final kingfisher project

7/31/2019 Final Kingfisher Project

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PROJECT REPORT ON AVAITION INDUSTRY

Submitted By

Aditya v s Mani (11DM183)

Gaurav Mittal (11DM186)

Kaiser Ahmed (11DM187)

Saurabh Kumar (11DM181)

Siddhartha Ranjan (11DM148)

PGDM Section C

Generated by Foxit PDF Creator Foxit Softwarehttp://www.foxitsoftware.com For evaluation only.


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ACKNOWLEDGEMENT

We are grateful to our project guides Prof. Kartik Dave and Prof. Gagan

Katiyar who have guided us in the process of making this project. We thank

them for their valuable advice and help.

We wish to thank everyone that helped us in the making of this project. We

acknowledge the assistance of our friends which further paved the way for

the completion of our project.



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CONTENTS

1. Acknowledgement 2

2. Contents 3

3. Introduction to Aviation Industry 4

4. Kingfisher Airlines: Profiles And Its Growth 13

5. Analysis of Market share 27

6. Surveys 30

7. SWOT Analysis 41

8. Current Crisis and revival 45

9. References 46



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CHAPTER: 1.

INTRODUCTION TO AVIATION INDUSTRY

Aviation is defined as the design, manufacture, use or operation of aircraft -

in which the term aircraft refers to any vehicle capable of flight. Aircrafts can

either be heavier-than-air or lighter-than-air: lighter-than-air craft include

balloons and airships, and heavier-than-air craft including airplanes,

autogiros, gliders, helicopters, and ornithopters (a machine with mechanical

wings which flap to mimic a bird).

The first form of an aircraft was the kite, designed in the 5th century BC.

Later on in the 13th century, Roger Bacon, an English monk, performed

studies which later gave him the idea that air could support a craft just like

water supports boats. In the 16th century, Leonardo da Vinci studied birds'

flight, and later produced the airscrew and the parachute. The airscrew,

leading to the propeller later on, and the parachute were tremendously

important contributions to aviation. He envisioned three different types of heavier-than-air craft: the helicopter, glider, and ornithopters. Although

Leonardo's designs were impractical, seeing they required human muscular

power, which was insufficient to generate flight with the aircraft he

envisioned, he was vital to aviation because he was the first to make

scientific suggestions.

Some of the more credible developments in actual flight and stability

occurred in the 19th century. British Sir George Cayley designed a combined

helicopter and horizontally propelled aircraft, and British Francis Herbert

Wenham used wind tunnels in his studies and predicted the application of

multiple wings placed above each other. Another famous inventor was John



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Stringfellow, who designed a steam-engine powered aircraft which was

launched from a wire. This model demonstrated lift but failed to actually

climb. Lawrence Hargrave, a British-born Australian inventor, created a

rigid-wing aircraft with flapping blades operated by a compressed-air motor;

it flew 312 ft (95m) in 1891. A famous glider developer in the 19th century

was Jean Marie Le Bris, a Frenchman who tested a glider with movable

wings.

From 1903 to today, it's remarkable how far aviation has come. OnDecember 17, 1903, at 10:35 a.m., the Wright brothers (Orville at the

controls) made the first heavier-than-air, machine-powered flight which

lasted 12 seconds and spanned 120 feet. Their first flight was 102 feet short

of the wingspan of the C-5 Galaxy today, yet they did what every man and

woman has dreamed for centuries they flew. Yet, not all flights were

victorious, on September 17, their aircraft crashed, injuring Orville and his

passenger (Lieutenant Thomas E. Selfridge). Selfridge later died of aconcussion and was the first person to be killed in a powered airplane. Yet

the show went on and Wilbur went to France in August 1908; on December

31, 1908, he completed a 2 hour 20 minute flight which demonstrated full

control over his Flyer. The Flyer was purchased on August 2 and became the



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first successful military airplane. It remained in service for around two years

and was retired to the Smithsonian Institution where it rests today.

Well-known in the aviation field by this time, Glenn Hammond Curtiss wonthe first American award, the Scientific American Trophy, for an airplane

flight when he flew the 'June Bug' 5090 ft (1552m) in 1 min 42.5 sec on July

4, 1908. Curtiss also went on to win the first international speed event, at

about 47mph (75.6 km/h), on August 28, 1910. He also became the

first American to develop and fly a seaplane -- the first successful seaplane

flight having been done by Henri Fabre of France on March 28, 1910.

Before World War I, airplane design greatly improved. Pusher biplanes (two-

winged airplanes with the engine and propeller behind the wing) were

succeeded by tractor biplanes (two-winged airplanes with the engine and

propeller in front of the wing). Monoplane designs were rare, and when

World War I began, huge biplane bombers with two to four engines were

developed. Airmail was also started, although it only lasted a week. The first

airmail officially approved by the U.S. Post Office Department began onSeptember 23, 1911, and the pilot (Earle Ovington) would carry the mail on

his legs and tossed the bag overboard when he reached his destination. Also

in 1911, the first transcontinental flight across the U.S. was completed by

Calbraith P. Rodgers. His flight from New York to California took 3 days, 10

hours, and 14 minutes, and was by a Wright aircraft.

