Airline Industry strategy Report

STRATEGY FORMULATION AND IMPLEMENTATION

AVIATION SECTOR

SUBMITTED TO: Prof. RASHMI MENON
SUBMITTED BY: RICHA SARITA Shailendra HARSHIT YASH ANKIT

INTRODUCTION TO THE AVIATION INDUSTRY
The 1884 La France, the first fully controllable airship Although many people think of human flight as beginning with the aircraft in the early 1900s, in fact people had been flying repeatedly for more than 100 years.  Wright brothers’ first successful flight in Kitty Hawk in 1903.  American Airlines in 1928 and United Airlines in 1931.  Development of the mail system by the U.S. Postal Service helped create the airline industry.  Increased R&D of aircraft after World War II: World War II saw a drastic increase in the pace of aircraft development and production. All countries involved in the war stepped up development and production of aircraft and flight based weapon delivery systems. After World War II commercial aviation grew rapidly, used mostly ex-military aircraft to transport people and cargo. This growth was accelerated by the glut of heavy and super-heavy bomber airframes like the B-29 and Lancaster that could be converted into commercial aircraft. The DC-3 also made for easier and longer commercial flights. The first North American commercial jet airliner to fly was the Avro C102 Jetliner in September 1949, shortly after the British Comet. By 1952, the British state airline BOAC had introduced the De Havilland Comet into scheduled service.

OVERVIEW OF THE GLOBAL AIRLINE INDUSTRY
The global airlines industry grew by 11.3% in 2007 to reach a value of $429.9 billion





In 2012 the industry is forecast to have a value of $711 billion, an increase of 65.4% since 2007



The industry grew by 5.6% in 2007 to reach a volume of 2,076 million passengers.



In 2012 the industry is forecast to have a volume of 2,362 million passengers, an increase of 13.7% since 2007



The domestic segment dominated in the global airline industry and accounted for 1.4 billion passengers in 2007, equivalent to 66.5% of the industry's overall volume



The Americas region is the largest airline industry in the world accounting for 51.1% of the global industry's value

 The report informs business decisions, enabling the reader to spot future trends and developments. Furthermore, the information contained in the report adds weight to presentations and helps the reader to save time carrying out entry-level research.



The global airline industry consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700 airports.



In 2010, the world’s airlines flew almost 28 million scheduled flight departures and carried over 2 billion passengers.



The growth of world air travel has averaged approximately 5% per year over the past 30 years, with substantial yearly variations due both to changing economic conditions and differences in economic growth in different regions of the world.



Historically, the annual growth in air travel has been about twice the annual growth in GDP.



Even with relatively conservative expectations of economic growth over the next 10-15 years, a continued 4-5% annual growth in global air travel will lead to a doubling of total air travel during this period.



In the US airline industry, approximately 100 certificated passenger airlines operate over 11 million flight departures per year, and carry over one-third of the world’s total air traffic – US airlines enplaned 745 million passengers in 2010.



US airlines reported over $160 billion in total revenues, with approximately 545,000 employees and over 8,000 aircraft operating 31,000 flights per day.

 The economic impacts of the airline industry range from its direct effects on airline employment, company profitability and net worth to the less direct but very important effects on the aircraft manufacturing industry, airports, and tourism industries, not to mention the economic impact on virtually every other industry that the ability to travel by air generates.



Commercial aviation contributes 8 percent of the US Gross Domestic Product, according to recent estimates.

OVERVIEW OF THE INDIAN AIRLINE INDUSTRY
 Indian aviation industry is growing at 17% rate for the last few years with more than 40 million passengers have travelled in domestic sectors and more than 20 million passengers have travelled in international sectors in India in 2008.



The number of airports in India has also been increased significantly with 15 international airports, 87 domestic airports, 27 civil enclaves and more than 300 small airstrips.



Also air cargo is growing at a rate of 13%-14% and contributes around 0.2% of India’s GDP. Besides the year old public company Air India the major private players operating in Indian market are Jet Airways, Kingfishers, Spice Jet, Indigo, Paramount, Go Air etc.

 Among this Kingfisher has the largest market share of 21% closely followed by Jet Airways with 19.5% market share.

 Indian airline have maintained a seat factor of 70% to 80% in 2009.

 Aviation Industry in India is one of the fastest growing aviation industries in the world. With the liberalization of the Indian aviation sector, aviation industry in India has undergone a rapid transformation.

 From being primarily a government-owned industry, the Indian aviation industry is now dominated by privately owned full service airlines and low cost carriers.

 Private airlines account for around 75% share of the domestic aviation market.

 Earlier air travel was a privilege only a few could afford, but today air travel has become

much cheaper and can be afforded by a large number of people.

 The sector deals with the transport of passenger and cargo from one place to another, using the aerial route.

 About 75 million passengers are use the service contributing $5.6billion every year.



Around 15% growth rate is been registered in last 10 years.

 Growth in 2020 statement predicts handling 280 million customers by 2020

MAJOR CHANGES IN AVIATION INDUSTRY

 1986: Private Sector Players permitted as Air taxi operators. Jet, Air Sahara, etc started service.

 1994: Private Carriers permitted to operate scheduled services. Six operators granted

license, however only Jet and Air Sahara able to service.

 2003: Entry of low cost carriers. Air Deccan, Spice Jet, Go Air, Indigo.

PLAYERS IN INDIAN AVIATION INDUSTRY ARE

 The players in aviation industry can be categorized in three groups:

 Public players : Indian Airlines

 Private players: Jet Airways, Kingfisher Airlines, Spice Jet, Air Deccan.

 Start up players : Omega Air, Magic Air, Premier Star Air & MDLR Airlines

KINGFISHER AIRLINES
UB group based in Bangalore, is a conglomerate of different companies with a major focus on the brewery (beer) and alcoholic beverages industry. The company markets most of its beer under the Kingfisher brand. The group is headed by Dr Vijay Mallya. The UB Group was founded by a Scotsman, Thomas Leishman in 1857. Kingfisher, the Group's most visible and profitable brand, made a modest entry in the sixties. During the 1950's and 60's, the company expanded greatly by acquiring other breweries. First was the addition of McDowell as one of the Group subsidiaries, a move which helped United Breweries to extend its portfolio to wines and spirits business. Strategically, the Group moved into agro-based industries and medicines when Mallya acquired Kissan products and formed a long-term relationship with Hoechst AG of Germany to create the Indian pharmaceutical company now known as Aventis Pharma, the Indian subsidiary of the global pharma major Sanofi-Aventis. The UB Group’s Brewing Entity called United Breweries Limited (UBL) - has also assumed undisputed market leadership with a national market share in excess of 50%. Through a process of aggressive acquisition and market penetration, The UB Group today controls 60% of the total manufacturing capacity for Beer in India.

Of the many private aviation companies in India, Kingfisher Airlines is one name that has established itself in a short time span as the hallmark of quality. Today the main hub of this aviation giant is at the Chattrapati Shivaji International Airport in Mumbai and its registered office is in Bangalore, India. Owned by the United Breweries group which has made rapid strides under the leadership of Vijay Mallya, Kingfisher Airlines is the top airlines in the region and has also been awarded a five star status. The company also has a low cost cousin which operates by the name of Kingfisher Red and is a pioneer in the Indian low frills airlines industry just like its bigger brother. A plane of the Kingfisher Airlines can be easily identified by the official logo of the company which is a flying kingfisher bird with red, blue and green colors forming the background. This is one of the major luxury carriers in India and its flights take off for more than 70 destinations. People in India now prefer Kingfisher over other airlines because of the remarkable on-board services. When it comes to the in-flight services, Kingfisher is simply the best. One of the key reasons of the very high popularity of Kingfisher Airlines is the fact that its entire staff is considered among the best dressed and best trained. Kingfisher also excels in a number of other areas like courteous service, cheap airfares, and a huge set of special discounts and offers. Compared to nearly every other air carrier in India, the interiors of Kingfisher aircraft are like heaven. They offer truly world-class luxurious amenities and when flying with Kingfisher you really feel special. At a number of times, Kingfisher Airlines offers cheaper airfares for the people who prefer online ticketing. Kingfisher Airlines has a website that allows not just online booking of flights but also allows you to check flight status, applicable air fare and much more. One more reason of the huge success story that the airline has become is the fact that the company takes its social and environmental responsibility very seriously. The company is always committed and makes regular efforts to reduce its carbon footprint. The most recent step by Kingfisher Airlines and Kingfisher Red in this direction is their collaboration with Anna University to explore alternative fuel choices like biodiesel along with the possibility to mix and use this fuel with the jet fuel. In India, Kingfisher Airlines is the way to fly.

THE ENVIRONMENT

PESTEL ANALYSIS
Political Factors
Indian political scenario has, is and will undergo various changes. Following are the various policy changes which might have an impact on aviation industry in coming years:

1. Open Sky Policy : India had this agreement with 40 countries and lately it signed the policy with UK, USA and European Union. According to this policy, the signatories are allowed to fly over the skies of India. Under this arrangement, airlines from EU member nations will be allowed to operate flights to India from any of the 25 EU nations regardless of the carrier's country of origin. Effect: Tourist arrivals in India are expected to grow exponentially, especially due to the open sky policy between India and the SAARC countries and the increase in bilateral entitlements with European countries, and the US. The increase in number of international tourists will percolate down to increase in domestic passengers.

2. Modernization Of Airports: The Indian Cabinet has approved a proposal mandating the state-run airport operator to modernize 35 airports in second-tier cities within the next two years. The modernization process will cost the government between Rs. 70 to 80 billion. Delhi (Rs.8,700 cr) to GMR and Mumbai Airport Modernization (Rs.6,400 cr)to GVK are two biggest investment projects . Total investment on hand in airport infrastructure crossedRs.35,000 crore in the quarter ended January 2006.This investment was spread over 89 projects. Upgradation of Kolkata and Chennai airports is on anvil. Simultaneously, 20 non-metro airports will be developed. Two biggest active projects are the Bangalore International Airports Authority Ltd (Rs.1.5 crore) and GMR Hyderabad International Airport Ltd (Rs.1.5 crore). Effect: Improved infrastructure would lead to rise in no. of travelers and also so would encourage more operators.

