Kingfisher Airlines

March 2010
 Table of Contents

• Section 1: Kingfisher Airlines Overview

• Section 2: India Aviation Market

• Section 3: Recent Performance and Continued Initiatives

2
Section 1

Kingfisher Airlines Overview

3
Kingfisher offers premium service with an efficient cost
structure in the world’s most attractive aviation market
Indian aviation market is on a recovery path and is poised for long-term accelerated growth
− Recovery in the market is underway (14% load factor growth, 11% yield growth, 30% pax traffic growth)

− Aviation is poised for secular growth of 15-20% (GDP growth at 8-9%, Aviation growth 2x, 4 trips/100 people)

− Irrational exuberance of capacity addition witnessed in the past is unlikely to recur (Air India likely to rationalize
capacity by 30%, All other airlines expected to add only 10-15 planes in next year on base of 260)

− Enabling conditions are improving; Significant upgradation in infrastructure of airports

Indian market is unique; Transplanting global models in India has rarely worked
− Indian geography makes airline travel indispensable; Emerging demographic profile requires equal focus on
metro and Tier-2 cities; Higher growth likely inTier-2 cities which are typically located in 500-600km from key
metros

− After years of deprivation, Indian consumers are moving towards conspicuous consumption; deep-rooted class
conscious mindset

− Large proportion of consumers continue to be ‘indirect’ purchasers; leisure traffic is limited

− No cost advantage for LCC operators (No separate airports, same personnel costs, low ancillary revenue, limited
online booking)

− Indian markets is more suited for short and medium-haul international routes at current fuel prices

− Slot constraints in metro airports create entry barriers for new players
4
 Kingfisher offers premium service with an efficient cost
structure in the world’s most attractive aviation market
Kingfisher offers a unique model which serves all Indian consumer segments & positions KFA to capture all
growth opportunities in India
− Airbus and ATR fleet provides unique advantage to capture growth in metro, Tier-2 cities and international market

− Premium offering covering all consumer segments (Only Indian airline with 5-star rating)

− KF First for high end business & premium consumers (valet service, gourmet cuisine, stand-up bar & lounge)

− Kingfisher Class for business consumers (IFE, superior service)

− Kingfisher Red for value-conscious (Food on Board, Lounge access, FFP)

− Cost - competitiveness to ensure premium services are offered at value price points

− Cost difference with LCC would be limited to Food-on Board ($1.5) and GDS costs ($5)

Kingfisher has developed unique advantage over its competitors

− Best ‘lifestyle’ brand in the country supported by multiple UB group properties (e.g. Beer, Force India, IPL); 50 years
of serving the Indian market provides unique consumer insights

− Largest Indian domestic carrier by market share; widest domestic network connectivity (~ 400 daily flights) to
leverage growth across all segments (Highest frequencies in key metros; Maximum day-return products; 29
exclusive city pairs; 400+ connections)
(contd.)

5
Kingfisher offers premium service with an efficient cost
structure in the world’s most attractive aviation market
(contd.)
− First carrier to enter Big-3 alliances – One World; In addition, Kingfisher and Jet are the only private carriers
currently to have approval for international operations

− Medium-haul routes connect to hubs of major participants in the alliance (HKG, LHR, SIN); These routes
also serve large Indian diaspora

− All short-haul routes to neighboring countries served through cost-effective A320 which increase aircraft
utilization

− Innovative FFP program has attracted over 1.1 million members in 4 years (68% cabin penetration in First)

Kingfisher is India’s most efficient and flexible Airline

− Consistently rated best on consumer satisfaction across surveys (rated higher than SQ in Asia)

− Best on-time performance amongst scheduled carriers (82%+ in Jan ‘10)

− Highest operational reliability of A321 fleet in world and one of the best technical despatch reliability in A320 fleet

− High aircraft utilization (~12 hrs on Airbus in a non ‘red-eye’ market)

− Low employee/aircraft ratio at 115; Non-unionized workforce; Outsourced model ensures low fixed costs

− 25% of Airbus fleet is flexible; can be branded as Kingfisher Class OR Kingfisher Red based on market needs

