PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

AIRLINES INDUSTRY OVERVIEW

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 lure
tourists 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.

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

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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

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 from 1990 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
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. Ticket less 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 are having 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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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

MAJOR PLAYERS IN INDIAN AIRLINE INDUSTRY

Aviation sector is also a lucrative segment in Indian business. As world's
top aviation companies like Airbus and Boeing are eyeing to leverage this
country as their hub for Maintenance, Repair and Overhaul (MRO), the next
10 years would see the presence of a number of top airlines companies in
India at a large number. It's also expected to generate over 6,00,000 jobs in
the same time period. Following are some of the top airlines companies in
India:

 Jet Airways
 Jet Lite
 Kingfisher Airlines
 Air India
 Indian Airlines
 IndiGo
 SpiceJet
 GoAir
 Paramount Airways

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Company’s Profile

Kingfisher Airlines

IATA ICAO Callsign

IT KFR KINGFISHER
Founded 2004
Bangalore International
Airport,
Chhatrapati Shivaji
International Airport,
Hubs
Indira Gandhi
International Airport,
Sardar Vallabhbhai Patel
International Airport
Frequent flyer program King Club
Fleet size 158 (incl. 126 in order)
Destinations 29
Parent company UB Group
Company slogan Fly The Good Times
Headquarters Bangalore, India
Dr. Vijay Mallya, CMD
Mr. Hitesh Patel, EVP
Key people
Mr. Rajesh Verma, EVP
Mr.A. Raghunathan, CFO
Website: http://www.flykingfisher.com/

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Kingfisher Airline is a private airline based in Bangalore, India. The

airline is owned by Vijay Mallya of United Beverages Group. Kingfisher
Airlines started its operations on May 9, 2005 with a fleet of 4 Airbus A320
aircrafts. The airline currently operates on domestic routes. The destinations
covered by Kingfisher Airlines are Bangalore, Mumbai, Delhi, Goa,
Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, Kolkata, Pune,
Agartala, Dibrugarh, Mangalore and Jaipur.
In a short span of time Kingfisher Airline has carved a niche for itself. The
airline offers several unique services to its customers. These include:
personal valet at the airport to assist in baggage handling and boarding,
accompanied with refreshments and music at the airport, audio and video
on-demand, with extra-wide personalized screens in the aircraft and three-
course gourmet cuisine.
Kingfisher Airlines currently operates with a brand new fleet of 8 Airbus
A320 aircraft, 3 Airbus A319-100 aircraft and 4 ATR-72 aircraft. It was the
first airline in India to operate with all new aircrafts. Kingfisher Airlines is
also the first Indian airline to order the Airbus A380. UB holdings Ltd, has
acquired 26% stake in the budget airline Air Deccan and has option to buy
further of 20% stake from the secondary market.

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KINGFISHER AIRLINE INTRODUCTION

Kingfisher Airlines is a subsidiary of the UB Group, one of the largest

beverage companies in the world. The branding of the airline is linked to
that of Kingfisher Beer, India’s largest brewery.

The airline, which is headed by the charismatic Dr Vijay Mallya, took

to the skies in May 2005, and attracted attention for its high quality product
with personal in flight entertainment in every seat; custom interior designs
for each aircraft; valet assistance at airports and complimentary hot food and
beverages. The airline initially operated a single class service but
subsequently introduced a highly acclaimed First Class, allowing it to
compete with Jet Airways for the high yield corporate market. In addition to
its A320 family aircraft used on domestic routes, Kingfisher Airlines also
operates ATR-72 turboprops on regional sectors.

Under current Indian regulations, which require airlines to operate 5

years domestic service before being granted international rights, Kingfisher
will not be permitted to operate overseas until 2010. However, the airline
has very clear international ambitions, with an order book for 45 wide body
aircraft, including A330s, A340s, A350s and A380s.

In just over two years, Kingfisher Airlines has achieved a market

share of 10% and has one of the most aggressive expansion plans of all
Indian carriers during 2007. In Jun-07, it dramatically increased its influence
in the market with the acquisition of a 26% shareholding in India’s largest
LCC, Air Deccan, for approximately USD130 million, and an open offer for
a further 20%. Through schedule coordination and joint operations in ground
handling, training, and maintenance, the carriers are projecting annual cost
savings of over USD70 million.

