Post on 05-Apr-2018
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Story Begins
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one of Indias leading privatecarriers went off on the night
of February 17 when word
spread like wildfire that
something was amiss at
Kingfishers Kolkata station.
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By the evening ofFebruary 18,the problem had become
serious enough for the airline to
issue a statement. But it was
too late.
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But what led to thelatest edition of the
trouble that has
plagued Kingfisher?
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Kingfisher has notched up adebt of over Rs7,000 crore. Just
recently, the airline reported a
loss of `444 crore
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But how did things come tosuch a pass for Kingfisher, that
always had the image of apremium airline where the
hospitality was king-size.
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Expert views..
Kingfisher got their strategy wrong. Kingfisher lost
out since it thought it could capture the market by
offering frills, - A prominent aviation analyst told CNN oncondition of anonymity.
For Kingfisher, it was a mish-mash of business
models. Theirs was a flamboyance-based aviation
model. Then they acquired a low-cost carrier like
Air Deccan but did not leverage it, - A prominentAnalyst
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Expert views..Contd..
There are deeper systemic flaws affecting all
carriers which too are responsible. - Mr. JitenderBhargava(Former executive director of national carrier, Air India)
The main problem is that global oil prices have
been shooting up. The airlines do not increasefares proportionally due to intense competition
among themselves. The result is more losses. - CivilAviation Ministry
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Kingfisher view..
The airline industry in India is going through a tough
period due to high costs and lower yields. This is
evident from the unprecedented losses recently
reported. Kingfisher has not made any bailout request
to the Government. We have only asked our banks for
an increase in limits due to significant increase in
operating costs caused by increase in fuel prices and
rupee devaluation,- the airline had stated last year.
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But just who will the market forces
make the biggest beneficiary ifKingfisher shuts shop??
Low-cost carrier IndiGo which ismaking profits is now viewed as the
most successful airline with a sound
business model.
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Now it's time to do what
managers usually do ;)
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Analysis 1
Indigo 31 destination in india Focused & Profit Making
routes
Low price compared to
kingfisher red Low Terminal cost like D1 in
new Delhi and 1B in Mumbai
Focus on Low Cost Airlines
Less Turn around time as
compared to Kingfisher red.
Kingfisher Red 63 domestic destination in
india
Many Unprofitable routes
like Nasik, Hubli etc
Grounding of 14 aircraft Operation shifted to New
Terminal in Delhi & Mumbai
Focus diverted from high
services to low cost
More Turn around time ascompared to Indigo
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Destination Map
To get more details about route map, You can visit
Indigo - http://book.goindigo.in/skylights/cgi-bin/skylights.cgi?module=C3&page=ROUTEMAP
Kingfisher - http://it.aviate-res.com/kingfisher-airlines/route-map.aspx
http://book.goindigo.in/skylights/cgi-bin/skylights.cgi?module=C3&page=ROUTEMAPhttp://book.goindigo.in/skylights/cgi-bin/skylights.cgi?module=C3&page=ROUTEMAPhttp://book.goindigo.in/skylights/cgi-bin/skylights.cgi?module=C3&page=ROUTEMAPhttp://book.goindigo.in/skylights/cgi-bin/skylights.cgi?module=C3&page=ROUTEMAP7/31/2019 king-fisher-120302075619-phpapp02
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Analysis 2
IndigoStandardized Aircraft Less Inventory Spares
Less Training Cost
Less Maintenance Cost
Less Operational Cost Effective Terminal Use
Easy Scheduling
Kingfisher RedDiversified Aircraft with
different capacities High Inventory Spares
High Training Cost
High Maintenance Cost
High Operation Cost
Scheduling difficult
More Human Resources
required.
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what is the roadforward for Kingfisher
or is it pretty much the
end of the road?
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In a recent media interview, Dr Mallya had indicated
that there were three investors ready to pick up stake
in the airline but added that they were waiting for
Government announcements on FDI to become policy.
The government is now set to approve a 49 percent
FDI limit for foreign airlines in Indian carriers.
FDI / EQUITY
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Expert View..
A total and urgent overhaul is needed. Only infusionof more funds can ensure the revival. There has to be
a sound and well-thought out business model as the
airline cannot afford to go wrong again. Costs have
also to be scaled down. There are too many things tobe done.Mr Bhargava
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My View..
Route Rationalization: Cutting back unprofitablesectors and services to several cities
Debt recast: Asking bank to reduce rates or take a cut
on loans or find a "local investor
FDI: If the FDI limit is raised and foreign airlines are
allowed to buy a stake. Mallya could recapitalize
kingfisher.
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The End
Can He Ride This Out?
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Thank You !!