Mallya has done a good thing by having one brand: Gopinath

Captain Gopinath, the pioneer of low-cost aviation model in India, is known to be a straight talker. He is always to the point. And, he was in full swing when he spoke exclusively to Business Standard about Vijay Mallya’s recent decision to ground the low-cost service offering of Kingfisher Airlines.

Mallya, chairman and managing director, Kingfisher Airlines, entered the low-cost aviation business when he acquired Capt Gopinath’s Air Deccan during 2007 in a $300-million deal. Following this, Mallya merged the two airlines and then rebranded Air Deccan as Kingfisher Red to offer low-cost service in addition to the full service offering.

“It is probably a good decision by Mallya to have one brand now. But I would have probably said that he should have made all the domestic service as low-cost offering and all international as full service,” said Gopinath, late on Saturday evening at his sprawling bungalow, just yards away from Mallya’s home in Bangalore.

According to Gopinath, having almost a similar looking brand and then when the offerings are just a little bit different there are bound to have been problems. “And that is what happened. You just cannibilise your existing customer base. When companies were merged and almost a single branding came in to existence, it was sort of a double whammy for Kingfisher. First, the economy passengers of Kingfisher started to look at Kingfisher Red as the offerings were almost same while the price was cost effective. And when Mallya decided to raise the fares of Kingfisher Red, customers switched over to other LCCs such as Indigo or Spicejet,” Gopinath said.

Mallya, according to Gopinath, took one more wrong decision. “He felt that Air Deccan was a step child. I told him that they are his two children and should be treated equally. Post the merger, whenever there was a Air Deccan and Kingfisher flight at almost the same time slots, a decision was taken to do away with the Air Deccan flight in a hope that the passengers will graduate to Kingfisher full service. But just the opposite happened. They went to other LCCs,” Gopinath said.

According to him low-cost service is not just making away with on-board meal. “It is a lot to do with innovation and how you position the brand. We brought in a whole on innovations to the market place, leveraged technology effectively and make flying accessible. Indigo, a full-blooded LCC airline is doing just fine and we need more such to stimulate demand in the economy,” Gopinath stressed.

But why couldn’t he (Gopinath) have stayed on at the helm of the Air Deccan after being acquired by Kingfisher and operated the low-cost airline? “That was the agreement…to have two separate companies …two different management and two distinct entities. But somewhere down the line, Mallya felt that integrating will have benefits and he went ahead with it. I was disappointed and I expressed it. But eventually, I gave way. Else it would have let to conflicts, which was not desirable,” Gopinath added.

According to Gopinath, when hardly four per cent of India’s population fly on an annual basis and almost 18 million passengers go by train every day, there should be a catalyst such as a low-cost aviation model to stimulate demand. “I am not saying that one is good and other is bad. We need both in a economy. Air Deccan had a simple mission. Make more people fly. Target the train traveler and elevate him to fly, which we did. Post that, as and when a person grows socially, he can certainly graduate to full service. Mallya should have sticked to that rationale,” Gopinath noted.