STRATEGIC

MANAGEMENT
Case Analysis
Kingfisher Airlines Ltd.

Submitted by:-
Akhtar Shahi Qureshi PGP/20/312
Bishal Naskar PGP/20/322
Naman Jaiswal PGP/20/333
Rishi Vyas PGP/20/343
Sonalika Kumari PGP/20/353
Avijeet Tulsiani PGP/20/363

 The rise and fall of Kingfisher Airlines

1991 2003 2005-06 2007 2008-09 2011 2012

The New Entry of Started Acquired With the 6th Kingfisher
Economic Kingfisher operations in market share market share consecutive Airlines
Policy in Airlines Ltd. 2005 with of 17% in of 26.7%, it year in losses grounded
1991, led to in the airline Airbus A-320 2007 from captured the Reduces fleet Declaration of
calls for the industry and other dry 2% in 2005 market but from the low Kingfisher
opening up of leased Bought 46% the losses fare sector Airlines as
the airline aircrafts stake in Air rose to and increased NPA by banks
sector Revenue of Deccan to around the fleet in
The operation Rs. 3.05 enter into the Rs.16.1 high fare
of Air Taxi billion and LCC market billion sector
services by loss of Rs. 3.4 as Kingfisher Loss of
the billion from Red market share
government first year of to Indigo and
operations Jet
STRENGTHS WEAKNESS
Strong brand value and Still in RED (still to
reputation in the minds Break Even)
of the consumer (An outstanding of
UB group as the parent 950crs only to oil
company marketing cos till may
First Indian airline to end )
have a new fleet of High ticket pricing (KF
planes First & Class)
Quality service and Tough competition from
innovation Indian as well as
More than 80 international players
destinations
Less than 100 people
(employees) per aircraft

OPPORTUNITIES THREAT
If able to survive for a Falling demand
couple of years, then can Over capacity in the
have a big market share skies
Untapped International ATF prices

SWOT
Markets
ANALYSIS
Economic slowdown
Untapped cargo market Infrastructure issues
Expanding tourism
business
Note : Till 2011 total assets are more then total liabilities ( assets : 1,36,212 million rupees , Liabilities : 1,12,239 million rupees) but in 2012 total
liabilities become more then total assets ( assets : 90,800 million rupees , Liabilities : 1,41,624 million rupees) and company became bank corrupt

Revenue( INR Billion) Profit Before Tax( INR Billion)

-0.08 -0.21
63.6
-3.37
-4.16
54.94
52.69 50.9 -6.83

-15.21

16.22
14.41
12.36
-21.55
3.06
0.63

Market Share Number of Aircrafts

Airbus ATR Total
27% 77 77
23% 68 68 68

20%

14% 41 41 39
13%
27
21 21
6%
4 4
2%

0 0 0 0 0
STRATEGIES LEADING TO THE FAILURE OF KINGFISHER

Division of the airline into Premium

business class, economy and low fare
led to dilution of the brand as a five OPERATIO STRATEGI
star rated airline. NAL RISK- C RISK
FUEL MARKET
Rapid Market expansion without proper
planning to mitigate existing losses: To
COSTS ANALYSIS
Kingfisher provided extra
gain maximum market share and be the market
leader Kingfisher airlines expanded at a very services like home
fast pace to 34 cities during 2007 while delivery of flight tickets, in
doubling its frequency to 208 flights. This led to flight entertainment
increased market share to 13% with increasing systems and valet services
losses and 412 flights in 2008-09 making which increased the costs
market share of 27% a 100% growth. tremendously.

STRATEGI
FINANCIAL
C RISK-
RISK-
MERGER
Dry Leasing of EXCESSIVE
Kingfisher entered into price war WITH AIR
Aircrafts: DEBT
in domestic market against all other As the DECCAN
carriers, especially the LCCs. Since Air company did not buy
Deccan was offering some tickets for aircrafts, it could not
meagre one rupee, Kingfisher had to command any bargaining STRATEGI
continue such kind of marketing power over Boeing or
activity. Airbus. The suppliers had C RISK
very high power over the INVESTME
transactions. NT IN
PLANES
Kingfisher airlines, a premium class category in
the airline industry acquired a low cost carrier
Air Deccan. This led to brand conflict among Instead of targeting profits, Kingfisher
the customers, and brand association
miserably weakened since
was only targeting to increase its
market share. When the strategy of
Risk Management Failures
acquisition. People failed to differentiate
the services of Kingfisher Red and Kingfisher
differentiation is being followed it is
wrong to focus intensively on market
in Kingfisher Airlines
which diluted the existing brand equity. share rather than focusing on the niche
segment.
STRATEGY in HINDSIGHT
AS MALLYA ENTERING
THE INDIAN AVIATION SPACE.
 A. Porters 5 Forces for Kingfisher Airlines (Premium Segment)
(Time: 2004-05 when Kingfisher entered the market)

High: high speed trains, high tech buses and

other means of transport has given more
LOW: The level of threat from options to people to travel.
new entrants is quite low such as
Virgin Atlantic, Qantas. Regulatory
hassles Threats from
Threats Threats from
competitors: Threats of
from new competitors: substitutes
entrants: The level of threat :
Thethe
from level of threat
domestic
from the domestic
competitors is very
competitors
high. Competitors is very
high.
like Competitors
Jet Airways,
like Jet Airways,
Indian Airlines are
Indian
some Airlines
of the old are High:. Airbus and Boeing only two
some
well of the old
established aircraftmanufacturer
well established
players in the Shortage of trained pilots.
players
market in the
which prove Government is one of the major
Bargaining market
to be strong which prove Bargaining supplier in form of Airport
power of to be strong
competitors for the power of Authority infrastructure
Medium: Kingfishers target competitors for the
emerging
segment is Premium range full
customers: emerging
suppliers: bottleneck of airports
Kingfisher Airlines especially in Tier-II cities.
service segment which seeks to Kingfisher Airlines
State Government levies heavy
provide luxury. Customers arent
VAT on Aviation Turbine Fuel
reluctant to pay a little more
upto 40%.
sum to gain this experience.

Low for caterers

B. Key Facts of Aviation Industry
 C. Strategy in Hind Sight
Only 2 competitors Jet Airways and Indian Airlines catering huge market and making annual
profits of around INR 6 billion operating on full service model, with significant entry barriers would
enter in premium segment as LCC are loss making and many players present in LCC segment.
Focusing in differentiation strategy and providing quality service, would not unnecessarily focus
on acquiring Market Share. Will not increase flights from 4 to 412 within 2 years as Tier-II
customers are more price sensitive and would not go for premium service.
In Full Service model, class segment has higher yield. Hence the Aircraft design from beginning
should have more seats for class segment than premium to avoid redesigning costs

Leasing or Aircraft purchase irrelevant. Spice Jet made profit and all its plane are leased.

Would explore possibility of Cartelling on routes so as to minimize vacant seat and increase
occupancy rate to achieve break-even per flight (Co-opetition)

All 3 players went for M&A which was a wrong strategy as post M&A integration was difficult and
synergy benefits could not be realized

Jet bought Air Sahara

Air India and Indian Airlines merged Vijay Mallya lost his stake in Mangalore Organics,
United Breweries was sold to Diego and F1 Team was
sold to Air Sahara. The loss is nothing in comparison
KFA bought Air Deccan to reputational damage of being an absconder and a
bankrupt all de to one wrong business decision of
entering into Airlines Industry
THANK YOU