3. Reduction on Excise Duty:

From January 9, 2004, the excise duty on ATF was reduced from 16 to 8 percent. The average domestic price of ATF is 99 per cent higher than prices in foreign countries and affects domestic airlines drastically as ATF accounts for 30 to 40 per cent of operating costs Effect: It would lead to low fares thus giving a boost to air travel. The government has reduced the average age of aircraft being imported into India for commercial airline operations by five years. Effect: It would lead to increase in imports of aircraft thus can discourage more operators coming in and improve services.

Economic Factors

India, ranked tenth in the world in 2004, is expected to be holding eighth rank in the world by 2014 and fourth rank in next year’s with a GDP of $1.15-1.4 trillion and $2.1-3 trillion respectively, and a projected growth rate of 6-8%. Effect: This rise in income levels along with introduction of no-frills flights will lead to: • Rise in no of travelers, • More investments in aviation, • More competition and • Rise in industrialization leading to more need of air transport

Socio – Cultural Factors

The growing rate of technology & workforce the airline sector generates employment opportunities for well qualified people. It is the responsibility of the airline department to safeguard the interest of the passengers. As new and reasonable airlines are coming into existence there has been an change in the lifestyle of people now prefer to travel through flight to distances where they can afford. This has brought in a change in lifestyle.
1. Change in Lifestyle :

Average income of middle class household is expected to rise to 194000 Rs by 2010 from 169000 Rs in 2001-02.No of households projected to be 43.6million in 2010. Effect: So there is going to be change in lifestyle and spending of people Due to this change people will prefer Low cost airlines instead of Railways first air-conditioned thus rise in air traffic. 2. Rise in Leisure travel: Tourism industry grew 8.8 per cent over 2003- highest growth rate in the world. 3.2 million Foreign tourists visited India last year. There has been an increase in leisure travel by tourists of 15% in 2004. Effect: It will lead to increase in number of tourist passengers thus more encouragement for new operators.

Technological Factors
1. Growth of electronic ticketing: The electronic industry continues to be plagued by spiraling costs, making cost cutting is a necessary survival tool. One sure method for airline to cut cost is by increasing the use of e-ticketing. It cuts distribution cost and it also reduced back office accounting and traveler’s can also book ticket sitting on their personal computer.

2. Modernization and privatization of airport: Installation of new technology, modernization of infrastructure and participation of private players fuel the growth of airline sector.

Ex- Sahara airport.

3. Developing Greenfield airport with private sector: Greenfield airport means a new airport which is built from scratch in a new location because the existing airport is unable to meet the projected requirement of traffic. It will add to a rapidly expanding network of domestic airport fuelling socio-economic growth across the length and breadth of country.

Environmental Factors

1. Increase in global warming: Aviation impacts the environment because aircraft engines emit noise, particulate gases, contribute to climate change and global dimming and the rapid growth of air travel in recent years contributes to an increase in total pollution attributable to aviation contribute to global warming. 2. The sudden and unexpected behavior of the atmosphere and the dependency on weather: The sudden and unexpected behavior of the atmosphere causes cancellation and delay in flight. Increment weather can affect air travel in any season, even on the clearest days, whether its high winds, rains, sleet or snow. 3. Shortage of infrastructure capacity: Aircraft spend useless time circling round airport for want of landing slots and parking bays. Aircraft have to be parked at night at airports which do not have any viable commercial traffic on account of the shortage of parking bays at major airport.

4. Tourism saturation: Tourism receiving areas have a finite capacity due to factors such as the limited amount of accommodation that can be provided and the other reason is increase price of air tickets.

Legal Factors

1. FDI Limits: Forty nine per cent foreign direct investment (FDI) is permitted in financing airport infrastructure as well as in airport ground handling. The government has recently increased FDI from 40 per cent to 49 per cent in domestic air carriers. However foreign airlines are not permitted to pick up a stake directly or indirectly. Non-resident Indians and corporate bodies are allowed to hold up to 100 per cent equity in domestic airlines.

2. Bilateral Treaties:

3. Safety Regulation:

Current Scenario

Change in business of aviation industry from October 2008 to October 2009 There were 2 main reasons for decline in the aviation industry:

1. Worldwide economic slowdown: The worst to be hit by it was USA but its effect could be seen all over the world. The leading airlines started giving lay-offs to bear less loss of the economic slowdown. 2. Terror attack in Mumbai: This might be the second reason in recession of the airline sector as there were cancellations and postponed visits sue to security and safety reasons.

The industry was affected by the record of high fuel prices and financial markets going globally down. The industry accounts only 2% o the world aviation market and the losses were us$2 billion.

October 2008: The growth of aviation industry saw a dip of 15% decline in air passenger traffic. During third time many airline started i.e. Jet and Kingfisher started giving lay-offs to reduce cost in business. Several private sector owners sat together and demanded concessions from government to protect against high aviation turbine fuel and airport charges. The impact of global slowdown and high price of aviation has turbine fuel. It accounts to 40% of the Indian carrier operating cost compared with 25% to 30%carriers globally. The growth slowed by 4.7% in 2008.net losses were forecasted to to reach 4.7 billion US $ up from 2.5 billion US $ in December 2008.premium passenger numbers fell from 17% while cargo fell by 23%. The biggest ever annual falls in revenue in 2009 with drop of us$62billion or 12% to US $467 billion.

October 2009: The slowdown hit aviation industry has started witnessing some stability in passenger traffic. The figures showed marginal improvement in air traffic from 3.63 million passengers in august 2009 to 3.59 million in months before. Other has been 14 to 15 % rise in passenger traffic.

In November 2009 the aviation industry is showing a boom where there has been double digit growth in October with 37% growth in passenger against growth of 19% in august and 11% in September these figures include both domestic and international. Also one of the reasons for growth during this time was seen as to be low fare and attractive packages by the airlines. a source from the industry had mentioned, “ if the oil prices stay below $50, air traffic for 2009 would be same to 2007 -08”. Airlines like spice jet, indigo have been hiring pilots and cabin crew. While kingfisher warned its employees of delayed salaries reporting to loss of Rs 240 crore and declared it5s flight to cut cost.

PORTERS FIVE FORCES
Threat of New Entrants.
At first glance, you might think that the airline industry is pretty tough to break into, but don't be fooled. You'll need to look at whether there are substantial costs to access bank loans and credit. If borrowing is cheap, then the likelihood of more airliners entering the industry is higher. The more new airlines that enter the market, the more saturated it becomes for everyone. Brand name recognition and frequent fliers point also play a role in the airline industry. An airline with a strong brand name and incentives can often lure a customer even if its prices are higher.

Power of Suppliers.
The airline supply business is mainly dominated by Boeing and Airbus. For this reason, there isn't a lot of cutthroat competition among suppliers. Also, the likelihood of a supplier integrating vertically isn't very likely. In other words, you probably won't see suppliers starting to offer flight service on top of building airlines.

Power of Buyers.
The bargaining power of buyers in the airline industry is quite low. Obviously, there are high costs involved with switching airplanes, but also take a look at the ability to compete on service. Is the seat in one airline more comfortable than another? Probably not unless you are analyzing a luxury liner like the Concord Jet.

Availability of Substitutes.
What is the likelihood that someone will drive or take a train to his or her destination? For regional airlines, the threat might be a little higher than international carriers. When determining this you should consider time, money, personal preference and convenience in the air travel industry.

Competitive Rivalry.
Highly competitive industries generally earn low returns because the cost of competition is high. This can spell disaster when times get tough in the economy.

SWOT ANALYSIS OF INDIAN AVIATION INDUSTRY
STRENGTH
Growing tourism: Due to growth in tourism, there has been an increase in number of the international and domestic passengers. The estimated growth of domestic passenger segment is at 50% per annum and growth for international passenger segment is 25%.
1.

2. Rising income levels: Due to the rise in income levels, the disposable income is also higher which are expected to enhance the number of flyers. 3. Opening of domestic aviation sector to private airlines and strong economic growth are the major reasons for rapid growth in aviation sector. Also as Indian aviation industry is relatively new, the planes are relatively new which results in better operational efficiency, passenger comfort and longer lifetime.

WEAKNESS
1.Under penetrated Market : The total passenger traffic was only 50 million as on 31st Dec 2005 amounting to only 0.05 trips per annum as compared to developed nations like United States have 2.02 trips per annum. 2. Untapped Air Cargo Market: Air cargo market has not yet been fully taped in the Indian markets and is expected that in the coming years large number of players will have dedicated fleets. 3. Infrastructural constraints: The infrastructure development has not kept pace with the growth in aviation services sector leading to a bottleneck. Huge investment requirement for physical infrastructure for airports. 4. Despite rapid growth and entrants of several new players there are certain issues which are haunting aviation sector till now. One of them is the deficiencies of airport infrastructure across the country. Nearly all the major airports in India are heavily congested and operating environments too are inefficient. Though recently new airports built in Bangalore and Hyderabad and modernization of Delhi and Mumbai airports have result in relatively better airport

infrastructure. Also most of airlines have not been able to break even till now. Unless they achieve profitability within a short time period some of these airlines will find it difficult to compete in this competitive market. 5. Another big obstacle to reaching profitability for Indian airlines is the high fuel cost. Due to high sales tax the fuel cost for airlines is sometimes 60% higher than international price. The rapid growth has also been resulted in scarcity of resources particularly for pilots, technical people, management people and airlines have to depend on the expats which costs them heavily. Also India does not have high quality training institutes which can generate required number of pilots or technical people.

