So in other words Mallya overexpanded and got caught short. At no point did his airline return a profit yet he still bought and leased a massive fleet as well as acquiring another airline. He refused to sell a majority stake in his spirits company until it was too late so he got less than he could have and also had to have a clause allowing diageo to buy the remaining stake if need be. He could have cut routes but didn't so his airline ended up cancelling sporadic flights which is the best way possible to eliminate customer confidence.
His brewery business did do very well but then as one of India's largest alcohol companies in a market that is highly protectionist and rapidly expanding that isn't surprising.
BTW I disagree that airlines in india face stiff competition from railways. Due to the sheer distances involved in crossing the country and the lack of a high speed rail network airline travel is the only serious option for commercial travellers. Internal tourism might be another matter though.
On the other hand I think he's done a good job with FI where though I don't like some of his methods I can't deny he has turned the team around. However I don't have the same faith in Sahara, if they take over the team it'll go backwards rapidly.
Mallya bought Deccan when he realised the airline would not be able to fly abroad or rather he would not be able to get the government to go his way. it happened early on in their operation and its important to remember the business was not bad then, another buyout had happened between two other airlines, the $ was not as strong as it is now and oil was much more stable. Not that it means he didnt screw up which he did.
he carried on because the money was debt, he didnt care essentially, he tried to keep going till a solution turned up but it just ballooned the debt.
as for trains, a great many travellers choose train because of affordability and connectivity. also, they employ 1.4million people and had a revenue of $19Billion. So its a huge business and tourism is a very small part of the enterprise..
another thing to factor in is the heavy taxes added on ticket prices and also the cost of turbine fuel which is taxed upto 40%.. the govt definitely does not make it easy to run an airline in India.. hell they dont make anything easy.
i hope this is not going too off topic. either way for Mallya, he has an exit out of his mess but it will involve a bruised ego and writing off some of that wealth but not too big a chunk. it will make him a pariah for bankers though.. even though the bankers should have known better.
Sahara are essentially a money operation, they will not i think meddle in the business, they own it with Vijay M and i dont see why they would tinker with whats not broken.. in the short term i dont see any problems with the business, with investments etc.. how the engineering will work, lord only knows.