During World War II, aircraft became a decisive factor in warfare. The

largest operator of all international airlines in operation at this time was Pan

American Airways. Pan American served 46 countries and colonies linking all

continents and nearly all oceans. Small aircraft production increased

significantly. Before World War II only about 193,000 people were employed

in the aviation industry, and during 1941 the number increased to 450,000;



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also, around 3,375,000 passengers were transported by 18 U.S. airlines at

this time, around 1 million more than in 1940. Airmail and express cargo

would also increase by around 30 percent. But by the end of World War II, a

new frontier of flight would take shape, jet and rocket propelled aircraft.

After World War II and by 1947 all the basic technology needed for aviation

had been developed: jet propulsion, aerodynamics, radar, etc. Civilian

aircraft orders drastically increased from 6,844 in 1941 to 40,000 by the end

of 1945. One of the minor military contractors was the Boeing Company who

later became the largest aircraft manufacturer in the world. With all the new

technologies developed by this time, airliners were larger, faster, and

featured pressurized cabins. New aerodynamic designs, metals, and power

plants would result in high-speed turbojet airplanes. These planes would

later be able to fly supersonically and make transoceanic flights regularly.

One of the more famous record-breaking flights around this time was theVoyager, developed by Burt Rutan. The aircraft held 1,200 gallons (4500

liters) of fuel in its 17 fuel tanks. It weighed about 9,750 lb (4420 kg) at

takeoff and only 1,858 lb (840kg) upon landing. The flight, maintaining an

average speed of 115.8 mph (186.3 km/h), lasted 9 days, 3 minutes, 44



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seconds and covered 25,012 miles (40254 km) and was completed in

December 1986.

AVIATION INDUSTRY IN INDIA

The first commercial flight in India was made on February 18, 1911, when a

French pilot Monseigneur Piguet flew airmails from Allahabad to Naini,

covering a distance of about 10 km in as many minutes.

Tata Services became Tata Airlines and then Air-India and spread its wings

as Air-India International. The domestic aviation scene, however, waschaotic. When the American Tenth Air Force in India disposed of its planes at

throwaway prices, 11 domestic airlines sprang up, scrambling for traffic that

could sustain only two or three. In 1953, the government nationalized the

airlines, merged them, and created Indian Airlines. For the next 25 years

JRD Tata remained the chairman of Air-India and a director on the board of

Indian Airlines. After JRD left, voracious unions mushroomed, spawned on

the pork barrel jobs created by politicians. In 1999, A-I had 700 employeesper plane; today it has 474 whereas other airlines have 350.

In recent years, however, this image of Civil Aviation has undergone a

change and aviation is now viewed in a different light - as an essential link

not only for international travel and trade but also for providing connectivity

to different parts of the country. Aviation is, by its very nature, a critical part

of the infrastructure of the country and has important ramifications for the

development of tourism and trade, the opening up of inaccessible areas of

the country and for providing stimulus to business activity and economic

growth.



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Until less than a decade ago, all aspects of aviation were firmly controlled by

the Government. In the early fifties, all airlines operating in the country

were merged into either Indian Airlines or Air India and, by virtue of the Air

Corporations Act, 1953; this monopoly was perpetuated for the next forty

years. The Directorate General of Civil Aviation controlled every aspect of

flying including granting flying licenses, pilots, certifying aircrafts for flight

and issuing all rules and procedures governing Indian airports and airspace.

Finally, the Airports Authority of India was entrusted with the responsibility

of managing all national and international air ports and administering every

aspect of air transport operation through the Air Traffic Control. With the

opening up of the Indian economy in the early Nineties, aviation saw some

important changes. Most importantly, the Air Corporation Act was repealed

to end the monopoly of the public sector and private airlines were

reintroduced.

Air travel remains a large and growing industry. It facilitates economic

growth, world trade, international investment and tourism and is therefore

central to the globalization taking place in many other industries.

In the past decade, air travel has grown by 7% per year. Travel for both

business and leisure purposes grew strongly worldwide. Scheduled airlines

carried 1.5 billion passengers last year. In the leisure market, the availability

of large aircraft such as the Boeing 747 made it convenient and affordable

for people to travel further to new and exotic destinations. Governments in

developing countries realized the benefits of tourism to their national

economies and spurred the development of resorts and infrastructure to luretourists from the prosperous countries in Western Europe and North

America. As the economies of developing countries grow, their own citizens

are already becoming the new international tourists of the future.



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Business travel has also grown as companies become increasingly

international in terms of their investments, their supply and production

chains and their customers. The rapid growth of world trade in goods and

services and international direct investment has also contributed to growth

in business travel.