OPPRTUNITIES
1. Expecting investments: investment of about US $30 billion will be made. 2. Expected Market Size: Average growth of aviation sector is about 25%-30% and the expected market size is projected to grow upto100 million by 2010. With expansion of tourism business this industry will grow directly proportional to it. 3. Indian aviation industry is still in nascent stage and further economic growth will increase both number of passengers opting for air travels as well as cargo transported through airlines. Also India is slowing becoming a tourist destination and the number of foreign national coming to India for both tourism and business activities are increasing. India’s geographical position is also very suitable for it to become an aviation hub at the cross roads between Europe/ Middle East and Asia pacific. Also increasing outsourcing of aerospace design and manufacturing to India has been resulted in creation of domestic talents which can be utilized to grow Indian aviation sector.

THREATS
Huge investments are expected to take place in aviation sector in near future. It is estimated that by 2012. 1. Shortage of trained Pilots: There is a shortage of trained pilots, co-pilots and ground staff which is severely limiting growth prospects. 2. Shortage of Airports: There is a shortage of airport facilities, parking bays,air traffic control facilities and takeoff and landing slots.

3. High prices: Though enough number of low cost carriers are already existing in the industry, majority of the population is still not able to fly to other destinations. 4. One of the biggest threats to Indian airlines particularly in the international segments is the entrant of more matured and cost effective foreign airlines. Also the security issues sometimes become matter of concern to the air traffics particularly in the international segment.

SWOT ANALYSIS OF KINGFISHER AIRLINES
STRENGTHS


Strong brand value and reputation in the minds of customers. Quality of the service. Route rationalization. First airline to have a new fleet of airbuses. Quality and continuous innovation.

   

WEAKNESSES
   Still a not in profit organization. High ticket pricing. Facing a tough competition from competitor

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 Economic slowdown.

 Promotions and sponsorship declining

STRATEGIC CAPABILITIES

RESOURCES AND COMPETENCE
 A larger-than-life brand image and promises of good times have helped Kingfisher

Airlines soar.

About Kingfisher Airlines:
 Since its launch carrier in terms of domestic passenger carried, daily departures (an

average of 383 daily departures), customer service quality and innovation.
 Kingfisher Airlines carried 10.9 million passengers in the financial year ended 31 March

2009 with a share of 27 per cent of the domestic Indian air travel market. For the nine months to 31 December 2009, it carried 8.2 million passengers.

 It is India's only five star airline, as rated by Skytrax, the independent airline quality research organisation.

 Besides being the first and only airline in India to offer in-flight entertainment at every

seat, Kingfisher Airlines offers Live TV with 16 channels. It has received numerous awards for innovation, customer responsiveness and was voted the “Best New Airline of the Year”, within months of its launch. It covers all segments of air travel – from low fares to premium service.

 The airline launched its first international routes in September 2008 and now serves

oneworld hubs Bangkok, Hong Kong, London Heathrow and Singapore. Internationally, it also currently serves Colombo, Dubai and Dhaka. In total, it flies to 70 destinations worldwide – 63 of them in India – in eight countries, with its main hubs at Mumbai, Delhi and Bangalore.

 Kingfisher Airlines’ network has been covered since 1 June 2009 by the Global Explorer

round-the-world fare offered by all oneworld member airlines and selected carriers that are not part of the alliance.

 Its fleet of 66 modern aircraft, with an average age of five years, includes five Airbus

A330s, eight A321s, 23 A320s, three A319s and 25 ATR 72-500s and two ATRs. It employs 7,400 staff.

 During the financial year ended 31 March 2009, it generated revenues totalling INR55.8 billion (US$1.1 billion), with INR50.9 billion (US$975 million) of that from its passenger business.

 For the nine months to 31 December 2009, it generated revenues totalling INR38.2

billion (US$817 million), with INR35 billion (US$753 million) of that from its passenger business.

 The 58 destinations across India that Kingfisher Airlines will add to the oneworld map

include Agartala, Agatti, Agra, Ahmedabad, Aizwal, Amritsar, Aurangabad, Bagdogra, Bhavnagar, Bhubaneswar, Bhuj, Calicut, Chandigarh, Coimbatore, Dehradun, Dharamsala, Goa, Guwahati, Hubli, Imphal, Indore, Jabalpur, Jaipur, Jammu, Jodhpur, Kandla, Khajuraho, Kochi, Kolhapur, Kolkata, Kullu, Latur, Leh, Lucknow, Madurai, Mangalore, Nagpur, Nanded, Nasik, Patna, Port Blair, Pune, Raipur, Rajahmundry, Ranchi, Salem, Sholapur, Silchar, Simla, Srinagar, Tirupati, Trichy, Trivandrum, Tuticorin, Udaipur, Varanasi, Vijayawada, and Vishakapatnam.

 Kingfisher Airlines is a part of The UB Group – one of India’s largest conglomerates with diverse interests and a global presence. The UB Group is also the largest Indian alcoholic beverages (beer and spirits) company and the third largest drinks group in the world.

THINGS WHICH CREATED IT A BIG BRAND

 In seven months after the launch KFA has earned Rs 200 crore (Rs 2 billion), flown over 500,000 passengers, grown to a fleet of nine Airbus A320 and expanded from four flights a day to 56.

 Equally important, Kingfisher Airlines bagged the third place in this year's Brand Derby: 64 per cent of those interviewed ranked it the third-most successful brand launch, while 11 per cent felt it deserved top slot.

 KFA's success carries a simple, yet vital lesson: do your homework. When the decision to enter the aviation industry was taken in early 2004, Mallya and his team knew the going would be rough.

 The 25-million seats Indian aviation industry was growing at 20 per cent, but it was on the backs of the new, low-cost players. Entrenched players like Indian Airlines and Jet Airway, too, were slashing ticket prices to cater to the new breed of have-ticket-willtravel passengers.

 The challenge for the new airline was to stand out in the crowd, for all the right reasons.

 So, Kingfisher approached market research agency IMRB to assess a possible niche.

IMRB interviewed 2,500 frequent air travellers, aged 21-45 years from SEC A1, A2 and B in the top 15 metros, where air travel markets are strong.

 "The study revealed people wanted a young, trendy, fun and yet premium product,"

says Girish Shah, head, marketing, KFA.

 The way ahead was clear: extend the Kingfisher brand into aviation, and focus on the

young business traveller.

 "The challenge was to make the mother brand slightly more serious and relevant to air

travelers.

 " Backed with an ad budget of Rs 25 crore (Rs 250 million), KFA began its ad campaign

a few weeks before the launch, booking every possible touchpoint relevant to the business traveller.

 Newspaper ads, radio spots, and a presence in upmarket stores like Westside and Shoppers' Stop, premium clubs like the Cricket Club of India. . . even with-it restaurants like Tendulkar's. Competitions and quizzes with free KFA tickets as prizes ensured customer interest.

 In mid-August, KFA launched its second campaign -- "Freedom from boring air travel" -to coincide with Independence Day..

 Customer interest was definitely hooked, not least because of Mallya himself. Media

analysts credit a large part of KFA's success to its flamboyant promoter and his directly addressing the press and customers.

 "Kingfisher's is a PR-driven communication instead of a regular, advertising-driven

communication,". "It's inspired from Virgin, where Richard Branson , too, focuses more on PR and value-adds."

 The value-adds have been critical for KFA, too. Attractive cabin crew in designer

uniforms, gourmet meals and personal screens for each seat add to the premium experience.

 On board, passengers watch a safety video featuring model-actress Yana Gupta and can then choose from five video channels and 10 radio channels. They are called "guests" and given gifts at the end of the flight -- sachets of flavoured tea and umbrellas during the monsoon.

 All of which ensured good times for the passenger. But Indians don't like their good times to be accompanied by huge price tags, so KFA clubbed its other selling points with a biggie -- moderate price points.

 Initially, KFA flights on the crowded Mumbai-Bangalore route were offered for just Rs 1,999 in a direct bid to lure passengers. Once the fish bit, it was reeled in with special, same-day return offers. That was a hit with business travellers, who usually return within the day.

 To cast its net wider, KFA then offered special fares for Central government and defence personnel and their families. "Kingfisher has conveniently sandwiched itself between the upper end of Air Deccan customers and the lower end of Jet Airways, thus roping in both the segments,"

 Now it was time to land the catch. KFA managed to bag access to the Indian Airlines' terminals at major airports, allowing it to glide past the inevitable delays at the private airlines' terminals and ensure timeliness. IA staff was also roped in for the ground handling and kitchen duty handed over to Sky Gourmet.

 "Outsourcing functions allows Kingfisher to cut cost and increase efficiency," Plus,

like low-cost airlines, Kingfisher effectively uses online ticketing, saving up on travel agents' commissions.

 All of which adds up to an effective brand. But KFA still has a long way to fly.

KINGFISHER RED AIRLINE CAPABILITIES

 Kingfisher Red Airlines is a subsidiary of the premier Indian airline Kingfisher Airlines.

 The company has designed Kingfisher Red to serve affordable flights to and from domestic and international destinations.

Growing bigger and better each passing year, the airlines has been re branded twice. Previously known as Simplifly Deccan, Kingfisher Red Airlines was also earlier known as Air Deccan. Air Deccan was picked up by the Kingfisher group from Deccan Aviation.


 A part of United Breweries group of Dr. Vijay Mallya, Kingfisher Red Airlines came about when Kingfisher acquired a major stake in Deccan Aviation, the holding company of Air Deccan.

The company has been relocating, reorganizing and speckling their carriers in dazzling red since, to become a favourite among budget friendly fliers.


 Kingfisher Red Airlines has its major headquarter at HAL Bangalore International Airport. The airline is one of the pioneers to provide cheap airfares to domestic and international fliers in the economy class.

Even so, they have also been successful in maintaining standards on board and in attracting more clientele with their comforting in-flight services and specialized features.


 The secondary hub for the airlines is at Chennai International Airport, making it a convenient and accessible option for clients in South India.

 Connectivity  Kingfisher Red has flights to 64 varied destinations within India. Important destinations covered by the airline are Delhi, Jaipur, Mumbai, Bangalore, Srinagar, Ahmedabad, Ranchi, Kolkata, Guwahati, Bhopal, Hyderabad, Goa, Chennai, Coimbatore, and Port Blair. Operating about 337 flights daily, Kingfisher Red is gaining popularity because of their scheduled flights, their reach to important destinations, and their in-flight services.