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There will also be greater coordination between the two brands, with
Air Deccan to adopt the Kingfisher image in its logo and to switch to a red,
rather than a blue color scheme. The combined Kingfisher/Deccan group has
a market share of just over 30% and a product range spanning from the
price-sensitive, first-time flyer, to the high yield business traveler, making it
one of the key pillars of the airline industry.

The airline which started its operation on 9th May 2005, following the
lease of 4 Airbus A320 aircraft. As of July 2007, Kingfisher operates only
on domestic routes, however it has announced plans to start flights to the
USA with Airbus A380 aircraft. The airline is owned by the United
Beverages Group under the leadership of Vijay Mallya (which also owns the
popular Indian beer of the same name). The airline promises to suit the
needs of air travellers and to provide reasonable air fares. Kingfisher
Airlines' main "luxury" component is its In-Flight Entertainment System, a
first among Indian airlines. The airliners in-flight Mobile Phone and Internet
Services will be provided by On Air starting 2008 for long haul flights.

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Products & Services

• Currently there are two classes of service in the Kingfisher domestic
network, Kingfisher First and economy.
• Economy class has 32-34 inch seat pitch with footrest.
• Also after the acquisition of Air Deccan, it has also started a low fare
Kingfisher Red Class offering cheaper fares to the passengers.
• Kingfisher Airlines' domestic in-flight product has been granted a 5-
star rating from Skytrax.
• As for other services within the Indian sub-continent, Kingfisher also
plans to fly to Dhaka, Bangladesh, apart from Lahore.
• It is also known for the glamorized look of its cabin crew.
• As part of its soon to be launched international operations, to fulfill
the services which they have promise to their customer.

The carrier intends to launch services to Singapore, Kuala Lumpur, London

and New York from Mumbai apart from new flights to Dubai from New
Delhi, Mumbai and Chennai.

 Kingfisher Airlines - Fly Five Star

Kingfisher Airlines, one of only six 5-star airlines in the world, has applied
to the Ministry of Civil Aviation to commence operations on the New Delhi
– London – New Delhi sector. The flights on this
Route will be operated using the Airbus A330-200 and launch dates will be
announced once the requisite regulatory approvals are in place. The launch
of this new route will mark the first time that Kingfisher Airlines will
commence international flights out of New Delhi.

 Reasons to fly Kingfisher Airlines

- India's only 5* rated airline by Skytrax for product and service excellence
on domestic network.
- India's only airline to operate a brand new fleet
- Double daily flights to India (Mumbai and Bangalore*) from London
Heathrow Terminal 4.

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 Kingfisher First guests can enjoy:

- A social area with state of the art, luxurious lounge and bar on board.
- Large luxurious flat beds with privacy screen and full size duvets and
pillows
- Seats with lumbar support and full body massage system, with touch
screen controls.
- Mood lighting with the unique 'Starry sky' effect.
- Traditional India Silver Thali, catered by London's famous Chutney Mary
restaurant
- A jacket ironing service
- A spectacle cleaning service
- BOSE noise cancelling headphones
- USB port
- 10.6" state of the art in flight entertainment system, with individual touch
screens AVOD.
- Meet and assist from check-in to boarding
- 70kgs baggage allowance to India only

 Kingfisher Class guests can enjoy

- The largest economy class seat pitch of 34 inches
- Unique business class style meal service
- Live TV
- USB connectors and in-seat plug/chargers
- Web chat and mail
- Full length mode blankets and full size pillows
- 10.6" state of the art in flight entertainment system, with individual touch
screens AVOD.
- 45kgs baggage allowance to India only

 King Club - Frequent Flyer Programme

King Club offers 3 tiers of membership - King Red, King Silver and King
Gold. Each tier offers a dedicated set of benefits to exceed customer's
expectations. The benefits include excess baggage allowance, access to
airport lounges, upgrade vouchers and priority check-in at Kingfisher First
counters.

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VALUE PROPOSITION

• Vision: “The Kingfisher Airlines family will consistently deliver a

safe, value-based and enjoyable travel experience to all our guests.”