Worldwide, IATA, International Air Transport Association, forecasts

international air travel to grow by an average 6.6% a year to the end of the

decade and over 5% a year from 2000 to 2010. These rates are similar to

those of the past ten years. In Europe and North America, where the air

travel market is already highly developed, slower growth of 4%-6% is

expected. The most dynamic growth is centered on the Asia/Pacific region,

where fast-growing trade and investment are coupled with rising domestic

prosperity. Air travel for the region has been rising by up to 9% a year and

is forecast to continue to grow rapidly, although the Asian financial crisis in

1997 and 1998 will put the brakes on growth for a year or two. In terms of

total passenger trips, however, the main air travel markets of the future will

continue to be in and between Europe, North America and Asia.

Airlines' profitability is closely tied to economic growth and trade. During the

first half of the 1990s, the industry suffered not only from world recession

but travel was further depressed by the Gulf War. In 1991 the number of

international passengers dropped for the first time. The financial difficulties

were exacerbated by airlines over-ordering aircraft in the boom years of the

late 1980s, leading to significant excess capacity in the market. IATA's

member airlines suffered cumulative net losses of $20.4bn in the years from1990 to 1994.

Since then, airlines have had to recognize the need for radical change to

ensure their survival and prosperity. Many have tried to cut costs

aggressively, to reduce capacity growth and to increase load factors. At a



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time of renewed economic growth, such actions have returned the industry

as a whole to profitability: IATA airlines' profits were $5bn in 1996, less than

2% of total revenues. This is below the level IATA believes is necessary for

airlines to reduce their debt, build reserves and sustain investment levels. In

addition, many airlines remain unprofitable.

To meet the requirements of their increasingly discerning customers, some

airlines have to invest heavily in the quality of service that they offer, both

on the ground and in the air. Ticketless travel, new interactive entertainment

systems, and more comfortable seating are just some of the product

enhancements being introduced to attract and retain customers.

A number of factors are forcing airlines to become more efficient. In Europe,

the European Union (EU) has ruled that governments should not be allowed

to subsidize their loss-making airlines. Elsewhere too, governments'

concerns over their own finances and recognition of the benefits of

privatization have led to a gradual transfer of ownership of airlines from the

state to the private sector. In order to appeal to prospective shareholders,

the airlines have to become more efficient and competitive.

Deregulation is also stimulating competition, such as that from small, low-

cost carriers. The US led the way in 1978 and Europe is following suit. The

EU's final stage of deregulation took effect in April 1997, allowing an airline

from one member state to fly passengers within another member's domestic

market. Beyond Europe too, 'open skies' agreements are beginning to

dismantle some of the regulations governing which carriers can fly on certain

routes. Nevertheless, the aviation industry is characterized by strong

nationalist sentiments towards domestic 'flag carriers'. In many parts of the

world, airlines will therefore continue to face limitations on where they can

fly and restrictions on their ownership of foreign carriers.



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Despite this, the airline industry has proceeded along the path towards

globalization and consolidation, characteristics associated with the normal

development of many other industries. It has done this through the

establishment of alliances and partnerships between airlines, linking their

networks to expand access to their customers. Hundreds of airlines have

entered into alliances, ranging from marketing agreements and code-shares

to franchises and equity transfers.

The outlook for the air travel industry is one of strong growth. Forecasts

suggest that the number of passengers will double by 2010. For airlines, the

future will hold many challenges. Successful airlines will be those that

continue to tackle their costs and improve their products, thereby securing a

strong presence in the key world aviation markets.



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CHAPTER: 2.

KINGFISHER AIRLINES: PROFILES AND ITS GROWTH

Kingfisher Airlines is a private airline based in Bangalore, India. Currently, it

holds the status of India's largest domestic airline, providing world-class

facilities to its customers. Owned by Vijay Mallya of United Breweries Group,

Kingfisher Airlines started its operations on May 9, 2005, with a fleet of 4

brand new Airbus - A320, a flight from Mumbai to Delhi to start with. The

airline currently operates on domestic as well as international routes,covering a number of major cities, both in and outside India. In a short span

of time, Kingfisher Airlines has carved a niche for itself in the civil aviation

industry.

HISTORY

Kingfisher Airlines proved to be a stiff competition for other domestic airlines

of India, with its brand new aircraft, stylish red interiors, stylishly dressed

cabin crew and ground staff. The airline introduced in-flight entertainment

(IFE) systems, for the first time to Indian consumers. The IFE systems were

provided on every seat, even on the domestic flights. The airline offers

attractive services to its on board passengers. Years following its inception

proved to be beneficial for the airline, in terms of its booming business, with

a good track record of customer satisfaction. However, it faced a worsening

economic scenario in 2008.

Recession

In 2008, due to the prevalent economic downturn, the civil aviation industry

faced the worst period in its history. It was the time, when air passenger



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traffic started dripping, and the aircraft fuel prices went sky rocketing. As a

result, Kingfisher Chairman Vijay Mallya and his Jet Airways counterpart

Naresh Goyal announced an alliance, after a meeting. According to the

alliance, both the airline companies decided to implement code-sharing on

both domestic and international flights. It was a step to reduce the

expenses. Subsequently, frequent flier programs were announced by both

the airlines, namely King Club and Jet Privilege.