BIGGEST ACHIEVEMENT FOR KINGFISHER WHICH ADDS TO ITS RESOURCES.

 Oneworld brings together some of the best and biggest names in the airline business -

American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malév Hungarian Airlines, Mexicana, Qantas and Royal Jordanian, and around 20 affiliates including American Eagle, Dragonair, 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.

• 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.

 The alliance enables its members to offer their customers more services and benefits than any airline can provide on its own.

 These include a broader route network, opportunities to earn and redeem frequent flyer

miles and points across the combined oneworld network and more airport lounges. oneworld also offers more alliance fares than any of its competitors.

 Oneworld was voted the World's Leading Airline Alliance for the seventh year running

in the latest (2009) World Travel Awards. It is the only winner of this award since it was introduced in 2003.

 India’s leading domestic carrier and only five-star airline, Kingfisher Airlines, is lining

up to join oneworld after signing a memorandum of understanding as its first step towards full membership of the world’s leading quality airline alliance, subject to Indian regulatory approval.

 The agreement was concluded at a meeting between Kingfisher Airlines’ Chairman Vijay

Mallya and Chief Executives from oneworld’s 11 existing member airlines, which include some of the best and biggest names in the industry.

 Kingfisher Airlines today applied to India’s Ministry of Civil Aviation for authority to

proceed with its membership of oneworld.



Kingfisher Airlines’ addition to oneworld will link India’s most extensive domestic network with oneworld’s unrivalled global network, as the only alliance with airlines based on every continent. It will add 58 cities to the oneworld map – all of them in India.

 This will expand oneworld’s network to 800 destinations in almost 150 countries, served

by a combined fleet of 2,350 aircraft operating some 9,000 flights a day, carrying some 340 million passengers a year.

 Established oneworld members American Airlines, British Airways, Cathay Pacific, Finnair, Japan Airlines, Qantas and Royal Jordanian already serve five gateways in India between them – Bangalore, Chennai, Delhi, Hyderabad and Mumbai.

 British Airways will support Kingfisher Airlines through its alliance implementation programme, as its oneworld sponsor.

 Kingfisher Airlines Chairman and Chief Executive Vijay Mallya said: “Kingfisher Airlines is proud to be lining up to join the world’s leading quality global airline alliance.

 Becoming part of oneworld would be one of our most significant steps so far - and is right in line with our vision to become one of the world’s top airlines.

 It will enable us to offer our guests a truly global network served by partners who include some of the best known and most admired airlines in the world, with frequent flyer benefits extended throughout this network.

 It will also strengthen us financially, through revenues from passengers transferring to

our network from our oneworld partners and the cost reduction opportunities the alliance offers.”

 Willie Walsh, Chief Executive of British Airways, oneworld’s sponsor of Kingfisher

Airlines, said: “Kingfisher Airlines is an ideal fit for oneworld. It has a strong focus on customer service and its network expands what the alliance currently offers. oneworld’s priority is the quality rather than quantity of our member airlines, which is why British Airways is delighted to be developing our relationship with Kingfisher Airlines further by acting as its sponsor into the alliance.”



Kingfisher Airlines will fill one of oneworld’s few remaining membership spaces with a carrier that matches our alliance’s demanding requirements, benefiting customers

by expanding our global reach and helping us ensure oneworld remains the pre-eminent global alliance with members unmatched in brand and service quality.” RESOURCES THRESHOLD CAPABILITIES It has matched with all the minimum capabilities i.e from finances to aircraft to enter in the industry and required to be in the industry UNIQUE RESOURCE High focus on customer satisfaction. Strong financial back up Tie up with one world for targeting the international routes. Coverage of maximum numbers of domestic routes. Celebrity association Luxury and comfort Strong PR directly addressing the customers. Strong marketing stg. COMPETENCES It is registered company which meets all the safety and other issues to continue to be in business. CORE COMPETENCE Strong brand value Flamboyant image of airline Finance Unique service experience.

CAPABILITIES FOR COMPETITIVE ADVANTAGE

-

-

-

PHYSICAL AND FINANCIAL RESOURCES


Kingfisher Airlines is an airline group based in India. Through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher Red.



Kingfisher Airlines is one of the seven airlines to be ranked as a 5-star airline by the independent research consultancy firm Skytrax Kingfisher operates more than 375 daily flights to 71 destinations, with regional and long-haul international services.

 In May 2009, Kingfisher Airlines carried more than a million passengers, giving it the highest market share among airlines in India  Kingfisher Airlines, India’s fastest growing airline and the first Indian carrier to offer Full Service at True Value today has placed an order for 20 ATR72-500 Aircraft at the Dubai Air Show in a deal valued at US $350 million.

 The order represents the first addition of regional aircraft to the fleet of Kingfisher

Airlines. 20 Aircraft are on firm order with options for another 15.

 It has four new Airbus A320-200s airlines also.

HUMAN RESOURCES
Prior to launch, KFA signed a “non-poaching alliance” with Air Deccan under which both the airlines agreed not to hire each other’s employee. KFA’s flight attendants called “Flying models” were selected through a national level model contest. KFA also stressed the fact that its employees had to be capable enough to meet the airlines’ high service standards. Among one of the biggest HR move for KFA was addition of Nigel Harwood as Chief Operating Officer with effect from August 1, 2005, to strengthen its management team. Mr. Mallya said “Kingfisher Airlines Limited has a first class management team not just at top most level but also in the second line. This is part of the UB group’s commitment to human resources”.

Kjglg

VALUE OF STRATEGIC CAPABILITIES
 Kingfisher has been able to create a successful brand only because of the value which it

has to offer to its customers.  Customers have opted for kingfisher for the premier level of services provided.

 Attractive cabin crew in designer uniforms, gourmet meals and personal screens for

each seat add to the premium experience.

 It is a young, trendy, fun and yet premium product to which customers look upon.

 Hence customers have attached value to its strategic capabilities.

 Kingfisher Airlines is among the most renowned airline companies this is one of the fastest growing airline, which has its bas in Mumbai.

 The ownership of the Kingfisher Airlines is leadership of Dr. Vijay Mallya and is under the United Beverages Group.

 This Airline has a Kingfisher bird as its logo due to which it can be distinguished from other airlines quiet easily.

 The logo of the flight is of red, blue and green colours. This is the one of the most important Indian luxury airline with an extensive network which spreads to more than 30 destinations.

 The trained staff never fails to fulfil the requirement of the passengers which make their journey pleasurable.

 The chief component of Kingfisher flights is the entertainment system which one can avail.

 This popular Airlines has beautiful interiors and the brightly dressed staff which provide courteous services to the passengers at low rates.

 The interiors of this flight offer to you world of luxuries and one can avail cheap discounted rates all the year round.

 The passengers can book the tickets online and avail the benefits which are given by the company from time to time. All details related to Flight schedules and status is mentioned on the web.

 Kingfisher started its operations on 9th May2005 with 4 Airbus aircraft which were taken on lease. This company was launched by the business tycoon Vijay Mallya with the motive of making it number one airline company in India.



This was the first Indian airline to start its operations with all new aircrafts. Beyond any doubts we now see Kingfisher Airlines to be the best in Indian aviation industry. In India the flights of Kingfisher Airlines fly to numerous destinations like Ahmadabad, Bangalore, Chennai, Delhi, Mumbai, Hyderabad, Kolkatta, Mangalore and many others. Kingfisher airline at present operates with 11 brand new aircrafts, everyday there are there 70 flights which cover around 16 important key destinations in India.

 The airline also provides you with ample of entertainment facilities which include on

demand audio and television shows which are played on LCD monitors. The most commendable quality of Kingfisher Airline is that it offers all services in the most

affordable price.

RARITY OF STRATEGIC CAPABILITIES
 Kingfisher has been able to create a rarity in terms of service level.

 It has also achieved to qualify in oneworld group which has given it an extra edge over all the other Indian airline.

 Oneworld brings together some of the best and biggest names in the airline business -

American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malév Hungarian Airlines, Mexicana, Qantas and Royal Jordanian, and around 20 affiliates including American Eagle, Dragonair, 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.

• 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.

 The alliance enables its members to offer their customers more services and benefits than any airline can provide on its own.

 These include a broader route network, opportunities to earn and redeem frequent flyer

miles and points across the combined oneworld network and more airport lounges. oneworld also offers more alliance fares than any of its competitors.

 Oneworld was voted the World's Leading Airline Alliance for the seventh year running

in the latest (2009) World Travel Awards. It is the only winner of this award since it was introduced in 2003.

 India’s leading domestic carrier and only five-star airline, Kingfisher Airlines, is lining

up to join oneworld® after signing a memorandum of understanding as its first step towards full membership of the world’s leading quality airline alliance, subject to Indian regulatory approval.

 The agreement was concluded at a meeting between Kingfisher Airlines’ Chairman Vijay

Mallya and Chief Executives from oneworld’s 11 existing member airlines, which include some of the best and biggest names in the industry.

 Kingfisher Airlines today applied to India’s Ministry of Civil Aviation for authority to

proceed with its membership of oneworld. .
 Kingfisher Airlines’ addition to oneworld will link India’s most extensive domestic

network with oneworld’s unrivalled global network, as the only alliance with airlines based on every continent. It will add 58 cities to the oneworld map – all of them in India.

 This will expand oneworld’s network to 800 destinations in almost 150 countries, served

by a combined fleet of 2,350 aircraft operating some 9,000 flights a day, carrying some

340 million passengers a year.

 Established oneworld members American Airlines, British Airways, Cathay Pacific,

Finnair, Japan Airlines, Qantas and Royal Jordanian already serve five gateways in India between them – Bangalore, Chennai, Delhi, Hyderabad and Mumbai.

 British Airways will support Kingfisher Airlines through its alliance implementation

programme, as its oneworld sponsor.

 Kingfisher Airlines Chairman and Chief Executive Vijay Mallya said: “Kingfisher Airlines is proud to be lining up to join the world’s leading quality global airline alliance.

