FAILURE OF KINGFISHER AIRLINES

INTRODUCTION TO UB GROUP

•Founded in-1857•Chairman–Dr. Vijay Mallya•Headquartered –Richmond Road, Bangalore

•Products-

Brewery,AlcoholBeverage,Aviation,Chemicals&Fertilizers,MangaloreChemicalsandFertilizersLtd,UBGlobal( trading company)

INDIAN AVIATION INDUSTRY

THENNOW

INTRODUCTION TO KINGFISHER

VISION “The Kingfisher Airlines family will consistently deliver a safe, value based and enjoyable travel experience to all our guests.”

Sanjay Agarwal is the current CEO of the company

Kingfisher Commenced its operations on May 9,2005.

KingfisherAirlines is also the sponsor of F1 racing outfit, Force India

MARKET SHARE

CURRENT POSITION

Departmental

Malfunctions

The Main Departments we deal with

Top Management

Finance HR Marketi

ngOperatio

ns

Finance Department

Marketing

Operations

Top Management

  31destinations in India Focused & Profit

making routes Low price compared to

King fisher red Low Terminal cost like

D1 in New Delhi & 1 Bin Mumbai

Focus on Low Cost Airlines

Innovative and radical method so fair line back

end operations like financing , leasing.

Less Turnaround time as compared to Kingfisher red

 

63 domestic destinations in India

Many Unprofitable routes like Nasik , Hubli etc.

Grounding of 14 aircrafts Strict rules by DGCA on

implementation of Time Table

Multiple Hopping, leading to cascading effect. Hence ,delay of flight

Operations shifted to New Terminals in Delhi & Mumbai.

Focus diverted from high service to low cost

More Turnaround time as compared to Indigo

Standardized Aircraft Less Inventory of SparesLess Training CostLess Maintenance CostLess Operational costEffective Terminal UseEasy Scheduling

High Inventory of SparesHigh Training CostHigh Maintenance CostHigh Operational CostScheduling difficultMore Human Resources

required

Diversified Aircrafts with different capacities

Frankly, it was a hassle-free decision for Vijay Mallya to completely suspend services on  his budget carrier Kingfisher Red , says one of his close confidantes. Formerly known as Air Deccan, Mallya had bought 26% stake in this airline from his friend-cum-neighbour Captain Gopinath in 2007 at Rs 550 crore and later picked up additional 20% stake at around Rs 155 a share.The intention of acquiring Deccan was only aimed at giving Kingfisher Airlines (KFA) an access to international routes quickly. Government rules gave overseas flight rights only to airlines with a minimum of five years experience, and KFA was behind in the queue after Deccan. “Mallya never believed in low fare business model even when he bought the airline,” says an official with the airline.

WHAT WENT WRONG?

The dismal performance of Red all these years made Mallya realise that the high profile ‘classy image’ of his very own  KFA is taking a hit due to him simultaneously running a low cost service.Meanwhile, discontinuing Kingfisher Red may have come as a surprise to a few at a time when low fare carriers like Jet Lite, Indigo and Spice Jet are doing better then their full service peers in terms of load factors--- but the news has not sprung any surprise to analysts and Kingfisher Airlines (KFA) officials who had guessed something of this sort was on its way.In that case, an official at KFA explains, “A year ago, Mallya had met many brand consultants in Europe who had advised him to hive off Kingfisher Red into a separate entity from its parent, KFA-- a move that could help the airline have an identity of its own just like JetLite--- a low cost arm of its arch rival Jet Airways which is doing very well with almost 90% load factors on domestic routes.But this idea did not see any daylight as the close coterie of Mallya had a better plan which was aimed at consolidating KFA’s image as a ‘luxury carrier’ and reducing operating losses. Quickly, his battery of experts went back to the drawing board, just recently, only to convince their boss that Kingfisher Red has to go off the radar and Mallya agreed.

•Holiday packages-at unprofitable routes like Nasik, Aurangabad

•Pricing-Should beat par with Spice jet and Indigo

•Tie-ups with Corporate •Frequent flyer programmes •Better deals and offers for flyers

in air

RECOMENDATIONS – MARKETING STRATEGY

1.Route rationalisation: Cutting back unprofitable sectors and services to several cities

2.Debt recast: Asking banks to reduce rates or take a cut on loans or find a 'local investor‘

3.Raising capital: It has plans to raise $200 million through GDR

4.FDI: If the FDI limit is raised and foreign airlines are allowed to buy a stake, Mallya could recapitalise Kingfisher

GENERAL RECCOMMENDATIONS