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The death of Capt Gopinath's dream
Anjuli Bhargava | December 31, 2007
On December 18, 2007, Captain G R Gopinath was executive chairman of Deccan Aviation [Get Quote], the company he created with a lot of chutzpah, a little money and one big dream: to bring air travel within the reach of the Indian middle class.
Giving him company as vice chairman was Vijay Mallya, the investor who bought into Deccan Aviation with a little bit of deception, a lot of money and another big dream: to be the king of the Indian, and one day, global skies.
Just a day later, on December 19, their positions were reversed, as the board of Deccan Aviation decided to merge with Mallya's Kingfisher Airlines. Mallya became the chairman of the merged entity, and Gopinath became its vice-chairman. Clearly, a lot of money had the last laugh, over a lot of chutzpah. And one dream had been crushed under the boot of the other.
That's not the way Gopinath sees things though. "All changes have been with my consent," he maintains. But his close associates say Gopinath has been through the pain of "watching his baby die before his very eyes."
Soon after Kingfisher took a 26 per cent stake in the common man's airline in June this year, things began to take a shape that Gopinath was not too comfortable with.
When, on the verge of bankruptcy, he decided to offer a strategic stake in his airline, Gopinath wanted to ensure three things: one, the survival of the company and protection of jobs of all his staff; two, the low-cost nature of the business in letter and spirit (the brand and Air Deccan's identity); and three, close, if not day-to-day, running of what he had created with passion and tenderness. He was proud of his airline's reach, its brand, its identification with the masses and even its colours.
However, as the months have gone by, it is not clear whether any of Gopinath's primary goals will be achieved. The first to go was the identity of the carrier. As Mallya's team started working with Air Deccan in June this year, Air Deccan changed more than Gopinath could ever have imagined.
The changes took place at two levels: one was the more public, visible face of the airline. The first thing Kingfisher officials sought to change was the very nature and character, which they felt had been tainted by the airline's poor reputation in the past.
Says Rajesh Verma, executive vice-president of Kingfisher Airlines, "We felt there was a need to shake off the perception that Deccan was synonymous with inefficiency. Late, cancelled, unreliable."
A re-branding exercise followed, which altered Deccan's entire look, leaving little difference between Air Deccan and Kingfisher.
The logo was changed -- the hand was replaced by the Kingfisher bird -- as were the colours of uniforms of the crew and airport staff. "The changes were symbolic but also real," says one Deccan employee, who's been with the company from its inception.
Sources say it was Mallya's idea to change the name to "SimpliFly Deccan". Unlike Gopinath who had paid scant attention to marketing, advertising and the brand, Mallya was totally hands-on in this regard.
Operationally too, the airline went through a dramatic makeover. It decided to drop its earlier model of outsourcing staff at airports, including check-in staff -- a cheaper option -- and hire its own employees. Water on flights was introduced as was a tele-check in facility for all passengers.
Congestion surcharge, which Gopinath was reluctant to introduce, was introduced and in full. Promotional fares vanished almost overnight, as did routes that didn't make economic sense. Efforts in the past by former chief operating officer Warwick Brady to bring some rationale into routes had met with Gopinath's stiff resistance.
Now, however, he was either in consent or had little choice. "Internally, yields, revenue and 'guests' were the words that replaced reach, affordability and passengers," says one Deccan official.
As the days went by, it became evident that Gopinath's grip over his company was gradually weakening as he lost all say in the day-to-day running of his carrier. Company insiders say he may have underestimated -- and even underplayed -- the extent of his alienation.
Several decisions were taken without his consent or even his knowledge. The final date of the unveiling of the new-look aircraft (in Mumbai on October 28) was fixed, keeping primarily Civil Aviation Minister Praful Patel's and Mallya's schedules in mind; all others at the function were simply informed of when they would need to be there.
Senior UB officials told Business Standard that quite early in the day, Mallya had decided he wanted Gopinath "out". "What Air Deccan is today is a far cry from what Gopinath created. He may or may not admit it, but Mallya has completely redefined the airline. It is unrecognisable," says a former Deccan employee.
But the merger is what Gopinath fought to avoid ever since he launched the airline. Even before Mallya launched his airline in May 2005, he approached Gopinath arguing that there was no point having two airlines out of Bangalore.
But Gopinath resisted his overtures. "I told Mallya the merger will never work," he said time and again in June, and there is more than one person who verified that he firmly believed it.
Gopinath's view has many takers. And that's where there's uncertainty on the third goal he wanted to achieve -- many feel that with the merger, his airline's very survival is now under a cloud.
The new company, with two brands under a single management, will operate long-haul full-service flights, short-haul low-cost overseas flights, domestic full-service flights, domestic low-cost flights and charter operations within the country -- a "bizarre bouquet" of offerings and a model that has never been tried anywhere in the world, let alone worked. "This is certainly a challenge," said SpiceJet director Ajay Singh a day after the announcement, as he wished Kingfisher Airlines loads of luck with their brave endeavour.
Others feel that culture alone will be the undoing. "There are three reasons why this may fail. Culture, culture and culture. Kingfisher is as premium as it gets. For Deccan to succeed, however, it must be ruthlessly low-cost. It's the schizophrenic nature of the task to be performed that would make me think twice if I was offered this job," said the CEO of a rival low-cost airline, on the condition on anonymity.
His point is that one simply cannot make the low-cost model work unless one is fanatical about cutting costs, which he thinks is not in Mallya's blood. Supporters of Mallya's move, however, argue two points: one, that India is unique and has proved so in the past. So, what doesn't work globally could very well work in India.
Two, he may simply do away with the Deccan positioning and set up "Kingfisherlite", on the same lines as Jet Airways' [Get Quote] treatment of the erstwhile Air Sahara.
That is what Gopinath also firmly believed at least till this June. In retrospect, many in the aviation industry feel that he should have in fact gone after a better deal (which may have been what Anil Ambani was offering), rather than trying to retain some vestige of control.
"The moment he knew he had to get a strategic investor in, the dream was dead. At that stage, Gopinath should have single-mindedly focused on getting the best deal," said an industry source. Others in the industry argue that even if SimpliFly Deccan continues to fly, it will be nowhere near the common man's airline that Gopinath set out to create. Gopinath admits that there has been an "emotional catharsis" both within the company and outside it.
"There is a feeling that Air Deccan is no longer their airline." But that's all he's willing to admit.
At the end of the day, the death of one dream has given rise to another: Mallya's dream of making Kingfisher one of the world's leading airlines. Now, it's to be seen if Mallya has what it takes to convert his dream into reality.