 Becoming part of oneworld would be one of our most significant steps so far - and is right in line with our vision to become one of the world’s top airlines.

 It will enable us to offer our guests a truly global network served by partners who include some of the best known and most admired airlines in the world, with frequent flyer benefits extended throughout this network.

 It will also strengthen us financially, through revenues from passengers transferring to

our network from our oneworld partners and the cost reduction opportunities the alliance offers.”

 Willie Walsh, Chief Executive of British Airways, oneworld’s sponsor of Kingfisher

Airlines, said: “Kingfisher Airlines is an ideal fit for oneworld. It has a strong focus on customer service and its network expands what the alliance currently offers. oneworld’s priority is the quality rather than quantity of our member airlines, which is why British Airways is delighted to be developing our relationship with Kingfisher Airlines further by acting as its sponsor into the alliance.”



Kingfisher Airlines will fill one of oneworld’s few remaining membership spaces with a carrier that matches our alliance’s demanding requirements, benefiting customers by expanding our global reach and helping us ensure oneworld remains the pre-eminent global alliance with members unmatched in brand and service quality.”

 Hence this has became a rare resource for kingfisher.

ROBUSTNESS OF STRATEGIC CAPABILITIES
COMPLEXITY :- the complexity is formed due to inter linkage of external PR activities, advertisement, flamboyancy with internal backup of excellent service level which is rare.

ROBUSTNESS

The culture at kingfisher is made up of excellent hard working employees who are courteous and yet flamboyant which is rare.

BUSINESS LEVEL STRATEGIES

BASES OF COMPETITIVE ADVANTAGE:

THE STRATEGIC CLOCK
Kingfisher airlines fall in route 5 that is focused differentiation. The prices of air tickets of kingfisher airlines are comparatively higher than other airlines but services rendered are different and excellent. Justification:  Kingfisher, offer a great flying experience. Everything about Kingfisher Airlines is designed to make one feel good. It starts from the airport itself. A red carpet in front of the Kingfisher Airlines counter. Staff to take away luggage and do the entire scanning, checking, etc. The planes, the seats, and the food everything is definitely superior. One walks out of a Kingfisher flight feeling "good".  It has an up market image. It projects the colorful image with red carpet, young & smart attendants, music & other accessories etc. Low cost airlines on the other hand are players like air Deccan & spicejet. These totally thrive on price as their competitive edge. Kingfisher is targeting those customers that are ready to pay a bit extra for comfort.  Kingfisher airlines are the only domestic airline that has its standard equivalent to international standards.  Vijay Malaya has always use celebrities to have his medium to deliver his products to the customers.  Its promotion strategy of its swimsuit calendars, parties has been its strategy to concentrate the youths.  It’s the only airline having service of home delivery of tickets.

ACHIEVEING COMPETITIVE ADVANTAGE:
SUSTAINING COMPETITIVE ADVANTAGE:
PRICE BASED STRATEGY
 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’ 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.

DIFFERENTIATION
 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’ airlines. Kingfisher Red serves complementary meals on board, thereby increasing the perception of ‘More Value for Money’ for the passengers.
 Passengers are offered in flight entertainment options and contests like ‘Kingfisher

Flying Face of the Month' and attractive discounts of branded merchandise.
 The company has just launched Kingfisher First, which is a print campaign to promote

its first class service. It is a personalized campaign, which has Vijay Malaya, signing off by saying, "I have created a product which is better than what I would have created for myself."  This has created difficulties if imitation as the strategies are personalized.

COMPETITION AND COLLABORATION:


Kingfisher and Jet Airways has decided to share facilities to cut costs. It is not an exact Mergers or an Acquisitions. It is collaboration. The seller’s power would be high here. These are the things they will be doing:

1. Manage fuel expenses jointly 2. Share some pilots 3. Cross-selling of tickets 4. Sharing training facilities 5. Accepting each other’s frequent flier miles.  This collaboration will help the customers too. Increased counters to get tickets. One can use the frequent fliers one has earned for destinations, which were not available earlier. They don’t find any good competitor who will enter the market. More consolidation means fewer players and hence the monopoly. If a player controls more than 50% of the market then consumers lose. They will not have a bargain because there is no competition.  The company is getting into collaboration with its competitors to cut costs and improve operations because cost is the major issue in airline industries in order to increase profits and operational efficiencies.

CORPORATE LEVEL AND INTERNATIONAL STRATEGY

KINGFISHER AIRLINES
Introduction to UB group
UB group based in Bangalore, is a conglomerate of different companies with a major focus on the brewery (beer) and alcoholic beverages industry. The company markets most of its beer under the Kingfisher brand. The group is headed by Dr Vijay Mallya. The UB Group was founded by a Scotsman, Thomas Leishman in 1857. Kingfisher, the Group's most visible and profitable brand, made a modest entry in the sixties. During the 1950's and 60's, the company expanded greatly by acquiring other breweries. First was the addition of McDowell as one of the Group subsidiaries, a move which helped United Breweries to extend its portfolio to wines and spirits business. Strategically, the Group moved into agro-based industries and medicines when Mallya acquired Kissan products and formed a long-term relationship with Hoechst AG of Germany to create the Indian pharmaceutical company now known as Aventis Pharma, the Indian subsidiary of the global pharma major Sanofi-Aventis. The UB Group’s Brewing Entity - called United Breweries Limited (UBL) - has also assumed undisputed market leadership with a national market share in excess of 50%. Through a process of aggressive acquisition and market penetration, The UB Group today controls 60% of the total manufacturing capacity for Beer in India. Hence the UB group has been expanding and diversifying in development of products beyond the current expertise. Hence we can say that the UB group is unrelated diversified.

Kingfisher Airlines : Introduction
Kingfisher Airline is a private airline based in Bangalore, India. The airline is owned by the United Beverages Group. Kingfisher Airlines started its operations on 09 May 05 with a fleet of 4 Airbus A320 aircrafts. The major destinations covered by Kingfisher Airlines on domestic routes are Bangalore, Mumbai, Delhi, Goa, Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, Kolkata, Pune, Agartala, Dibrugarh, Mangalore and Jaipur. It is a major Indian luxury airline operating 400 flights a day and has an extensive network to 37 destinations, with plans for regional and long-haul international services. It has announced plans to start flights to the USA with Airbus A380 aircraft. Its main bases are Bangalore International Airport, Bangalore, Chhatrapati Shivaji International Airport, Mumbai and Indira Gandhi International Airport, Delhi, with a hub at Sardar Vallabhbhai Patel International Airport, Ahmedabad. Kingfisher Airlines, through one of its holding companies United Breweries Group, has acquired 26% stake in the budget airline Air Deccan and has option to buy further of 20% stake from the secondary market.

Promotion:
Various promotional strategies have been adopted by Kingfisher airlines like the following:
a. b.

The 'Power Flyer' a consumer incentive offer targeted at the corporate traveller Passengers are offered in flight entertainment options and contests like ‘Kingfisher Flying Face of the Month' and attractive discounts of branded merchandise. Offer in-flight silent auctions for lifestyle products and in-flight sales of dry packaged food and beverages.

c.

d. The marketing department showcased the airlines as ‘The new flying experience’. e. Kingfisher Airlines has announced special fares for all personnel serving in the Indian Armed Forces, the Union Government, State governments, and employees of all public sector units in the country. The immediate families of these personnel are also eligible for these concessions. f. The company has just launched Kingfisher First, which is a print campaign to promote its first class service. It is a personalized campaign, which has Vijay Mallya, signing off by saying, "I have created a product which is better than what I would have created for myself."

Need for International Diversity:
Kingfisher Airlines, one of India's largest domestic carriers, launched its international service with daily flights to Europe and Southeast Asia and the US . Non-stop flights from Bangalore and Mumbai to London, and from Mumbai to Hong Kong and Singapore. The India-to-London flight reaches the British capital after lunch around 2.30 pm GMT, and the return flights will be overnight journeys beginning around 10 pm GMT. A unique non-stop flight from Bangalore to San Francisco is planned for September or October, along with a flight to New York, either non-stop or one-stop. The Bangalore-San Francisco non-stop flight is a no-brainer because it connects the two silicons - the Silicon Plateau and the Silicon Valley with an Airbus A330-200 aircraft recently acquired by Kingfisher Airlines and displayed at the Farnborough air show. The biggest and the best software companies from the San Francisco Bay area have large operations in Bangalore and there is a huge amount of traffic. That's one sector in the (aviation) industry that hasn't been affected by rising oil prices or the slowing economy. Kingfisher has convenient landing and take-off slots for all the sectors. The success of Kingfisher's international service is pinned heavily on demand for foreign travel among Indians sustaining through an economic downturn and rising prices. Hence the globalization and the international business, Kingfisher diversified diversely. Kingfisher Airlines were forced to raise prices due to the rises in the price of fuel but surprisingly they had not seen any reduction in thier load-factor, which reinforces our belief that when people pay more they demand higher standards of quality, which Kingfisher Airlines is able to deliver.

MARKET SELECTION AND ENTRY AND INTERNATIONAL VALUE NETWORK:
Kingfisher airlines launched its domestic air service operations in May 2005.KFA was promoted by UB group and offered a single class- “Kingfisher Class”. KFA successfully leverage the youthful and vibrant image of its kingfisher beer brand and called its airlines as ‘Funliners’ to emphasize the fun-filled experienceKFA started its operation in May 7, 2005, positioning itself as a budget carrier and not as Low Cost Carrier (LCC). Kingfisher is one of only 6 airlines in the world to have a 5 star rating from Skytrax, along with Asian Airlines, Malaysia Airlines, Qatar Airways, Singapore Airlines and Cathay Pacific Airways. 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, exclusive lounges with private space, accompanied with refreshments and music at the airport, audio and video on-demand, with extra-wide personalized screens in the aircraft, sleeperette seats with extendable footrests, and three-course gourmet cuisine. An on-board chef and business class seats will come with head-to-toe massagers and Bose headphones.Economy class passengers will be served business class meals and have access to web-chat and email services The following are the major attributes of the Airline:

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

Values: Safety: This is an overriding value. In this line of business, there is no compromise. important and building trust,

Service: In hospitality business customer satisfaction is very 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’ 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:
Kingfisher airlines has a fleet of 11 brand new A320 family aircrafts and has a route connecting 15 key business and holiday destinations with more than 70 flights across India every day. Chairman Vijay Mallya himself guarantees an experience like never before, and each member of the kingfisher family takes accountability of the exertion of services in the right manner. Hence from the above attributes we can say that Kingfisher Airlines entered with a focus to cater the premium class and middle class customers with premium level of service. These kind of unique service features is not being offered by any of the local Airlines.