6
Kingfisher offers premium service with an efficient cost
structure in the world’s most attractive aviation market
Kingfisher is now focused on ensuring sustainable and profitable growth
− Experienced management team is in place with deep aviation experience

− Rationalized capacity by > 20% during past 2 years; At the same time order book position will ensure
lucrative growth to capitalize on demand uptick

− Steadily increasing Passenger RASK (21% increase from Rs 3.19 to Rs 3.86 over past 6 quarters);
Several revenue enhancement initiatives identified and initiated, which would further enhance RASK

− Kingfisher Xpress cargo service, One Stop Connect campaign, code share agreements with key
global carriers, updated FFP program, Internet Booking Engine, Revenue Management initiatives,
One World Alliance

− Aggressive cost reduction plan targeted to reduce costs

−Rationalizing distribution costs, Reduction in expat pilots, renegotiating E&M vendor agreements,
renewal of operating leases at 20% discount, additional operational efficiencies (fuel consumption,
overheads)

− Balance sheet being restructured to re-phase and reduce debt

− Appointment of Seabury as advisors to identify further opportunities for efficiency enhancement

− Additional upside possible through policy initiatives like tax rationalization on fuel

7
 UB Group – Transparent Holding Structure (as on date)

51.8%

Promoter Group UBHL

Held by Held by Total Group
UBHL Promoters Holding
and Other
Group Cos.

Real Estate (UB City) Investments Pegasus License USL 29.11% 6.65% 35.76%

UBL 12.62% 24.87% 37.49%

KFA 60.58% 5.69% 66.27%

Spirits Beer Aviation Other Inv UB 37.18% 3.56% 40.74%

Engg
35.8% 12.6% 60.6% 10.2% MCF 24.51% 5.94% 30.45%
United Spirits United Kingfisher Aventis
Ltd Breweries Airlines Ltd Pharma Ltd Aventis 10.22% - 10.22%
Ltd

100% 24.5%
50%
Whyte & Mangalore
Mackay Millennium
Chemicals &
Fertilizers Ltd
Alcobev

37.2%

UB Engineering
Ltd

8
 UB Group’s Entry into Aviation

May-05 Jan-05 31-May-07 • UB Group’s dominance of its core beverage

KFA – first flight KFA buys 26% business, gave it unique strengths
Apr-05 stake in Air Deccan – Sharp understanding of the evolving tastes
@ INR150/share and behavior of the Indian consumer
Jul-05
– Ability to create premium products with true
Oct-05
value
– Nuanced understanding of operating in a
Oct-08 21-Jul-08 highly regulated environment
India’s largest Jan-08
Launches plans
carrier with ~ for international
28% market Apr-08 operations and
• Aviation offered extra ordinary growth
share Kingfisher First potential in an emerging economy like India
Jul-08
– UB group launched Kingfisher Airlines to
leverage on its unique strengths
Oct-08

• Aviation business has been built on three

Jan-10 Apr-09 1-Sep-08 core competencies of the group
Kingfisher dominates with Deccan to be renamed as – Ability to deliver a unique experience while
Jul-09
widest network coverage Kingfisher Red remaining competitive
of about 63 cities
operating over 375 flights Oct-09 – Ability to manage scale up
a day within India – Ability to tightly manage costs
Jan-10

