Business - Simply absurd to simply red

can’t help but feel a tinge of sadness for Air Deccan, as we knew it since 2004. As I woke up one morning to see full page advertisements in the dailies announcing the extinction of the yellow and blue common man’s airline and the birth of Kingfisher Red, it was hard not to feel slight regret at what might have been and will now never be.

Air Deccan was launched with the intention of making every Indian fly. Captain Gopinath, whose baby it was, almost ran his airline aground to prove that he truly meant this. The airline bled with absurdly-low fares (one of my favourite ad-lines from the Deccan campaign was “every time we fly, the economy looks up”). Impractical routes, poor management and extraneous circumstances brought the airline to a stage where no one in his right mind was willing to lend any money to Deccan. Passengers complained about the service but flights went full because no one else offered such a deal.
Yet, despite its shoddy service and poor image, I found the airline and what it stood for had seeped into people’s psyche. A number of Indians identified with the airline as “their own”and were willing to forgive and tolerate.
However, market dynamics are not controlled by emotions and in due course Air Deccan gave way to SimpliFly Deccan. (When I told Captain Gopinath that the name was “Simply Absurd” and a mouthful — one that their own announcers at airports don’t bother to elucidate, sticking to the more easy-on-the-tongue Deccan — he defended the change.) SimpliFly Deccan lost some its regular-though-troubled fliers and many employees who no longer felt strongly associated with it (employee morale and identification with Air Deccan was among the highest I have seen).
A day before the announcement of the merger (December 2007), at his house on Vittal Mallya road, I remember Captain Gopinath telling me about how they (he and Mallya) had a shareholders’ agreement in which he was the chairman of the company and Mallya was the vice-chairman and the company was run by professionals at the behest of the board. He said he and Mallya could appoint six directors each and the board would be neutral. He said they were proceeding on trust and that whatever would happen had happened and would continue to happen with his consent. Things however took quite a different turn the very next day.
But if one was to look at what happened objectively, things perhaps turned out for the best. Hard-nosed passengers, for one, gained. With the services of SimplyFly Deccan showing a marked improvement (a fall in cancellations and a better on- time performance), passengers found they got a better deal. Fares may have moved up but that’s true across the board. For whatever the passenger pays, there’s no denying that he gets a better value for money with SimpliFly Deccan than he did with Air Deccan. In fact, many fliers may well prefer the new flashier, more arrogant and more “with it” image that Kingfisher Red promises to deliver because flying is not only about reaching destinations but also about making a statement.
He may have lost his carrier but Captain Gopinath is better off. Even if he had not sold his airline when he did, how would he have managed the latest oil carnage when bankers turned reluctant to lend to the best of the carriers? If he got a decent price then, he may not have got even half of that today. Industry analysts argue that a sale to Anil Ambani may have been better as Vijay Mallya is not known for his ability to create shareholder value but this is merely an academic point today. Shareholders undoubtedly now have more to look forward than they did last year when Deccan was usually in the news for all the wrong reasons.
With oil reaching record highs and competition intensifying, Gopinath’s chances of keeping his carrier afloat would have been more than slim. Employee’s jobs and salaries would have been at stake. Even if the 3100-odd employees feel rudderless today, without the sale, they would have been rudderless and riddled by uncertainty of whether or where their next pay cheque would be coming from. So, employees — if less happy — are probably better off than before.
I still remember the day last December when, outside the Air Deccan head office on the busy Cunningham road in Bangalore, the back-lit common man’s poster that once symbolised the airline was taken down.
That in a nutshell, literally and figuratively, brings us to the end of this story, shareholder agreements notwithstanding.