MARKET SHARE REVIEW: PERFORMANCE

(a) (b) (c)

Kingfisher:26.08 % Jet Airways:16.72 % Jetlite: 7.39 % 17.66 %

(d) Air India:

(e) Indigo: 13.75 % (f) Spicejet: 11.72 %

(g) Go Air: 4.29 % (h) Paramount: 2.27 %

Kingfisher Airlines - Strategies
Kingfisher airlines launched its domestic air service operations in May 2005.KFA was promoted by UB group and offered a single class- “Kingfisher Class”. KFA successfully leverage the youthful and vibrant image of its kingfisher beer brand and called its airlines as ‘Funliners’ to emphasize the fun-filled experience. Within the first six months of its launch, KFA managed to corner a 6% market share in the domestic air travel mark. KFA started its operation in May 7, 2005, positioning itself as a budget carrier and not as Low Cost Carrier. Following strategies were followed to make it one of the leading Airlines in India.
• • • • •

It came up with a very appealing promotional line “Fly the good times” and it reflected in the experience the company offered to its passengers. KFA is also launched Kingfisher express in order to tap into the growing LCC segment. It planned to re-launch its commercial air service called UB Airway again which it had to withdraw it due to government restrictions. The company gave best services to its customers that were like providing world class interiors, and in-flight entertainment systems. The company came up with only one class airlines rather than other airlines that had Business Class; Economy Class the idea was to combine Business Class experiences and Economy Class experiences in one.

Having a single class freed up more leg space for passengers when compared to normal economy class flights.
• •

The company started addressing its customers as “GUEST” rather than passengers. The company made its mark by providing its guests with more legroom and bigger seats so as to provide better comfort.

KFA has set its sight to become India’s largest airline both is capacity and in market share.

KFA’s Promotional Strategies
As part of its promotional strategy the marketing team of KFA showcased the airline as “the new flying experience”. The following initiatives were taken as part of its promotional strategy…
     

  

Advertisements hoardings at airports depicted the stylish interiors of the “Funliners”, which conveyed youthfull, fun-filled, and world class image. INOX multiplexes in Mumbai publicized KFA’s special offers for a month. KFA was the official travel airlines for the cast and crew of “Mangal Pandey”- the movie. KFA made use of various fashion shows, celebrity golf matches, New Year parties all to build its “Kingfisher” brand. The UB groups monthly magazine called “Pegasus” published information about KFA along with other information related to UB group. KFA launched many attractive offers to promote its sales like the “King Card” in association with ICICI Bank, in August 2005. This was ment to creat loyal customers for KFA by providing benefits like privileged access to lounges, restaurants, free refreshments at airports, access to 180 golf clubs across India, special invites for lifestyle shows . In October, KFA launched “Chill Times Offer” in the month of August 2005 and September 2005. In October they launched the “King Saver Offer” which said “Fly like a King, don’t play like one”. KFA targeted the frequent fliers business traveler segment, which was dominated by Jet Airways. By offering a “King Saver Booklet”, This booklet contained six free flight tickets and was presented as a free gift if the passenger bought two such booklets each worth Rs. 26,999.Passengers could avail off this offer if they showed there Jet Privilege Member (Gold or Platinum) card.

Financial strategies:
KFA came up with many new financial strategic moves that made it one of the leaders of aviation industry the company had adopted following strategies:
•

It purchased brand new A320 aircrafts powered by the cockpit that was a paperless environment. In June 2005 KFA planned to order US$5 bn at the Paris Air Show, for 5 new A350-800 aircraft, and five A330-200 aircraft. KFA was first Indian carrier to place an order for A380s. In November 2005 it placed an order for 30 A 320 and 20 ATR72-500 aircraft at the Dubai Air Show. This ATR72-500 was worth US$750.

•

• •

To further its expansion plan KFA put in its bid to buy Sahara in November 2005.How ever negotiation came to a standstill when KFA felt the valuation of Sahara Airlines of around US$750mn to US$1 bn. was too high. KFA has plans to make an Initial Public Offer (IPO) and raise around US$200 mn that would be used for its fleet acquisition and route expansion activities. KFA set up Kingfisher International Inc. (KII), a subsidiary in US for its international operations. KFA plans to operate international routs by end of 2007. But KFA had yet to receive permission from the Indian government. According to Indian government domestic air carriers are not allowed to fly international routes without five year of domestic flying experience. But Mr. Mallya said if he failed to convince the government to change its rules, it would start an airline in a foreign country and fly it to India.

Human Resource Strategies
Prior to launch, KFA signed a “non-poaching alliance” with Air Deccan under which both the airlines agreed not to hire each other’s employee. KFA’s flight attendants called “Flying models” were selected through a national level model contest. KFA also stressed the fact that its employees had to be capable enough to meet the airlines’ high service standards. Among one of the biggest HR move for KFA was addition of Nigel Harwood as Chief Operating Officer with effect from August 1, 2005, to strengthen its management team. Mr. Mallya said “Kingfisher Airlines Limited has a first class management team not just at top most level but also in the second line. This is part of the UB group’s commitment to human resources”.

Awards and Recognition:
Within a short span of four years, Kingfisher Airlines has received many international and national awards.

Award is Presented by the highly acclaimed Business Daily, Economic Times, Business World, NDTV.

• • • • • • • •

India's No. 1 Airline in customer satisfaction - Business World NDTV Profit Business Leadership Award for Aviation - Kingfisher Airlines awarded by NDTV. Brand Leadership Award - in the service and hospitality segment against several acclaimed prestigious Rated amongst India's most respected companies - Business World. Rated amongst India’s 25 Innovative Companies - Survey conducted by Planman Media. The Best Airline and India’s Favourite Carrier - In a Survey conducted by IMB for The Times Of India. Buzziest Brands of 2005 - Ranked amongst the Top Ten buzziest brands of 2005 & 2006 across product categories, in the survey conducted by agencyfaqs.com and Brand Reporter. hotels, leading banks and other airlines. Economic Times Avaya Award 2006 for Excellence in Customer Responsiveness - The

• • •

Best New Airline of the Year - Centre for Asia Pacific Aviation (CAPA) Award in the Asia Pacific and Middle East region. Rated amongst Top Ten Internet Advertisers - Yahoo India. Rated amongst the top ten in the Best Television Commercial Jingles - NDTV.

GROWTH SHARE or BCG Matrix:
Ever since the aviation sector opened up the skies to private carriers, air passenger travel in India has been expanding at about 25% a year. The Airline industry has experienced a drastic increase in number of passengers, driven by privatization of aviation industry and introduction of low cost carriers like Deccan Airlines, Go Air, and Spice Jet etc. India is one of the fastest growing aviation markets in the world. The Airport Authority of India (AAI) manages a total of 127 airports in the country, which include 13 international airports, 7 custom airports, 80 domestic airports and 28 civil enclaves. There are over 450 airports and 1091 registered aircrafts in the country. Hence the Indian aviation market is on a boom. The estimated growth of domestic passenger segment is at 51% per annum and growth for international passenger segment is 26%, moreover Kingfisher Airlines in leading at No. 1 with market share of 26.08%. Hence we can analyze KFA as Stars in the BCG matrix.

Public Sector Portfolio Matrix:
KFA here in this matrix will come under the Golden Fleece, as its ability to serve is high and the public support and funding attractiveness is low.

DIRECTIONS AND METHODS OF DEVELOPMENT

ANSOFF”S PRODUCT/MARKET MATRIX

MARKET PENETRATION:
 It is trying to harp on the foreign player’s weakness who lack in Indian values and traditions.  Showing customers additional benefits along with the primary benefits.

PRODUCT DEVELOPMENT:
 KFA is also launched Kingfisher express in order to tap into the growing LCC segment.  The company made its mark by providing its guests with more legroom and bigger seats so as to provide better comfort.  The company gave best services to its customers that were like providing world class interiors, and in-flight entertainment systems.  The company came up with only one class airlines rather than other airlines that had Business Class; Economy Class the idea was to combine Business Class experiences and Economy Class experiences in one.

MARKET DEVELOPMENT:
 Kingfisher is now aiming to target the senior citizens as their one of target audience in order to provide extra discounts and facilities.  It is trying to aim even the first time as well as more repeated customers to give them additional benefits.  Loyalty and frequent flyer programs are planned.

DIVERSIFICATION:
 It is planning to go for international services. (Flight services).

TOWS MATRIX
SO (strength used to take advantage of opportunity)
 As Vijay Malaya has the brand value and reputation in minds of consumers it can take advantage of this and hit the places where, the customer income is increasing and can they can afford to fly in this airline.  Quality of service and continuous innovation is the strong factor to capture the market in large size. E.g. First airline to have a new fleet of airbuses.

WO (taking advantage of opportunity to overcome weakness)
 The increasing tourism industry can be targeted and taken advantage of.  Kingfisher Red can cater to more customers as its prices are less.  It is still not counted as a profit organization as its ticket prices are fairly high which is not affordable by customers and so the prices of this should be reduced.  The competition it is facing is much high which is hampering its growth as a whole.

ST (use strengths to avoid threats)
 The fuel price hike is one of the greatest fears and the organization has overcome this by its collaboration as stated above.  It can do contracts with pilot training institutes as there is shortage of pilots.  Services given can be increased or given at discounted prices.

WT (minimize weakness and avoid threats)
 Horizontal integration can be done in order to save oneself from price war and intensive competition.