Unique Services

Kingfisher Airlines offers several unique services to its customers. These

include personal valet at the airport to assist in baggage handling andboarding, exclusive lounges with private space, accompanied with

refreshments and music at the airport, audio and video on-demand, with

extra-wide personalized screens in the aircraft, sleeperette seats with

extendable footrests, and three-course gourmet cuisine.

Fleet

Kingfisher Airlines was the first airline in India to operate with all new

aircrafts. It was also the first airline in the country to order the Airbus A380.

Kingfisher Airlines currently operates ATR 42, ATR 72 and Airbus A320

aircraft for domestic and Airbus A330s for international services. In the

present time, the airline operates with a fleet of 74 aircrafts, which include

25 Airbus A320-200 aircraft, 6 ATR 42-500, 27 ATR 72-500, 3 Airbus A319-

100, 8 Airbus A321-200 and 5 Airbus A330-200.



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Destinations

Kingfisher Airlines plies regular flights from the major cities of India

including Delhi, Mumbai, Bangalore and Kolkata. The airline also covers

regional destinations from the four zones of India, including Chennai,

Hyderabad, Pune, Port Blair, Rajahmundry, Tirupati, Vijayawada,

Visakhapatnam, Agartala, Dibrugarh, Guwahati, Jorhat, North Lakhimpur,

Silchar, Patna, Chandigarh, Raipur, Goa, Ahmedabad, Bhavnagar, Bhuj,

Kandla, Dharamsala, Kullu, Simla, Jammu, Leh, Srinagar, Jamshedpur,

Ranchi, Hubli, Mangalore, Calicut, Cochin, Trivandrum, Agatti, Indore,

Jabalpur, Aurangabad, Kolhapur, Latur, Nagpur, Nanded, Nasik, Solapur,

Imphal, Aizawl, Dimapur, Bhubaneswar, Amritsar, Jaipur, Jodhpur, Udaipur,

Coimbatore, Madhurai, Trichi, Tuticorin, Dehradun, Lucknow, Varanasi and

Siliguri are the other regional destinations covered by Kingfisher Airlines.

The airline also plies flights to Dhaka and Colombo. The airline is soon going

to ply flights from Kolkata to Bangkok. It will also provide its passengers to

take a flight from Mumbai to international destinations including Singapore,

Hong Kong, Bangkok, Colombo and Dubai. It has also started flights from

Delhi to London, Dubai and Bangkok. The airline has started to increase its

international presence, by plying flights to Kuala Lumpur, Mal, Lahore and

Karachi.



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Company Overview: Kingfisher Airlines Ltd:

Date of Establishment 1995

Revenue 1397.93 (USD in Millions)Market Cap 13489.8169433 (Rs. in Millions)

Corporate Address U B Tower Level 12, U B City 24 Vittal Mallya

Road, Bengaluru-560001, Karnataka

www.flykingfisher.com.

Management Details Chairperson - Vijay Mallya

MD - Vijay Mallya

Directors - A K Ravi Nedungadi, A

Raghunathan, Anil Kumar Ganguly, Bharath

Raghavan, Diwan Arun Nanda, G R Gopinath,

Ghyanendra Nath Bajpai, K J Samuel, N

Srivasta, N Srivatsa, Naresh Trehan, Piyush G

Mankad, S R Gupte, Sanjay Aggarwal,

Subhash R Gupte, Vijay Amritraj, Vijay Mallya

Business Operation Airlines

Background Kingfisher Airlines is one of the leading

private players in the Indian aviation industry.

Incorporated in 1995 as Deccan Aviation, the

company is engaged in the business of

providing passenger services and helicopter

charter services. The name was changed to

Kingfisher Airlines in the year 2008. The

airline is part of UB Group owned by Dr Vijay

Mallya. Kingfisher Airlines owns 100 plus



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aircrafts.

Financials Total Income - Rs. 64955.623 Million (year

ending Mar 2011)

Net Profit - Rs. -10273.98 Million (year

ending Mar 2011)

Company Secretary Bharath Raghavan

Auditors BK Ramadhyani & Co.

GROWTH OF KINGFISHER AIRLINES:

Passenger growth of 61% in Mar-2009, for 26.7% domestic marketshare;

Kingfisher the largest carrier in the shrinking domestic Indian market; In codeshare negotiations with KLM and Jet Airways;

Debt levels increased significantly; To launch third international destination: Dhaka; Migration of pilots, predominantly to Qatar Airways.

Kingfisher Airlines passenger growth increased 61.1% year-on-year in Mar-

2009, to 844,000 passengers, according to latest Indian Ministry of Civil

Aviation data.



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Kingfisher Airlines domestic passenger numbers (thousands) and

year-on-year change (%): Apr-2008 to Mar-2009

Source: Centre for Asia Pacific Aviation & Ministry of Civil Aviation

NB Kingfisher traffic results include Deccan traffic since Dec-2008

The large year-on-year increases of debt over the past four months are due

predominantly to Kingfisher's merger with Deccan, with the carriers

reporting combined traffic results since Dec-2008. This effectively doubled

Kingfisher's domestic passenger traffic between Nov-2008 and Dec-2008(For example, in Nov-2008, Deccan handled 398,000 domestic passengers,

more than Kingfisher's 348,000 passengers). However, passenger numbers

fell 21.7% year-on-year in Mar-2009, based on the combined

Kingfisher/Deccan figures.



