This PPT explains about the OPERATIONAL REASONS FOR FAILURE,MAIN FINANCIAL CHALLENGES,STRATEGIC FAILURES of king fisher airlines

1. SUDHARSHAN.E

2. Introduction
 Established in 2003, It was owned by the Bengaluru based United Breweries Group.
 started commercial operations on 9 May 2005 with a fleet of four new Airbus A320-
200s operating a flight from Mumbai to Delhi.
 Kingfisher Airlines had the second largest share in India's domestic air travel market,
Until December 2011.
 The airline had shut down its operations and locked out its employees for several days
when on 20 October 2012 the Directorate General of Civil Aviation (DGCA) suspended
its flight certificate.
 In February 2013, the Indian Government announced the withdrawal of both domestic
and international flight entitlements allocated to the airline.

3. OPERATIONAL REASONS
FOR FAILURE
 Maintenance, Landing and Navigation Cost : Kingfisher Airline’s cost of
maintenance than Jet was about 2% higher in 2011 and 3% higher in 2012.
 High Overhead Costs : In 2012, Kingfisher Airlines had 5,696 people working for
them vis-à-vis 13177 employees by Jet as on 31st March2012. The % was much
higher than other airlines.
 High Cost of VAS : KFA’s cost for value added services were much more than
other airlines. While they focused less on scheduling, connectivity, cleanliness
and low price, the basic needs of Indian Customers.

4. 1.Delayed Salary : KFA delayed salaries in Aug 2011 and at a Point when salaries to
employees were due for more than 4-5 months(Oct’11-Jan’12), Engineers refused to sign
the ‘Tech Log’, which is mandatory to certify that aircraft is fit to fly before every flight.
 When this was brought to the attention of DGCA, they cancelled the KFA license.
2.Fuel Dues and Bank Dues
3.Aircraft Rental Dues : Since 2008, KFA was unable to pay Aircraft rentals on time. Due
to that 16 out of 66 Aircrafts had to be grounded.
4.Airport Dues : AAI sent notice to KFA in Feb 2012 regarding accumulated dues
MAIN FINANCIAL CHALLENGES

5. STRATEGIC FAILURES
1.Unrealistic Market Analysis:
 The first mistake, is lack of understanding of consumer requirement and basing a decision
that luxury sells in Airline Industry.
 Failure to understand and comprehend potential opportunities.
 Mr. Mallya & UB Group, highly successful in the liquor business could not comprehend in
customer preferences within two industries.
Example: Customers might buy expensive alcohol but not airline tickets since the total cash
flow is higher. Travelling is more of a necessity than a luxury item.

6. 2.Unrelated Business Diversification :
 Unrelated diversification involved entering into entirely new industry that lacks any important
similarities with the firm’s existing industry or industries, and is often accomplished through a
merger or acquisition.
 With the offering of three different classes of travel i.e. Kingfisher First for Premium business
class, Kingfisher Class for Premium economy, Kingfisher Red for low cost.
 • All these propositions diluted the image of the brand, which eventually led to decline in
market share .The operating losses increased every year, and so did the debts

7. 3.Merger With Air Deccan :
 The sudden change in the business strategy created confusion in the minds of
the consumers.
 Airlines passengers having got used to premium services offered by King
Fisher Airlines
 Suddenly with acquisition of Air Deccan, there was introduction of King Fisher
Red in 2008, which added to customer’s dilemma, From treatment of five star
and value added services, it had suddenly transformed to a no frill airline.

8. 

9. solutions
 Acquisition and expansion-downfall-A clear cut approach was needed to know
the stability in the domestic market and also to understand the ground realities of
the airlines industry
 The company must have improved in its ability to adapt its business with the
external environment and change the business culture to suit the demands and to
avoid high potential risk.
 It must have understood to estimate the changing trends, consumer preferences
and cost curtailing to improve profitability
 There was no single CEO continued for one year in Kingfisher airlines, there was a
frequent change in the top level management, serious interference should have
been done to avoid fall of the company