INTERNAL DEVELOPMENT:
 The best services with unique features were provided to the customers.  Better route plans.  The new comfortable seats.  Non-stop international flights.  Enhanced service level.  First Airline Company to order Airbus.  Providing better flying experience.

BEBEFITS OF MERGER :
The economic recession was taken an an opportunity. Looking at dramatically changed world scenario and a pool of about 2.5 billion people, who are potential fliers in both India and China. Expected savings of about Rs 300-400 crore (Rs 3-4 billion) annually to accrue because of the synergies achieved due to the merger. An increase in the revenue through reduction in costs would follow because of the operation of an airline that will have about 600 flights a day. The resultant negotiation power and costs saved in fuel and maintenance will be the added benefits. An increase of Rs 300-400 crore in the first six months in the bottom line once we launch the international operations. The main idea was to increase revenues on every flight the take-off and increasing capacity and not pricing. The implementation of network strategy and good understanding of the customers were implemented to increase the revenue.

ORGANIZING FOR SUCCESS

Structure

Processes

• Fare options/Booking options/Home delivery We are committed to making our tickets easily available to our Guests. Kingfisher Airlines tickets can be purchased by:
o o o o

Calling up our Call Centers The Kingfisher Airlines website (www.flykingfisher.com) The Home Delivery option Through the Travel Agents

We follow a dynamic fare policy and the fare levels fluctuate depending on the number of

bookings made / anticipated on a particular flight.

It is our commitment to our Guests that at any given point of time the lowest available fare at that time would be made available on all booking mediums. In case a lower fare level is available after a Guest has made his booking, a rebooking will be allowed on the lower fare level after paying a seat release charge. Our fares are quoted in Indian Rupees and in US Dollars. Our International guests can book and make payments through their credit card.

• Amendments and Cancellations We understand that our Guest could be in a situation where they have to amend or cancel their tickets. At Kingfisher Airlines our Guests can amend or cancel their tickets up to one hour before the scheduled departure of the flight. For details of cancellation and seat release charges please see the Conditions of Carriage section. • Keeping you informed At Kingfisher airlines we are committed to keep our Guests informed in case of known delays, cancellations and diversions as early as possible. We use the contact details in your reservation record to update you or if you have made the reservation through a travel agent we attempt to contact him in case your contact number is not available in our records.Guests can also receive the latest flight information using our Kingmobile service by sending a SMS, eg. SMS KING to 6388. • Overbooking We operate with the objective that no Guest with a confirmed reservation should be denied boarding. Keeping this objective in mind we commit to as many Guests reservations as the number of seats on each flight. • Refunds On cancellation of a booking, the refund will be processed in the same medium in which the ticket was purchased, and through the point of sale.

• Terminal locations Currently Kingfisher Airlines operates to Agartala, Agatti Island, Ahmedabad, Bagdogra, Bangalore, Bhubaneshwar, Bhuj, Chennai, Coimbatore, Delhi, Goa, Guwahati, Hubli, Hyderabad, Imphal, Indore, Jaipur, Kochi, Kolkata, Mangalore, Mumbai, Nagpur, Pune, Raipur, Srinagar, Trichy, Tirupati, Trivandrum, Varanasi, Vijayawada and Vishakapatnam airports. • Valet assistance As a value added service, Valet assistance is available at all airports. This assistance is available from the time you reach the airport to the time you Check-in. Assistance is also available on arrival at the airports. • Checking-In All efforts are taken to ensure a smooth Check-in. The availability of multiple Check-in counters and the presence of efficient staff help reduce congestion, which translates into less waiting time at the counters and 'On time' departure of our flights. • Delay Handling In case of delay at the airport, we make all effort to minimize the inconvenience. Guests are offered refreshments in case the delay is more than one hour. In case of longer delays, Guests are offered meal subject to the airport facilities and local infrastructure. • Roving Agents No more waiting at the Check-in counter. Now guests with hand baggage need not wait at the check-in counter to collect their boarding pass. They can directly approach the security check-in counters. Deployed outside the Security check-in area will be Kingfisher Airlines' Roving Agent who will attend to these guests personally and book them on their choice of seats. Specially trained Roving Agents will reach out to guests and check them in using a mobile digital device and printer. Kingfisher Airlines is the first airline in India to launch this unique service.

• In-flight entertainment At Kingfisher Airlines, we take pride in being the first domestic airline in India to offer personalized In-flight Entertainment. Guests have the option of Live TV, Fun TV and 10 audio channels on Kingfisher Radio with choices appealing to every segment's expectations. The video choices range from Sports to fashion to an exclusive channel for kids. Similarly the audio

channels range from Ghazals to hip- hop to rock music. All efforts are made to ensure that you have a wide selection every time you fly with us. Another unique feature of our In-flight Entertainment system is the on screen moving map that let you know the Funliner's location, altitude, speed and other relevant flight details. • Meal options We offer our Guests complimentary meals on all our flights. At this stage, Guests have the choice of opting for vegetarian or non vegetarian meals on most sectors. The menus are designed considering the Guest feedback and are frequently changed to meet their changing tastes. To ensure that the Guests get different choices every time they travel with us, we have six different types of menu which are changed everyday.

• World class crew Our Crew is personally selected by the chairman. They undergo a rigorous training program in the Safety and First aid, Service Delivery and Personality development before they are cleared to take on the role of hosts on board.

• Baggage Delivery We at Kingfisher Airlines endeavor to reunite your checked baggage with you as soon as you reach your destination. Kingfisher Airlines representatives are present in the arrival lounge should you need any assistance on account of bulky baggage.

• Delayed / missed Baggage In a situation of misrouted baggage we will make every effort to locate and deliver your baggage to you as soon as possible. When a misrouted baggage is tracked we attempt to deliver it at our expense at the time convenient to the Guests. Delivery of baggage for international destination in case of transit, may take some time considering the longer flight duration, availability of flights and custom and immigration procedures. Details about our policy on lost baggage can be viewed in the Conditions of Carriage section.

•

Your special needs

We at Kingfisher Airlines are committed to provide a seamless travel experience to our guests who require special assistance. This commitment is clearly established by the fact that our personnel at various functional areas are well trained to handle your special needs. Special care is taken even while assigning a seat on board the flight. These Guests are assigned seats closer to the exits and lavatories so that they can board, use facilities and disembark in comfort. To enable us to serve you better we request you to inform us about your special needs within a reasonable time before your travel. • Unaccompanied Minor Flying alone can be a thrilling experience for kids, especially with a little advance preparation. Children may be nervous at first, but chances are they'll soon be absorbed in the adventure of stretching their own little wings. Children in the age group of 5 to 11, holding a confirmed reservation and traveling alone qualify as Unaccompanied Minors. We take the responsibility of escorting them safely to their destination. Kingfisher Airlines personnel assist in check-in and boarding process and introduce the child to the flight attendants on board. Our flight attendants take special care of the child to ensure a comfortable and enjoyable flight. At the destination our staff escorts the child to the arrival terminal and meets the person named on the UNM form. Only after checking the credential of the assigned person is the child released. The airline will assign someone to take care and make sure that your child is never really alone

• Guests with reduced mobility and Senior Citizens Guest with disabilities can expect a personalized and caring treatment from us. An escort with a wheel chair can be assigned to the Guest. Help in check-in, boarding and disembarkation can also be availed. Our flight attendants are formally updated about Guest's requirements on board their flights. Besides, a personalized briefing is also conducted on the flight for Visually impaired Guests, Guests with reduced mobility and other Guests with special needs to familiarize them with the safety and service aspects of the flights. Similarly senior citizens also have the option of availing wheel chair assistance if required.

ENABLING SUCCESS

Managing People
People as a resource
Kingfisher will succeed or fail as a team. Each one of them must respect their colleagues regardless of their rank, and they work together to ensure their mutual success. Kingfisher takes their employee as resources. They train them in such a way that the do a value addition in the organization. Kingfisher employee work in team and they have collective behavior among themselves.

Performance Management The Company provides its employees with suitable training and development opportunities to help them grow and develop their skills which are unmatched in the industry. This aspect of their training has helped their employees in creating a sound impression on their customers and they have become a highly admired airline company in India. The employees are paid good salaries and performance based incentives to motivate them even more. HR function
Recruiting quality people is a major plus point of the kingfisher. They hire the best people in the industry and pay them handsomely so that they contribute to the company’s goals and ambitions to the best of their capabilities.

Managing People
The crew members of Kingfisher are paid more than their counterparts in any other airline company in India. Kingfisher has HR Management Information System which keeps record on performance of the human resource. Training/ Learning Management System (LMS) Performance Record

Structure and Processes
IATA ICAO Callsign

IT Founded
Hubs

KFR

KINGFISHER 2002
Bengaluru International Airport

( Primary Hub)
Chhatrapati Shivaji International Airport

( Secondary Hub)
Indira Gandhi International Airport

( Secondary Hub)
Focus cities Ahmedabad Chennai Hyderabad Kolkata

Frequent flyer program

King Club 75 (+139 Orders, 25 Options) 77 (Including routes servedKingfisher Red)
UB Group