• Safety: This is an overriding value. In this line of business, there is no

compromise.

• Service: In hospitality business customer satisfaction is very

important and building trust, goodwill and loyalty of customers is at
prime focus.

• Happiness: Kingfisher seeks to build an organisation with people

who choose to be happy, and will endeavour to influence their guests
and co-workers to be happy too.

• Teamwork: Kingfisher believes that “We will succeed or fail as a

team. Each one of us must respect our colleagues regardless of their
rank, and we must work together to ensure our mutual success”.

• Accountability: Every employee in Kingfisher will be held

accountable for the successful execution of their duties, commitments
and obligations, and they will strive to lead by an example.

• Product: Premium class seats

 Sleeperette seats with extendable footrests. 48" seat pitch and a

125° recline. Fully-adjustable headrests.
 Laptop and mobile phone chargers in each seat.
 Comfortable pillows and snug blankets.

• Price:Initially Kingfisher airlines did not differentiate between

business class and economy class. But eventually they decreased the
prices of business class and called those seats as premium seats. Fares
were very average as it had to target middle class as well as premium
class people. The introduction of Kingfisher Red services have given
the airline a ‘Low-Cost’ option to compete with other ‘No-frills’
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airlines. It is important to note that the Kingfisher Red serves

complementary meals on board, thereby increasing the perception of
‘More Value for Money’ for the passengers.

• Fleet: To operate a minimum of 33 aircraft within the next two years

and 55 by 2010;

• Fares: Bangalore-Mumbai fares are at least 35% lower than Indian

Airlines and Jet Airways;

• Network: Bangalore-Mumbai frequency increased from two to three

times daily on 20 May. Bangalore-Delhi service commences on 6
June.

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PROMOTIONAL STRATEGIES

 Kingfisher has adopted a 360 degree approach.

The 360 degree media approach, taking into account all possible ways to
communicate with the target audience, has generated so much equity for the
brand. IPL is a good example of our all round approach. From TV, print
(newspaper and magazines), digital, PR, merchandising, sponsoring to
organizing pre-night parties - we are doing it all.

Currently, the brand's marketing spends are directed towards four

platforms - music, fashion, food and sports. In music, Kingfisher is
associated with events such as Voice of Goa; The Great Indian October Fest
(Bangalore); and Pub Rock Fest. It also sponsors fashion awards, fashion
weeks, individual fashion shows and is the official sponsor for IPL after
parties.

 Along with in-flight Entertainment system, Kingfisher is

coming up with path-breaking Partners Program.
Kingfisher airlines are established one world members with American
Airlines, British Airways, Cathay Pacific, Finn air, Japan Airlines, Qantas
and Royal Jordanian already serve five gateways in India between them –
Bangalore, Chennai, Delhi, Hyderabad and Mumbai.

One world brings together some of the best and biggest names in the
airline business - American Airlines, British Airways, Cathay Pacific, Finn
air, Iberia, Japan Airlines, LAN, Malév Hungarian Airlines, Mexicana,
Qantas and Royal Jordanian, and around 20 affiliates including American
Eagle, Dragon air, LAN Argentina, LAN Ecuador and LAN Peru. Russia’s
S7 Airlines will join the alliance in 2010 with Kingfisher now on track to
follow during 2011. Between them, these airlines:

• Serve 800 airports in nearly 150 countries, with some 9,000 daily
departures.

• Offer nearly 550 airport lounges for premium customers.

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• Carry some 340 million passengers a year on a fleet of almost 2,500

aircraft.

• Generate more than US$100 billion annual revenues in total.

It is the only alliance with any airlines based in South America, Australia or
Asia’s Middle East.

 Brand activation at multiple consumer touch-points like

multiplexes, malls, restaurants, pubs, events etc.
Kingfisher had announced special offer for its guest , all that they have to
do was to fill a form & submit it to any kingfisher airlines check in counter&
participate it to win a Toyota Innova.or they can log on to
www.flykingfisher.com/innova. After logging on, the guest has to submit the
PNR number of the flight taken, answer two questions and submit their
contact details.