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The Big Three: Air India, Jet Airways and Kingfisher/Deccan

passenger numbers (000s): Jan-2006 to Mar-2009


NB Kingfisher traffic results include Deccan traffic since Dec-2008

Kingfisher reported an average domestic load factor of 60.9%, a reduction

from 74.3% in Feb-2009, and the lowest level since Nov-2008. Kingfisher's

load factor was also one of the lowest in the domestic market, behind

Air India (57.0%) and Jet Airways (60.6%), with the country's LCCs and

smaller carrier reporting higher load factor figures.



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Select Indian carriers' load factors: Mar-2009

Source: Centre for Asia Pacific Aviation and Indian Ministry of Civil Aviation

Kingfisher Airlines 1Q09 domestic passenger numbers (thousands):

Jan-2009, Feb-2009 and Mar-2009




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In codeshare negotiations with KLM

Kingfisher Airlines and Jet Airways announced they are in negotiations with

KLM for a codeshare agreement to cover six to ten secondary market

destinations in India, reportedly including Bangalore, Chennai and

Hyderabad.

KLM withdrew services to Delhi, Hyderabad and Mumbai in Feb-2009 due to

continued losses on the routes, although India still represents approximately

4% of KLM's total revenue. This figure is expected to increase in the medium

term, as the Indian market continues to develop and expand. The carrier

also expects the Indian market to be more resilient to current challengingoperating conditions, with KLM Asia Pacific Senior VP, Marnix Fruitema,

stating, the carrier expects India to "bounce back faster than Europe and

the US".

Meanwhile, Kingfisher and Jet Airways are reportedly considering code

sharing on some domestic and international services (reportedly to include

services to the UK, Hong Kong and Singapore), in an attempt to further

reduction costs.

The alliance aims to benefit both airlines by helping to rationalize and reduce

costs and offer a wider choice of travel options to consumers. The Jet-

Kingfisher "operational merger" does not involve equity and aims to very

quickly cut costs and rationalize flying operations, to reduce cash burn.



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Features of Jet Airways and Kingfisher Airlines alliance

Codeshares on domestic and international services, subject

to DGCA approval

Interline/Special Prorate agreements to leverage the joint networkdeploying 189 aircraft offering 927 domestic and 82 international services

daily

Joint fuel management to reduce fuel expenses

Common ground handling

Cross-selling of service inventories using the common GDS platforms

Joint network rationalization and synergies

Cross utilization of crew on similar aircraft types and commonality of

training as also of the technical resources, subject to DGCA approval

Reciprocal frequent flyer links

Source: Centre for Asia Pacific Aviation, Kingfisher and Jet Airways

Debt levels increased significantly

Kingfisher Airlines stated its owner, Vijay Mallya led United Breweries

Holdings, has requested shareholders' approval to provide a USD2.4 billion

corporate guarantee to its lenders, by pledging shares and mortgaging its

property. The United Breweries board has already approved the request.

The latest funds will be used for general corporate purposes, and to fund the

carrier's capital requirements and loss-making domestic and international

operations. Kingfisher reported a USD128.5 million loss in the three months

ended 31-Dec-08, with losses exceeding USD300 million in the first nine

months of 2008/09.



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To launch third international destination: Dhaka

In network news, Kingfisher Airlines announced plans to launch

daily Kolkata-Dhaka service on 15-May-09, using ATR 72-500 aircraft

(configured with 60 seats), the carrier's third international destination,

after Colombo and London.

The carrier, which commenced international operations in Sep-2009, also

has government permission to operate to 13 international cities (in US,

UK, UAE, Saudi Arabia, Kuwait, Singapore, Thailand, Hong Kong, Malaysia,

Maldives, Sri Lanka and Bangladesh). The carrier also recently stated it was

considering launching services to Bahrain "if there is enough economic justification," or once "the economy gets better".

The carrier had previously planned to launch international services to

Singapore, Hong Kong and Dubai, although these plans have been deferred

due to the global economic downturn. The carrier has also announced plans

to delay the launch of Mumbai-Bangkok services, initially planned for Mar-

2009, until late Oct-2009, with the airline citing aircraft availability

constraints. The carrier had intended to utilize A321 equipment on the route.

Even after the delay in launching plans the airline launched its new routes on

24 th March, 2010. The plan was an instant success with a great increase in

revenue till the airline hit the large amount of debt building up.