Fleet size Destinations
Parent company

Company slogan Headquarters Key people

Fly The Good Times
Bangalore, India Dr. Vijay Mallya, CMD

Mr. Hitesh Patel, EVP Mr. Rajesh Verma, EVP Mr. A. Raghunathan, CFO

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. It placed orders for 5 A380s, 5 A350-800 aircrafts and 5 Airbus A330-200 aircrafts in a deal valued at over $3 billion on June 15, 2005. With the sign of trouble in aviation industry, Kingfisher airlines and Jet airways (used to be competitors), formed alliance (October, 2008) to significantly rationalize and reduce costs and provide improved standards and a wider choice of air travels options to consumers with immediate effect • • • • • Kingfisher airline has won global awards at the SKYTRAX World Airline Awards ceremony held recently in Hamburg , Germany(2009). Air France –KLM is in talks with Jet Airways and Kingfisher Airline for having a codeshare agreement .The conclusion of this agreement could help passengers , especially from smaller cities ,to travel further on the network of these global airline. Kingfisher Airlines has launched “Five Star Privileges” ,an exclusive program that entitles guests to avail of great deals at partner establishment around the country. Kingfisher Airlines captures market share with strong passengers in February 2009 as per the latest ministry of Civil Aviation data. Kingfisher Airlines has deferred deliveries of some Airbuses (EAD,PA) aircraft, wary of overcapacity as airlines struggles to cut costs to offset high fuel prices and softer demand. The Airline , a unit of alcoholic drinks maker UB Group , has negotiated with Airbus to defer deliveries of 32 A320-family aircraft to 2010-2012 from2008/09, Kingfisher, which owns discount carrier Deccan Aviation DECA.BO, has five A380 super jumbos on order , scheduled for delivery from 2012 , as well as 20 A350 Aircraft scheduled for delivery from 2013. It also has a further 20 A330/200 aircraft on order , making it one of the single largest stakeholders in the Airbus order backlog by number of planes. • • • • • • • Indigo ,paramount Mull joining Jet Airways (India) limited and Kingfisher Airlines Ltd ties up Kingfisher Airlines Ltd plans to sell 25% stake to allow foreign airlines to invest in domestic carriers, with a cap of just below 26%. Kingfisher Airlines Ltd in talks to lease out two of its Airbus A330 planes to Nigeria’s Ank Air. Recently, it has announced management change . Air India has rejected the Jet Airways(India) Limited-Kingfisher Airlines Ltd offer to join their Alliance. Deccan aviation Ltd has changed its name to Kingfisher Airlines Ltd. Private air carrier Kingfisher Airlines has inked an agreement with Citibank Cards which allows members of its 'King Club' holding the bank's cards redeem their points for flights on Kingfisher Airlines or its partner airlines. King Club is the airline's frequent-flyer programme.

"The association will benefit members of King Club, the frequent-flyer programme of Kingfisher Airlines and Citibank cardholders who are King Club members

Managing Information
New Business Model
To further its expansion plan KFA put in its bid to buy Sahara in November 2005.How ever negotiation came to a standstill when KFA felt the valuation of Sahara Airlines of around US$750mn to US$1 bn. was too high. KFA has plans to make an Initial Public Offer (IPO) and raise around US$200 mn that would be used for its fleet acquisition and route expansion activities. KFA set up Kingfisher International Inc. (KII), a subsidiary in US for its international operations. KFA plans to operate international routs by end of 2007. But KFA had yet to receive permission from the Indian government. According to Indian government domestic air carriers are not allowed to fly international routes without five year of domestic flying experience. But Mr. Mallya said if he failed to convince the government to change its rules, it would start an airline in a foreign country and fly it to India. May go for other services like international flights (concentric diversification). May go for arrangement fashion shows (horizontal diversification).

Mergers and Acquisitions
Dec. 2007Low-cost carrier Deccan and Vijay Mallya-led Kingfisher Airlines decided to merge and create a single corporate entity to cut down operational costs and accelerate their journey to profitability. Shares of Deccan Aviation have doubled in a little over a month in anticipation of a reverse merger of Kingfisher Airlines into Deccan Aviation. Details of Deccan-Kingfisher merger, valuations and swap ratio will be worked out by accountancy firm KPMG. Mallya would be the chairman and CEO of the merged entity, while executive chairman of Deccan, Captain G R Gopinath would be the vice-chairman.

Managing Finance
Mallya made it clear that KFA would not be positioned as a low cost carrier as passengers would attribute the features of low cost carriers like low quality of service, delayed flight timings, etc., to KFA as well. Hence, the airline was called a budget airline and not an LCC. Fares were above those of LCCs but lower than the economy class fares of Jet, Sahara, and IA. KFA also allowed multiple fare options and auctioning of tickets on all traffic routes. Kingfisher follows a dynamic fare policy and the fare levels fluctuate depending on the number of bookings made / anticipated on a particular flight. It is their commitment to Guests that at any given point of time the lowest available fare at that time would be made available on all booking mediums.

The Company offers world class services at the most competitive prices. Their services are rated as the best in the Indian aviation industry and their pricing strategy aims at acquiring customers from their competitors by providing state of the art services at very competitive prices. The company carefully analyzes its load factors in order to optimize their investments in the operations and to break even because they are operating in a very dynamic industry and it is very crucial for them to have a measure their costs so that they can optimize the profitability of their operations. KFA came up with many new financial strategic moves that made it one of the leaders of aviation industry the company had adopted following strategies: The company is planning to spend close to Rs 40 crore on various media and below-the-line marketing activities for the year 2009-10

Cut down the salaries of the staff like trainee pilot now drawing Rs20k as compare to Rs2.0lacs. To come over the financial crisis the KFL is considering an option of retrenchment.

It purchased brand new A320 aircrafts powered by the cockpit that was a paperless environment. KFA was first Indian carrier to place an order for A380s. The ROI (return on interest) for Kingfisher Airlines turns out to be low since the capital investments done by them are very high and profits incurred are low. ROI = Profit / Capital Employed The strategy proposed for Kingfisher Airlines in this assignment would help Kingfisher Airlines to recover from their losses by a substantial amount but the strategy of Vijay Mallya is to conquer the Indian Aviation market by any cost.

Managing technology
The cargo sector in the domestic industry is very much unexploited and the company can exploit this because they have access to some of the most profitable routes in the industrial towns and cities in India. The company has got a sound infrastructure to support its cargo operations and they should take advantage of this before their competitors. • The company has hangers at the major airports in order to increase their revenues while cutting down the costs. For Example, if they have their own hangers then they will not pay the parking charges to the competitors and at the same time if they have their own hangers then they can charge their competitors for using their hangers which will increase their revenues.

Seek additional distribution channels such as more tie ups & collaboration, try seeking collaboration with international carriers, bilateral discussions over seats and code-sharing between the carriers. Easy accessibility to Guests. Telephone numbers are accessible 24 hours Easy availability of tickets. Amendments and Cancellations up to one hour before the scheduled departure. Keep their guests informed in case of known delays, cancellations and diversions. Valet Service Checking-In, multiple checking counters. Guests are offered refreshments in case the delay is more than one hour Inflight entertainment Meal options World class crew

Managing Strategic Change

Diagnosing the change situation
The fluctuating aviation turbine fuel (ATF) prices are always a concern for low cost airlines, according to analysts. Many doubt how long these no-frills airlines can survive in the market. In Europe, low cost airline boom was followed by a bust, which only a few competitors survived. Since low cost airliners depend on maximum utilization due to lack of stand-by aircraft, any technical snag would adversely affect on the travellers as only a refund is made and no alternative travel arrangements are done Experts say that airlines compete primarily on three fortes such as price, customer service and value-added services. While no-fillers fight the price war, service is the main thing provided by their larger peers. The critical factor will be the ability to keep costs low and the offer of an on time service at an affordable price, despite the infrastructure constraints, for survival. The next issue to tackle is to properly position itself in the aviation market. The Indian customers are not that much mature as compared to their American contemporaries. They will not pay more for just mere entertainment or watching TV in a flight of one or a half hour journey. Poor airport infrastructure such as few landing slots, Inefficient Air traffic controllers, not yet automated systems prone to human delays and errors, shortage of skilled personnel. The revenue per seat is low. It cannot rely solely upon the direct selling model for sell of the tickets as the Internet and credit card penetration is not that remarkable. The dishonesty of travel agent who usually do not push their seats as that of the rival’s. A certain amount of churn and turmoil for players who don’t have the deep pockets. For example, as happened in USA, many smaller airlines without deep pockets fell by the wayside unable to sustain the predatory pricing techniques adopted by their strong opponents. The outdated Aviation rules in India which compels the airlines to add more to their operating cost, which could have been easily, do away with. Taxes like passenger service fee which is Rs. 221 on one seat looks ridiculous for a ticket worth Rs. 99.

Overhauling costs is another major hurdle. Current number of pilots in India is over 1,500. According to aviation ministry sources, the money that is coming to the sector is from dubious origin in several cases & is from investor seeking quick returns. So it may be possible that some of the players may not even be in the game for long. They may sellout after listing on the stock market or get bought out, once the market starts consolidating.

Types of change
It planned to re-launch its commercial air service called UB Airway again which it had to withdraw it due to government restrictions. The company gave best services to its customers that were like providing world class interiors, and in-flight entertainment systems. The company came up with only one class airlines rather than other airlines that had Business Class; Economy Class the idea was to combine Business Class experiences and Economy Class experiences in one. Having a single class freed up more leg space for passengers when compared to normal economy class flights. The company started addressing its customers as “GUEST” rather than passengers. The company made its mark by providing its guests with more legroom and bigger seats so as to provide better comfort. KFA has set its sight to become India’s largest airline both is capacity and in market share.

Bibliography

 http://flykingfisher.com/   http://avindia.blogspot.com/2006_12_24_archive.html www.moneycontrol.com/india/news/press--news/kingfisher-airlines -paymate-to-launch-flybuysms/307281       timesofindia.indiatimes.com/articleshow/2007722.cms timesofindia.indiatimes.com/articleshow/1955887513.cms http://www.coolavenues.com/know/gm/manasi_1.php3 http://www.slideshare.net http://www.wekipedia.com http://www.google.com

 www.quickmba.com/strategy/ansoff/  www.quickmba.com/entre/definition  www.thehindubusinessline.com/2007/06/01/stories/200706010640010

0.htm
 www.how-to-make-more-money.com/Vijay-Mallya_biography.html  www.gaebler.com/entrepreneur-characteristics.htm)  www.prenhall.com/scarbzim/html/smallbus.  http://www.quickmba.com/strategy/swot  www.coolavenues.com/know/gm/manasi_6.php3  www.coolavenues.com/know/gm/manasi_8.php3  www.marketingteacher.com/Lessons/lesson_bowman.htm

 www.ficci.com/media-room/speeches-presentations/2007/feb/air-

con/session3
 economictimes.indiatimes.com/.../articleshow/2602464.cms