9
Strong and Highly Experienced Management Team
Operations &
Engineering
Hitesh Patel
EVP
• Currently leading
operations and
engineering at Kingfisher
Airlines, Hitesh has over
27 years of work
experience in the Airline
industry. Prior to joining
KFA, Hitesh managed the
line and base maintenance
operations at JetBlue
Airways in United States
as a Director for over 6
years. Hitesh enjoys the
record of having
maintained the best fleet
with the highest dispatch
reliability of Airbus A320s
world-wide
In-Flight &
Services
Rajesh Verma
EVP
• Rajesh heads Guest
Services, In Flight
Services, Airports and
Security functions at
Kingfisher Airlines and has
rich experience in the
Airline and Hospitality
industries. Prior to KFA, he
worked with Jet Airways
for over 10 years. Rajesh
has also worked with the
ITC-Welcome Group
Chairman &
CEO
Dr. Vijay
Mallya
Finance
A Raghunathan
CFO
• Mr. A Raghunathan is a
qualified Chartered
Accountant with over three
decades of work
experience in finance and
accounts. Before taking
over as the CFO of
Kingfisher Airlines, Mr. A
Raghunathan worked in
senior finance positions in
the liquor business of UB
group for 26 years. He is
responsible for Finance,
Accounts, Legal,
Secretarial, Purchase &
Administration
Commercial
Manoj Chacko
EVP
• Manoj has over 18 years
of experience in Indian and
international airlines and
travel services. He
currently heads the
Commercial function at
Kingfisher airlines and is
responsible for the Sales,
Revenue Management,
Network Planning,
Alliances and Loyalty
functions. Prior to joining
Kingfisher, he has worked
with American Express
(Travel services division)
and Emirates
IT
Sourav Sinha
CIO
• Sourav currently heads
Information technology at
KFA and has over 17
years of work experience
with airline systems and
technology. Prior to joining
Kingfisher, he spent 10
years with TCS and was
the head of IT department
at Qatar Airways
10
Strong and Highly Experienced Management Team (contd.)

Chairman &
CEO
Dr. Vijay
Mallya

Corporate Human Resources Marketing Quality & Guest Security

Development & Rubi Arya Ravikant Sabnavis Commitment Maj. Leslie Missal
Planning VP VP Gaurav Rathore AVP
Amit Agarwal AVP
Sr. VP

• Amit has recently joined
Kingfisher as Sr. VP –
Corporate Development
and Planning. He comes
with a strong airline
background spanning over
17 years with leading
airlines such as American
Airlines, Continental
Airlines and Delta Airlines.
His last role with Delta was
Managing Director for RM,
Pricing & the Network
Group.
• Rubi heads the Human • Ravikant currently heads
Resources function at
Kingfisher Airlines. She
has over 13 years of
experience spanning
various industries and
consulting. An MBA in
Human Resources from
India’s premier institute
XLRI, she was previously
associated with the UB
group. Prior to that, she
worked with
PricewaterhouseCoopers
in their Human Capital
Solutions group .
• Gaurav is responsible for
the Marketing function at the Quality, Guest
Kingfisher Airlines and Commitment & Call Centre
overall has an experience functions in Kingfisher
of 18 years in Marketing. Airlines. Gaurav has over
He joined the UB group in 15 years experience in the
2007 and was Divisional aviation industry. Prior to
Vice President-Marketing joining Kingfisher, Gaurav
prior to joining Kingfisher worked with Jet Airways
Airlines in September where he was heading the
2009. Service Quality Group.
• Major Leslie is the head of
the Security function at
Kingfisher Airlines. Prior to
Kingfisher Airlines, he was
associated with the UB
group since 2003, in the
role of Security Advisor.
Prior to his stint with the
UB Group, Major Leslie
served the Indian Army for
10 years in counter-
insurgency areas, and as a
Black Cat Commando for 3
years.

11
A Premier Product for the Indian Flyer with a Low Cost
Focus

Strong Kingfisher Brand High brand salience & preference in the minds of Indian consumer

Costs more aligned towards low cost model

No Legacy Issues (Unions etc)
Allow high level of operational flexibility

Diversified Network Well spread on business and leisure routes

Monopoly Destinations Highest exclusive stations amongst private carriers

High Service Quality Levels Premium business class product, well trained young staff

Well positioned to capitalize on the demand uptick

Segmented customer base targeted effectively through three sub brands “Kingfisher
Balanced & Flexible Aircraft
First”, “Kingfisher Class” and “Kingfisher Red”
Configuration
Flexibility to deploy same aircrafts across Kingfisher Class and Kingfisher Red based
on need

Outsourced Ground Handling Protection against policy change

More than 1 million members; superior features like faster tier upgrade, non-air reward
Unique Frequent Flyer Program
shop, family club program encouraging customer stickiness

