kingfisher failure

1. Failure Of KingFisher Airlines
Symbiosis Institute of Pankaj Murudkar
Vinay Nadar
(063)
(064)
Operations Management Vaibhav Nagvanshi (065)
Sachin Bajaj (066)
Sumit Pahuja (067)

2. WHAT DO YOU FEEL ???

3. INDIAN AVIATION INDUSTRY
Low Cost Carriers (~ 70%)
Indigo
Spice Jet
Go Air
Jet Lite
KingFisher Red
Source : KPMG Report On Indian aviation Industry 2010

4. INTRODUCTION TO UB GROUP
• Founded in -1857
• Chairman – Dr.Vijay Mallya
• Headquartered -Richmond Road, Bangalore
• Products –Brewery, Alcohol Beverage ,Aviation,
Chemicals & Fertilizers, Mangalore Chemicals and
Fertilizers Ltd, UB Global (trading company)
•
•

5. INTRODUCTION TO KINGFISHER AIRLINES
VISION
“The Kingfisher Airlines family will consistently deliver a safe, value
based and enjoyable travel experience to all our guests.”
Kingfisher Commenced its operations on
May 9,2005.
Sanjay Agarwal is the current CEO of the company .
Kingfisher Airlines is also the sponsor of
F1 racing outfit, Force India.

6. CURRENT FINANCIAL STATUS
Particulars Amount in crores (Rs.)
Net Worth 2951.19
Total Loss 1027
Total Debt 7,057.08
Total Liabilities 4,105.89
SHARE PRICE AS ON 7TH DEC’ 2011

7. CRITICISM
Economic Times -23 /11/2011

8. ANALYSIS

9. ANALYSIS -1
INDIGO AIRLINES KINGFISHER RED
 31 destinations in India  63 domestic destinations in India
 Focused & Profit making routes Many Unprofitable routes like Nasik, Hubli etc
 Low price compared to Kingfisher red  Grounding of 14 aircrafts
 Low Terminal cost like D1 in New Delhi & 1B in Strict rules by DGCA on implementation of Time Table.
Mumbai  Multiple Hopping, leading to cascading effect. Hence,
 Focus on Low Cost Airlines delay of flight.
 Innovative and radical methods of airline back-end  Operations shifted to New Terminals in Delhi &
operations like financing, leasing. Mumbai.
 Less Turn around time as compared to Kingfisher red  Focus diverted from high service to low cost
 More Turn around time as compared to Indigo

10. ANALYSIS - 2
INDIGO
 Standardized Aircraft
 Less Inventory of Spares
 Less Training Cost
 Less Maintenance Cost
 Less Operational cost
 Effective Terminal Use
 Easy Scheduling
KINGFISHER RED
 Diversified Aircrafts with different
capacities
 High Inventory of Spares
 High Training Cost
 High Maintenance Cost
 High Operational Cost
 Scheduling difficult
 More Human Resources required

11. ANALYSIS - 3
Rating of Airline Operators - Overall
Rating of Airline Operators - Based on service Quality Dimensions
The survey was carried out by Monitoring and Research Systems
Pvt. Ltd among 1,330 passengers who had taken at least four flights in the
past one year. The sample was spread across 10 towns—Delhi, Lucknow,
Kolkata, Guwahati, Mumbai, Pune, Ahmedabad, Chennai, Bangalore and
Hyderabad.

12. ANALYSIS - 4
Seat Load factor Analysis
Flight Cancellation Analysis

13. ANALYSIS - 5

14. RECCOMENDATIONS

15. RECOMMENDATION – 1 ( Marketing Strategy for KF-Red)
• Holiday packages
- @ unprofitable routes like Nashik, Auraangabad
• Pricing
- Should be at par with Spice jet and Indigo
• Tie-ups with Corporate
• Frequent flyer programmes
• Better deals and offers for flyers in air

16. RECOMMENDATION -2 (Long Term Strategy)
Features Airbus A380 Dreamliner 787
Unit Cost 375.3 million USD 193 million USD
No of passengers 450-600 200-400
Fuel efficiency More consumption 20% less
consumption
Wing span 60 m 80 m
Cruising Speed 900 kmp/h 1000 kmp/h
Comfort level No noise during None
take off and landing
Customization level High Low

17. RECOMMENDATION – 3 ( Strategy for KF-Red)
BOMBARDIER Q400
-Bombardier Q 400 (Canada)
- 80-100 passengers
- Equivalent to ATR
- 20 million USD
COMAC C919
-Comac C919 ( China )
- 190-220 passenger
- Equivalent to Boeing 737 and Airbus A320
- Delivery by 2014

18. GLOBALLY BEST LOW COST CARRIERS

19. AIR ASIA – (Malaysia)
• Skytrax best low cost airlines
2007,2009,2010 and 2011
• Head quarter Malaysia
• operating cost $0.035 /seat-km
• First airlines for ticket less air
travel
• 106 routes – Flies international

20. JETSTAR AIRWAYS – (AUSTRALIA)
• World no 2 low cost airlines
• Subsidiary of Qantas
• Flight entertainment system
using i-pad
• Flies international
• Has a business class

21. CEBU PACIFIC – (PHILIPPINES)
• “Its time everyone flies”- slogan
• From Pasay city- Philippines
• For 15 January – Manila to
Singapore
– Singapore airlines 576SGD ( INR
23300)
– Cebu pacific 99 SGD ( INR 3960) –
no baggage
– Cebu Pacific 165 SGD (INR 6600)-
30 kg baggage

22. CONCLUSION

23. CONCLUSION
• Route rationalisation: Cutting back unprofi table sectors
and services to several cities
• Debt recast: Asking banks to reduce rates or take a cut on
loans or find a 'local investor‘
• Raising capital: It has plans to raise $200 million through
GDR
• FDI: If the FDI limit is raised and foreign airlines are allowed
to buy a stake, Mallya could recapitalise Kingfisher

24. The End