Kingfisher Airlines marketing head Girish Shah said, "Kingfisher

Airlines has redefined the way the airline category is marketed and
promoted. All marketing initiatives and promotions have been conceived to
deliver superior value and to delight guests who chose to fly with Kingfisher
Airlines.

At Kingfisher Airlines the Good Times experience is not limited to

guests' in-flight experience. We are delighted to present yet another exciting
promotion for our guests. The contest runs for a month and at the end of the
month, one lucky guest will win a brand new Toyota Innova. As we expand
our network of cities served, we will continue to innovate and present
exciting marketing initiatives in the months ahead”. Kingfisher Airlines has
also launched the Partners Programme.

This is a forum where like-minded brands to Kingfisher Airlines can

come on the same platform and achieve respective marketing objectives.
Some brands that Kingfisher Airlines presently partners with are Tata
Tetley, Tabasco, Pepsi and Frito-Lay.

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The team at Kingfisher Airlines also believes that a consumer does not
select a brand in isolation. Taking this insight forward, an extensive on-
ground activation programme has been launched that is aimed at
communicating the Good Times experience of Kingfisher Airlines outside
the air travel context as well.

Brand activation efforts have been successfully carried out at multiple

consumer touch-points like multiplexes, malls, restaurants, pubs, events etc.
Kingfisher Airlines also offers its guests King Club. This loyalty programme
offers the fastest way to earn free tickets along with unparalleled rewards
and benefits.

In addition to the above initiatives, Kingfisher Airlines has launched the

'King Credit Card', a co-branded credit card with India's leading bank, ICICI
Bank. Launched on a Super-gold platform, The King Card offers exclusive
privileges to its members including a personal concierge service 24 x 7.

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BRANDING INITIATIVES & STRATEGIES.

1) Kingfisher Airlines, American Express to lunch co branded card.

Corporate Card issuer American Express and Kingfisher Airlines announced

a joint marketing initiative with the launch of the first airline corporate
charge card specifically targeted at the small to medium sized enterprise
(SME) market in the country.

A market-first, the American Express Kingfisher Airlines Corporate Card

will offer India-based companies an 8-per cent rebate on Kingfisher Airlines
air travel which is charged to the card and will also offer card holders an
exclusive membership upgrade within the Kingfisher Airlines frequent flyer
programme, King Club.

2) Kingfisher Airlines have made tie up with NDTV Good Times.

To market their product effectively and reaching out to the people,
Kingfisher Airlines selected NDTV Good Times as their media partner for
the aggressive advertising through which they can interact with the people in
an efficient way.

3) Kingfisher F1& IPL: Marketing, The Vijay Mallya way

Vijay Mallya has most definitely been looking to overtake something and
ensure that he is the first to cross the line with the chequered flag. Spyker
Ferrari is most likely what it is. Mallya has decided to get himself a Formula
One team, happily investing a cool €90 million over a weekend, and in the
process, exponentially expanding marketing opportunities for his flagship
brand, Kingfisher.

They also owned team in IPL and named it Royal Challengers

Bangalore it was done as part of their promotional strategy by Vijay Mallya.

4) ICICI Bank and Kingfisher Airlines Launch Co-branded Credit

Card.

Kingfisher Airlines, India's first true-value, full-service airline, in its

constant attempt to provide enhanced value to its consumers entered into an
agreement with ICICI Bank , India’s second largest Bank, to create a co-

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branded credit card that will allow its members a host of privileges and
would also serve as an incentive to become loyal travelers of Kingfisher
Airlines.

5) Kingfisher Airlines and Dish TV Form an Unprecedented

Alliance in the Indian Skies.

Kingfisher Airlines and Dish TV introduce LIVE TV in-flight. Now enjoy

watching your favorite channels 35,000 feet high in the sky History has been
created in the world of entertainment and Indian aviation, with the coming
together of two large corporate houses, Dish TV and Kingfisher Airlines, to
bring LIVE TV entertainment for the very first time in the Indian skies. This
association signifies the commitment to enhance in-flight entertainment like
never before and a turning point to make the unprecedented happen, the
launch of LIVE TV, 35000 feet high in the sky. As a part of the tie-up, the
country’s pioneer DTH player, Dish TV, will demonstrate its services on the
country’s fastest growing airline, Kingfisher Airlines

6) Kingfisher Airlines to buy 26 percent in Air Deccan for US$135

million.