12
Widely Recognized for Brand Strength and World Class
Service

Asia Pacific’s “Top Airline Brand” in a survey conducted by TNS on 'Asia Pacific's Top 1,000 Brands' for 2008
(2007 – SQ)

Voted India’s No. 1 airline in customer responsiveness in an independent survey

Voted India’s No. 1 airline in customer satisfaction in an independent survey conducted by India’s largest
business magazine

Rated the ‘Best Airline in Central Asia’ at the SKYTRAX World Airline Awards in 2009

Economic Travel award for ‘India's top rated Domestic Airline- Full Service’ for Kingfisher Airlines and ‘India's top
rated Domestic Airline- Low Cost’ for Kingfisher Red (2009)

‘India’s favorite airline’ as per recent HT-MaRS consumer survey (2009)

Kingfisher Airlines’ frequent flyer program, King Club received 2 Freddie Awards for Best Bonus Promotion and
Best Customer Service in 2009

13
 “What Makes Kingfisher India’s Favorite Airline?”
The Hindustan Times- MaRS Consumer Satisfaction Survey” rated Kingfisher as India’s Favorite Airline

Overall Rating of Airlines Operators (1)

Aggregating Their Flying Experiences on All Airlines, Indian Flyers Gave a
Satisfaction Rating of 794 out of 1,000
“ Kingfisher’s valets (porters and loaders) make a great
difference for guests. Kingfisher does a little extra, which
Kingfisher 794
passengers like. It is also seen as a glamorous airline and
people do like that, too. Then, of course, it serves excellent on-
board cuisine” - Ajay Prakash, CEO of Mumbai-based Nomad
Jet Airways 786
Travels

Spice Jet 773

“The inquisitiveness about Mallya and his lifestyle draws a
sizeable number of flyers to Kingfisher. Given an option, I prefer
Indigo 761 Kingfisher. It is much better value for money”
Ankur Bhatia, MD, Amadeus India, the country’s largest online
reservation system
Go Air 752

Jet Lite 745 “Kingfisher is the best due to its competitive fares and hygienic
washrooms. Their service attitude makes all the difference. I
will prefer Kingfisher even if the fare is 5 per cent more.”
Air India 736 Rajesh Verma, Mumbai-based exporter

700 720 740 760 780 800

Notes
(1) Higher scores indicate greater satisfaction levels
14
Differentiated Strategy Offers Best-in-Class Value
• Only domestic airline to provide
Gourmet Cuisine Gourmet menus created by a team of
renowned Chefs
• Our on-board reading material is a
mix of International and Domestic,
Business, Fashion and Leisure
In-Flight Magazines
Reading Material • The newspaper selection ranges from
The International Herald Tribune and
The UK Times to ethnic language
publications
• Kingfisher First lounge on board is
Kingfisher
staffed by professionally trained
Lounge in the
Bartenders offering Signature
Air
Cocktails in a luxurious setting
• Kingfisher First Amenities (Perfumes,
Eau de Toilettes, Moisturisers, Lip
In-Flight Guest
Balms and tailored Sleeper Suits)
Amenities
exclusively designed by Salvatore
Ferragamo
• Only low cost airline to provide
Complimentary
complimentary meals including
Hot & Filling On-
breakfast, lunch, snacks and dinner
Flight Meals
depending on flight timings
• Selection of Indian publications such
as Cine Blitz, Times of India,
In-Flight Reading
Economic Times and local
Material
newspapers as on board reading
material
• Only low cost airline in India to offer
Frequent Flier
Frequent Flier Privileges
Privileges
• Reward system linked to King Club
• A judicious mix of customer service
and basic comforts provided at low
Efficient Service
cost
at Low Cost
• Delivers a delightful experience to the
cost conscious yet discerning traveler
15
 Partnerships & Frequent Flyer Program

• More than 88 bilateral and unilateral interline partners across the world
• Focused on attaining code shares
Partnerships
• Only Indian private carrier slated to join a global Alliance- One World, which is expected to further enhance
revenue and streamline costs

