A lot of interesting points rolled out here. I would like to chip in.
First of all Kingfisher definitely started on a roll, a roll based on extravagance inspired by their CEO and the work culture of UB group. Breweries and Airlines don't work the same way. They started too big for their own good. Predatory pricing ensured that none of the premier airlines could sustain their business model including Jet Airways. Even they had to go for a correction, while Kingfisher continued doling out goodies to every passenger to garner a customer base which it couldn't sustain.
Secondly, if you look at the groups history you'll know that corporate governance meant little to it as a brewery group(especially domestic businesses) and they continued the same idea of a closed group approach of being opaque in their policy decisions. Lack of transparency with their own employees especially the ones sitting in the cockpit and doing the flying so to speak led to a negative sentiment within the Kingfisher fold. And I am sure everyone agrees that negative sentiment spreads like wildfire. Through out the aviation industry there was a buzz of eventual failure.
Thirdly, the Air India sort of deals, fleet expansion too big to handle, sectors flown to with predatory pricing too hot to sustain.
Clearly lean business model meant little to the ambassador of good times
Now for solutions.
Externalities cannot be avoided. Negative sentiment and publicity will continue, competitors will ride on this sentiment, the so called favourable policies may not come as quickly as the industry would desire.
My issue is even if favourable policies come in, the current managements functioning would not be able to pull it together. FDI inflow would probably help Jet most, not Kingfisher, so the whole FDI brouhaha is not even applicable to Kingfisher unless they pull up their socks.
So what next ???
Well some ideas would be :
a)leasing out their planes(unused or minimally used planes) to other carriers
b)cancelling all orders of airplanes.
c) Transparency and confidence building measures firstly amongst its own employees and then the customers.
d) Cut costs by not flying to expensive sectors and airports resulting in huge parking costs and low returns.
e) Focus on tier II nd tier III cities where other airlines may n have made considerable inroads and judge the operating costs of the same.