United Breweries (Holdings) Ltd., which runs Kingfisher Airlines, is to buy

26 percent of Deccan Aviation Ltd, which operates the low-cost carrier Air
Deccan, for US$135 million.

Deccan will issue about 35 million shares at US$3.8 each to United

Breweries (Holdings), an 18 percent premium to Deccan’s closing price on
Wednesday. UB Group has paid an advance of US$36.82 million and the
balance will be paid in next four months.

7) Kingfisher becomes first Indian customer for A380, A350, &

A330.

Kingfisher Airlines has become the first Indian carrier to sign a firm contract
with Airbus for the A350 and A380 – the company’s newest and largest
aircraft, respectively – as well as for the A330. The order is for five A350-
800s plus five A380s for intercontinental services, and five A330-200s for
regional routes.
Deliveries of Kingfisher’s Airbus A330s are due to begin in the third quarter
of 2007, those of the double-deck A380s in 2010, and those of the A350s in

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2012. Engine selections have yet to be announced. Kingfisher will use its
A330s on regional routes, including flights to Europe, while the A350 and
A380 are destined for longer nonstop flights – such as to the USA.

8) Kingfisher ties up with perfume brands in promotional offer.

Kingfisher Airlines has announced a “Scent of Good Times” Offer, under

which it gives away reputed perfume brands worth Rs 4,000 to anyone
who purchases flight coupon booklets having two flight coupons for Rs
10000. For this, Kingfisher has tied up with leading perfume brands like
Pierre Cardin, Paul Smith and Kenzo.

9) Sign up for the new brand ambassador

Kingfisher Airlines have made Deepika Padukone & Katrina Kaif

as their brand ambassador to create more customer base value to
their organization.

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SWOT ANALYSIS
STRENGHTS

 Large Fleets
 Experienced Staff
 Dedicated Departure terminal at Delhi
 Connectivity with the reservation centers and agents are good
 Adequate infrastructure and large network
 People are loyal towards the national carrier
 Kingfisher Airlines has a modern and complete in – house training
facility

WEAKNESSES

 High overheads and huge workforce resulting in lower output

 Preconceived image of PSU’s
 Attitude of the staff
 Ageing workforce ( cabin crew )
 Kingfisher Airlines has its socio – economic responsibility of catering
to the inaccessibility areas at subsidized rate affecting operational
expenses
 Being a dedicated terminal all services rendered at the airport is
presumed by passengers to be done by Kingfisher Airlines
 Inaccessibility of the staff over phone.

OPPORTUNITIES

 The expanding tourism industry.

 The non penetrated domestic market.
 International market.
 Untapped air cargo market.

THREATS
 Competitors
 Infrastructure issues.
 Fuel price hike.
 Tourism saturation

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 Economic slowdown.
 Promotions and sponsorship declining.

PEST ANALYSIS

POLITICAL FACTORS

1) Open sky policy

2) FDI limits: 100% for Greenfield airports

74% for the existing airports

100% through special permission

49% for airlines.

ECONOMICAL FACTORS

1) Contribution to the Indian economy.

2) Rising cost of fuel.

3) Investment in the sector of aviation.

4) The growth of the middle income group family affects the aviation
sector.

SOCIAL FACTORS

1) Development of cities leads to better services and airports

2) Employment opportunities.

3) Safety regulations.

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4) The status symbol attached to a plane travel.

TECHNOLOGICAL FACTORS

1) The growth of e-commerce and e-ticketing.

2) Satellite based navigation system.

3) Modernisation and privatisation of the airports.

4) Developing green field airports with private sector for example in

Bangalore the airport corporation limited.

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PORTER FIVE FORCE MODEL IMPLEMENTATION IN

KINGFISHER AIRLINE

Rivalry amongst existing Competitors:

 Jet group is a major rival of Kingfisher airlines.