Instead, Kingfisher launched five new domestic routes on 29-Mar-09:

Mumbai-Thiruvananthapuram Mumbai-Vadodara Hyderabad-Aurangabad Hyderabad-Bhubaneswar Bangalore-Kozhikode



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Fares on the rise, as fuel surcharges increases

In the domestic market, Kingfisher Airlines and Kingfisher Red (and Jet

Airways and JetLite ) have increased domestic fuel surcharges by INR200

(USD4) per passenger on flights less than 750 km and INR300 (USD6) on

flights more than 750 km, following a 6.7% increase in jet fuel prices on 15-

Apr-09, the third consecutive increase in ATF prices in a month. The total

fuel surcharge on flights less than 750 km is now INR 2,150 (USD43.11) and

more than 750 km is INR3,000 (USD61.16).

The ATF rate in India is revised by Indian Oil Corp, Hindustan Petroleum and

Bharat Petroleum on the first and sixteenth of every month, based on theaverage international jet fuel rates in the preceding fortnight. Three

increases, on 16-Mar-09, 01-Apr-09 and 15-Apr-09, respectively, have

resulted in a combined increase of 17.8%.

WTI Spot Oil Price: Jan-2008 to Apr-2009

Source: Centre for Asia Pacific Aviation and Energy Information

Administration



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Enters MRO agreement with Air Works

In fleet news, Kingfisher entered an agreement with Air Works to maintain

their turbo-prop fleet of 27 ATR72-500s and six ATR42-500 aircraft

(covering the Kingfisher Airlines and Kingfisher Red combined fleets).

Under the agreement, Air Works will perform C-checks on Kingfisher ATR

aircraft at its MRO facility at Hosur (Karnataka).

Domestic Indian carriers currently operate a fleet of 54 ATR aircraft, with

this to more than double to 120 aircrafts.

India's current and future ATR fleet

Operator TypeIn

ServiceIn Storage

On

Order

On

OptionTotal

Alliance AirATR 42-

3007 0 0 0 7

Jet AirwaysATR 72-

50014 0 6 0 20

Kingfisher

Airlines

ATR 72-

50018 2 13 20 53

Kingfisher

Airlines

ATR 72-

6000 0 23 0 23

Kingfisher

Red

ATR 42-

5006 2 0 0 8

Kingfisher

Red

ATR 72-

5009 0 0 0 9

Total 54 4 42 20 120

Source: Centre for Asia Pacific Aviation and Ascend



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According to Air Works, the potential market for MRO services in India is

currently approximately 200 aircraft, with maintenance spent by Indian

carriers during 2008 totaling USD800 million, according to Air Works. This is

expected to increase to USD1.4 billion by 2018 (or approximately 2% of

global MRO worth).

Migration of pilots, predominantly to Qatar Airways

Meanwhile, approximately 20 Kingfisher Airlines pilots have reportedly

resigned from the carrier, due to deteriorating working conditions, reduced

hours and lowered salaries (Kingfisher reportedly reduced the salaries of its

pilots by 15-20% in Feb-2009). A number of the pilots joined Qatar Airwaysin Jun-2009, with other pilots moving to other domestic Indian carriers,

reportedly to include IndiGo.

The carrier's pilots are currently debating with the DGCA over the six-month

notice period required under the Civil Aviation Requirement of 2005, which

makes it mandatory for pilots to give six months' notice prior to leaving jobs.

This requirement was introduced at a time when there was a pilot shortage

and there was extensive 'poaching' between airlines.



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CHAPTER: 3.

ANALYSIS OF MARKET SHARE AND COMPETITOR ANALYSIS

Kingfisher is the largest carrier in the shrinking domestic Indian market.

Overall domestic India traffic fell from 14.8% year-on-year to 3.2 million in

Mar-2009, with Kingfisher capturing approximately a 26.7% domestic

market share in Mar-2009, making it the largest carrier in the domestic

market, ahead of both Jet Airways (17.8%) and Air India (17.1%).

Kingfisher's market share has also risen sharply since its takeover of

Deccan.

Kingfisher domestic market share: Mar-2009

On a quarterly basis, Kingfisher handled 2.7 million passengers,

approximately 52% more passengers than the next largest domestic carrier,

Jet Airways.

Market share2009-2010

kingfisher- 20.8%

Jet airway-19%

air india-18.3%

indigo-15.4%spice jet-12.9%



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Jet Airways

India's premier private airlines, Jet Airways started its operations on May 5,

1993. It has been adjudged many times as India's 'Best Domestic Airline'.

Its fleet currently consists of 49 Boeing 737 aircraft, 3 Airbus 340-300E, 2Airbus 330-200 and 8 turbo-prop ATR72-500 aircraft. The airline flies to 58

destinations - 43 destinations within India and 15 international destinations.

Every day it operates over 340 flights to these destinations.

In April 2007, Air Sahara was bought over by Jet Airways for 14.5 billion

rupees ($340 million). The deal is expected to give Jet Airways a combined

domestic market share of about 32%.

Jet airways operate at one of the lowest rates in its class along with many

attractive discount offers and prices.

It has interline agreements with 126 international airlines which allow

passengers to use interline documents on Jet Airways for their travel.

Among the many schemes it has launched, mention may be made of the

special "VISIT INDIA USD FARES" for 7-day, 15-day and 21-day travel. It

also offers innovative Jet Escapes travel packages in association with India's

leading hotels and resorts.

