As far as indian airline is concerned, it is a necessary evil. Take it out and majority of the small airports will cease to exist and places which are trying to attract investments, would no longer be able to do that.
Here are the KF assets based on which banks offered loans to KF airlines:
Loans are secured in part by a combination of guarantees by the airline's parent, the UB group, as well as Kingfisher shares, Mallya's personal guarantees, Mumbai real estate assets and the Kingfisher brand itself, bankers said.
This clarifies why Mallya wants a bailout. Mallaya not only has to sell shares but liquidate his assets as well to pay outstanding dues. I think his net worth is about 1 billion and dues 1.3 billion. If government makes him pay then his net worth becomes negative. If government does not make him pay then Kingfisher employees don't get paid. The right and lawful thing to do would be liquidate Mallaya's assets and pay the bills. Indian government requires courage to do this.
Courage is one thing Indian government lacks and that is why this mess keeps going on.
The other day, SP Tulsian from Premium Investments was saying on CNBC-TV18 that the logical thing to do would be for Mallya to sell UB Group and negotiate with banks about swallowing some of the loss and pay off around 5000 crore to them and then start afresh with the 1000 crore or so he would be left with. Mallya can opt for stake sale to save Kingfisher: Tulsian - CNBC-TV18 -
This kind of seems logical, since if he can get rid of the debt, he can sell his airline to another company. No doubt his assets will take a huge hit in the short term, but there is no way they will go into negative and he would be able to make a comeback and considering the fact that he has literally created majority of the wealth he owns, he certainly has the ability to do it all over again.