 Kingfisher - 919,000 passengers, Jet Airways – 8,37,000
passengers.
 Trying to grab maximum market share through price wars.
 Market Share of Kingfisher airlines is 27.6% and of Jet group is
25.1%.
 Ahead of competitors due to strong brand loyalty and adequate
modern infrastructure.

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 Threat to competitors in all domestic segments.

Threats of New Entrants:

 Increasing customer base may attract new player to enter the

market and try to capture market share of the existing company.
 Relaxation in FDI policies may attract new foreign players to
explore this market.
 Virgin Atlantic, Low Cost of Carriers applied for license.

Bargaining Power of Buyers:

 Due to availability of many carriers, buyers have many options to

reach desired destination..
 The company has to price its services accordingly.
 Recession is helping low cost carriers do well.
 Corporate customers.

Bargaining Power of Suppliers:

 Airbus and Boeing are the two major supplier of aircraft.

 Also fuel prices are high – Monopoly.
 Facilities from Airport Authority of India.

Threat from Substitutes:

 Development of road and railways infrastructure.

 Reduce time to travel by road to nearby cities.
 Improvement in rail connectivity as well as services.

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ANSOFF MODEL IMPLEMENTATION IN KINGFISHER AIRLINE

Market Penetration

• Encouraging existing Customer to buy more Showing benefits for

using more associating freebies/extra service/member ship with
primary offering.

• Try to look for foreign entrant’s weakness such as Virgin Atlantic

which lacks in Indian values & taste

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Product Development

• Seek additional distribution channels such as more tie ups and

collaboration, try seeking collaboration with international carriers,
bilateral discussions over seat and code-sharing between the carriers

• New product development

Market Development

• Try to find out new customer group such as Old-retired persons.

• Special offering for the first time fliers.

Diversification

• May go for other services like international flights (concentric

diversification).

• May go for arrangement fashion shows (horizontal diversification).

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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

COMPARISON OF KINGFISHER WITH JET AIRWAYS

Kingfisher Airlines Jet Airways

Kingfisher is one of the latest Airlines Jet Airways is the experienced airline
in INDIA in INDIA.

Overall growth in year 2006-07 is Overall growth in year 2006-07 is

37%. 37%.

Kingfisher acquired 26% share in Air Jet airways acquired Air Sahara in
Deccan in 2007. 2006.

Domestic airlines poised to go Jet Airways already has domestic as

international flights. well as international flights.

In a short span of 2 years its market Jet Airways has its market share 31%
share has become 28% including Air including Air Sahara.
Deccan.

Personal in-flight entertainment in Average entertainment services.

every seat.

It was awarded the ‘Best New Airline Jet Airways won Double Honor
Of the Year’ award in 2005. Travel Trade Gazette Travel award in
2007.

Already have training academy. They are planning to start training

academy.

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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

Contempary Problems of Kingfisher Airlines

Cash Crunch Problem

Kingfisher Airlines is burning cash like a Nasa spaceship. According

to Mumbai-based banking sources, the company’s debt is reaching
“unserviceable” proportions as total loans today stand at roughly Rs 6,000
crores and the outstanding current liabilities (due to oil companies, airports
and so on) at Rs 1,800 crores.

On the other hand, its poor market capitalization of roughly Rs 1129

crores (as on 5 August 2009) makes raising resources against the equity very
difficult. There is also a monthly interest burden of Rs 100 crores as the debt
reaches what many analysts describe as “frightening levels”.

The losses of the airline are also mounting. For the quarter ended
December, the net operating loss was Rs 626 crores. However, after making
some adjustments, the net loss was Rs 413.93 crores. If one goes by the net
operating loss, the airline’s daily operating loss is just over Rs 7 crores. The
company’s debt-equity ratio, which was at 5.12:1 as of FY2007-08, is
believed to have shot up significantly.

“(Chairman) Vijay Mallya has been claiming he will raise $400

million for Kingfisher Airlines by parting with some of the stake,” says one
industry analyst. “He wants to raise this amount in a company that is valued
in full at about $200 million. It is a joke.”

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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

The huge debts also imply that several banks have a huge exposure to
the airline. It is common knowledge that ICICI Bank — one of the major
lenders to the airline — has refused it any further loans.