By current scenario Jet airways has surpassed kingfisher airlines by

approximately double sales. Their low price and dedicated city to city

frequency with upheld services are the main reasons for this.



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2010-2011

Company Sales

(Rs. Million)

Current

Price

Change

(%)

P/E

Ratio

Market

Cap.(Rs. Million)

52-Week

High/Low

Jet Airways

(I)

127768.30 264.50 2.03 0.00 22382.09 842/222

Kingfisher

Airlines

62333.79 25.30 2.22 0.00 12320.04 74/18

Spice Jet 28795.08 22.35 1.36 0.00 9733.97 93/19



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CHAPTER: 4.

SURVEYS

Figure 1: Preferred Airline

During the survey, we tried to reach a diversified customer base, keeping in

mind the only criteria being a regular flyer. We tried to include fresh MBAs,

working professionals, different officials, entrepreneurs, musicians, and

actors.

Despite the recent melt down, what we found out during the survey is that

fresh and energized youth is still to some extent tilted towards the Brand

Kingfisher, whereas the rest of its competitors are more preferred by

experienced professionals. The data therefore helped us identify the biggest

customer base of Kingfisher Airlines. We will be focusing on individual

parameters for our following discussions.

19%

10%

17%

8%

39%

7%AIR INDIA

GO AIR

INDIGO

JET AIRWAYS

KINGFISHER

SPICE JET



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Figure 2: Comparative Analysis

As the graph represents, Kingfisher scored high on hospitality whereas

AirIndia & IndiGo are more preferred for their convenience. Whereas wefound out that the Government employees prefer AirIndia because of the

perks they receive.

We found out when we questioned daily users that safety is a matter of

utmost concern for them. Again when there is a need for cheap travel by the

young flyers, the tendency to opt for GoAir is a concern. Some prefer this

parameter ahead of hospitality recently.

0

5

10

15

20

25

30

JET AIRWAYSINDIGO

GO AIR

SPICE JET

KINGFISHER

AIR INDIA



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Figure 3: Availability of Flights

Kingfisher mostly has flights more than thrice a day in the metro cities which

are used mostly by businessmen as well as frequent flyers. Mumbai-Kolkata-

Delhi-Chennai-Hyderabad is the most congested route for Kingfisher.

Whereas Kingfisher has flights twice a day for the regional connecting flights

with the metros. This is again visible to the leisure traveller.

But recently there is a shift in its orientation. Many of the respondents

complain that they find just one flight a day in their route. This of course is

because of the recent melt down of the Airline. But distinctly it still is one of

the most preferred Airlines.

Kingfisher Airlines

once/day

twice/day

thrice/day

more than 3

Absence while emergency



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Figure 4: Availability of Tickets

During the survey, we found that even in the busiest routes, passengers

sometimes need tickets at a very short notice, which refers to the fact that

there is less number of seats that go vacant for the economy class.

The Business class passengers responded mostly with an always as this is

distinctly due to the availability of money. Also their responses included a

huge fascination towards the hospitality it offers.

For the young flyers, it is little difficult to arrange for a ticket at the shortest

notice as the prices tend to go up constantly.

Kingfisher Airlines

Always

Mostly

Never

Not So easily



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Figure 5 Ground staff efficiency

Kingfisher as a brand made a clean sweep in this category as people were

pretty impressed with the efficiency the ground staffs show during checking

in, which in turn made many of the respondents a regular flyer with

Kingfisher. The brand still dictates for itself.

The personalized attention provided by the ground staff helps the passenger

maintain his tickets and passports efficiently without much hassle through

the much required security clearance.

12%

88%

Kingfisher Airlines

Yes

No



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Figure 6: Interior Decoration

During our survey, one of our observations was that there is a feeling of

content and satisfaction whenever someone just steps into a Kingfisher

Aircraft. Though this trend is mostly with the young generation, but leisure

travellers feel the beginning of their vacation when they step inside.

Obviously the trend goes down with aged passengers with plenty of flying

experiences as these little things come with little marginal utility to them.

But analyzing the same, we can still say, there is a potential for holding on

to a loyal customer base as it is a service industry where feeling and fantasy

could be your USP.

60%

40%

Kingfisher Airlines

Yes

No



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Figure 7: Price fluctuation

The numbers speak for themselves. Respondents answered with mostly

during holidays the most, while the other options carried equal weightage.

This seems to be a general trend in most airlines.

The price fluctuation is also due to the daily increase and decrease in

international price of crude oil. The airlines are bound to suffer because they

do not have the whole control over the ticket prices.

29%

39%

15%

12%

5%

Kingfisher Airlines

consistently Goes High

Mostly during Holidays

Always goes up in Limits

Both ways movement

Negligible



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Figure 8: Food

Food can be taken as another ingredient towards the overall feeling. While

surveying, we mostly encountered good as a reply. Some had bad

experiences with food though.

Here Kingfisher has an immense opportunity to grow. It can always bridge

the gap between good and excellent or average and good.

