute what experts call the most challenging turnaround in aviation history.