The fact that the airline is finding it hard to make ends meet has been
evident in the small things it does — or does not do. At many airports, for
instance, even when aerobridges are available, the airline has been shunning
their use (and thereby payment) and using the buses to cart passengers.

However, the fiscal and quarterly results are even gloomier. In the first nine
months of FY2008-09, Kingfisher Airlines has incurred a net loss of Rs
1,054 crores on operating income of Rs 4,168 crores. In comparison, in FY
2007-08, it had a net loss of only Rs 188 crores on operating income of Rs
1,441 crore.

DVB Aviation sues Kingfisher Airlines for default on aircraft rentals

Vijay Mallya owned Kingfisher Airlines has landed in fresh trouble

with Singapore based DVB Aviation Finance Asia Ltd , a subsidiary of
Germany’s DVB Bank, suing the airline in the British courts for defaulting
to the payment of aircraft rentals. The Singapore based company had leased
two Airbus 320 aircraft to Kingfisher Airlines in 2006.

The suit was filed on 16th July 2010 and will be heard by the Queen’s
Bench division’s commercial court. A source from DVB Aviation, who did
not want to be named, said the suit has been filed after the airline failed to
pay dues for the last three months. These payments are made on monthly
basis. “There is a grace period given for seven to eight days but in this case

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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

dues have been pending for the last three months.” The official spokesman
of DVB Aviation refused to comment. An e-mail query to KFA’s
spokesperson did not elicit any response.

40 senior pilots quit Kingfisher Airlines in a month

Kingfisher Airlines, owned by the flamboyant tycoon Vijay Mallya,

has seen 40 of its senior pilots quit over the past month as a cut in the
number of planes and routes limits opportunities, multiple sources in the
company said.

A total of 100 pilots have left the company in the past year, 16% of its
total strength of 600. The Kingfisher spokesperson confirmed that the pilots
had resigned, but said this was in no way out of the ordinary.

The majority of those quitting are at the commander level, senior

pilots with over 2,000 hours of flying time and who are in charge of the
plane during flights. Another 20 pilots too are set to put in their papers, said
the sources.

The recent attrition excludes 100 trainee pilots Kingfisher benched

three months ago after it cut its domestic capacity by 22% and brought down
the number of flights per day to 350 from 600 about a year ago.

The term benched, which is borrowed from the IT industry, means

that there is no work for these pilots. The airline has not yet said what will
happen to these trainees though company sources say it has conveyed its
inability to absorb them.

Kingfisher has reduced its fleet size from 88 at the beginning of 2009
to 66 now by returning planes taken on lease. This has meant it has more
pilots than it needs. Airlines usually do not own their aircraft, instead they
prefer taking them on lease from finance companies such as GE Capital, an
arm of General Electric.

An aircraft can be returned by terminating the lease. Some of the 66

aircraft physically in India are currently grounded because of legal disputes
between Kingfisher and GE Capital, while a few others are not able to take
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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

to the air because of technical problems with their engines. ET wasn’t able
to ascertain the exact number of planes which are currently grounded.

Industry officials say that Kingfisher’s path to recovery still seems

shaky compared to its competitors that have started adding capacity as more
people take to the skies in the wake of a rapid recovery from the downturn.

It is believed some of the Kingfisher pilots have joined Delhi-based

low-budget carrier Indigo, though this could not be confirmed. Other
airlines, which are hiring pilots, include budget carrier Spice Jet, which is
inducting three Boeing-737 in its fleet by this year end.

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 PROJECT ON AVIATION SECTOR (KINGFISHER AIRLINE)

CONCLUSION

Kingfisher Airlines is one of the largest and most widespread airlines

of the country providing its services not only in India as well as outside
India also. It has alliance with many other airlines in this sector.

Kingfisher Airlines offers world class services to the customer

at a nominal rate. The national carrier takes immense pride in having
successfully played a pivotal role in making various facets of India popular
with the people of the world and acting as the country’s cultural ambassador.
The airline uses the services of one of the advanced plans been operated in
the world.

To sum up we would like to say that Kingfisher Airlines is

serving its customer in an appreciated way and going to be in the list of best
services providers in coming years.

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