Kingfisher Airlines

Below Avg

Avg

Good

Excellent



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Figure 9 Comfort level

According to the flyers, Kingfisher provides them with well-maintained

interiors adding up to the good feeling quotient. The cushions and the seats

of the aircrafts are very comfortable as said by the frequent flyers.

Kingfisher Airlines

Well maintained

Excellent

Average



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Figure 10 Hospitality

Most respondents were thrilled by the hospitality and the proactive attitude

of the air-hostesses while flying. They always check if Im comfortable was

a common response in the survey. If to go by a response of value, it must

focus its core product as hospitality and the overall flying experience.

55%

45%

0%

Kingfisher Airlines

Proactive

Normal

cold



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Figure 11 Punctuality

There is much strength this airline is equipped with. But recently it is

subjected to average punctuality which indeed is taking some passengers

away from it. It may be because of the recent melt down, but obviously it is

a matter of immense concern if it needs to grow in the coming years.

74%

13%

13%

Punctuality

Average

Low

High



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Hospitality Vijay Mallya claims to have personally handpicked his staff

and air hostesses. This fact is backed up by the welcoming effect of being in

a Kingfisher Airlines plane. The air hostesses are charming and the

cleanliness and service is pleasing for the passengers.

Weaknesses:

Expectations Kingfisher Airlines has surely made a mark in the airline

industry. The problem it now faces is that customers expect too much out of

them and it is getting difficult for the brand to maintain that level of service.

The brand is not being able to hold that height that it has set itself on. Thus,

it has been wallowing in losses. People expect a great deal from thecompany they choose to travel and if not delivered with the same level

expectation, they tend to blame the same company that they themselves

chose. In this case, the company didnt deliver what was expected from

them.

High ticket pricing Kingfisher First and Kingfisher Class is overly priced

and in these days of inflation and recession, consumers want to save as

much as they can. This is why these two ranges of the airline have been

incurring losses which are making the brand difficult to hold its position in

the market. Also, the price of their tickets in the low cost segment was also

the highest.

Punctuality Customers have had numerous complaints regarding the

punctuality of Kingfisher flights. Delays range from 4 hours to even a day.

This leads to consumers banking on other flights to reach their destinations

on time. Also, the delays cause cancellation from the customers and refunds

have to be given out.



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Opportunities:

Venture into cargo This can prove to be a good option for the brand.

Cargo and goods need to be delivered and it is a need in todays time. Also,

this will allow profits to increase as they will be coming in from a new

source.

Better connectivity in remote areas It should expand to more

destinations to cater to people living in remote areas.

Hit the lower price segment Kingfisher can offer discounts and cut

down on services to maintain its market share. It needs to fight for its

survival in the industry.

Tie-ups with other companies Kingfisher can branch out and take

assistance from other companies to hold its position. This way, financial aid

can also head its way.

Threats:

Falling demand Kingfisher has recently been losing its market share

whereby consumers are deviating to other airlines for travel. It is even

losing its loyal customers because of the pricing problems. This is causing

serious trouble for the brand because its customer base was one of its

greatest strengths.

ATF prices Aviation Turbine Fuel prices fluctuate and airlines are losing

out profits due to this. Kingfisher needs to keep this factor in mind and

carefully plan out a strategy to maintain competency.

Economic slowdown Recession and inflation hit consumers badly and

this causes the companies to face a fall in the demand of its services.



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Infrastructure problems It is getting really tough for Kingfisher to

maintain its aircrafts and staff. Workers have not received their salaries

since the last three months. The quality of brand Kingfisher is diminishing as

it is not being able to maintain its true essence and it is failing in its cause.



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CHAPTER: 6.

CURRENT CRISIS AND REVIVAL

The company has a debt of Rs. 7,493 crores which includes around Rs. 800

crores as a debt to Indian oil companies for crude jet oil (aviation fuel). The

rest of the debt is from airport taxes, hangar rents and from the lease of

aircraft manufacture companies. The company has to pay salaries to its

various employees including the down staff.

The company is approaching the government to pull it out of its crisis by

providing the cash inflow and rebate in taxes. The company is thinking about

liquidifying its assets and converts them into cash to pay its current debt

and reduce it to a permissible Rs. 4000 crores. For this they are pondering

about selling their various landholdings in the country. The UB group can sell

off some of its interests to the public players to generate more cash to infuse

in the company.

The company is rescheduling its flight patterns by cutting down the number

of airplanes and the number of staff making it a more lean organization. Thecompany has cancelled orders for its myriad aircrafts and is also reducing

the aircrafts on lease.

Kingfisher Airlines

The major lender of the company, RBI has asked the company to produce a

strategic plan for the future to help them to help them to refine their overall

functioning of the company.

The company should enter into joint ventures with international companies

which would consolidate its financial aid. Airlines like British Airways and

Lufthansa are willing to enter into ventures with Kingfisher Airlines and this

move can help in securing Kingfishers future.



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References

1. www.moneycontrol.com

2. www.buisness-standard.com

3. www.moneylife.in

4. www.wikipedia.org

5. www.flykingfisher.com


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