• Huge member base in just 4 years of launch (~1.16 million members growing at 46% YoY)
• Awarded Two top honors at Freddie Awards 2008 (Best Bonus promotions , Best Customer Service)
Frequent Flyer Program • One-of-its kind benefits like family club and non-air rewards
• Very high cabin penetration levels indicating affinity to the product (Kingfisher First penetration ~68%)
• Significant ancillary revenue generation through 57 partners across 10 verticals ( Banking, Hotel, Retail)

• Launch of an auto-sweep co brand credit card (current and new partner) expected by Q2 FY11
New Developments and • Launch of debit co-brand card expected by Q4FY11
way forward • Extension of King Miles as a preferred loyalty currency by increasing width of partners
• Increased CRM based analytics and campaigns

16
One World Alliance
About One World

One World serves 800 airports in 150 countries. It

World’s most profitable global alliance, bringing
operates 9,000 daily flights, carrying 340 mn
together the leading airline carriers- American Airlines,
passengers annually, on a combined fleet of 2,500
British Airways, Cathay Pacific, Qantas, Finnair
aircraft

Only alliance with member airlines based in every

Voted the World’s Leading Airline Alliance for the
continent and with members based in South America,
seventh year running in the 2009 World Travel Awards
Australia and Asia’s Middle East

Key Benefits for Kingfisher

Access to market share and network without significant addition of financial investments

Access to landing/parking slots and gates that are typically leased to the larger airlines

Significantly enhance customer proposition

– Top-tier qualifying miles
– Top-tier recognition
– Global lounge access

Provide further opportunities for cost savings and access to management best practices

17
Powerful Marketing Efforts Drive the Kingfisher Brand
Strength

Movie Associations
and in - Film
Branding

Events

Cabin Crew with Delhi CM Events: Women’s Conference Kingfisher Cabin Crew
at Delhi Marathon with Cherie Blair at the TiE Summit

Outdoor Branding

18
Significant Marketing Synergies from Parent Group
Branding
Leveraging Group Marketing Assets

Formula 1 Car Racing Team Kingfisher East Bengal Football Club

Royal Challengers IPL Cricket Team

Kingfisher Frequent Flyer Program

19
Extensive Network Providing the Widest Domestic Reach

66 aircraft
Market Share Evolution
70 destinations %
394 flights a day 100
4 2
4 1
15

75 27 12

11 AI
18
50
7

36
18 JA
25

12 22 KFA
5
0
FY 2005-06 January 2010
KFA Air Deccan Jet Airways
Jet Lite Air India Alliance Air
Go Air Spice Jet Indigo
Paramount

Source: DGCA 20
 Performing well on operating parameters

Key Operational Analysis KFA

Current Fleet (Dec’09) 61
Average Fleet Age (yrs) 3.0
Employees per Aircraft 115*
Market Share (Jan’10) 22.2%
Average Seat Factor (Apr-Dec’09) 70.2%
RASK (Apr-Dec’09) 3.58
CASK (Apr-Dec’09) 3.88
Unionized No

Legacy Govt. Ownership No

Customer Satisfaction Skytrax-5 star

Notes
(1) All metrics are for domestic operations only
(2) Market Share is basis DGCA report for Jan ‘2010
(3) RASK is Passenger Revenue per ASK; CASK is EBITDA cost per ASK
(4) ASKMs are basis the DCGA monthly reports
(5) * Employees/AC numbers are for Domestic + International ops, based on Q3 FY10 declared numbers

Source: DGCA and Published financials

21
 Uniquely Flexible Fleet to Aid Market Based Deployment

Current Fleet Description Projected Delivery Schedule

Fleet Type # Aircraft Fleet Type # A320 # A330 # A350/380 Total

Airbus 319 3 2011 - - - 0

Airbus 320 23 2012 6 4 - 10

Airbus 321 8 2013 9 3 - 12

Airbus 330 5 2014 7 4 2 13

ATR 72 25 2015 8 4 6 18

ATR 42 2 2016 12 0 2 14

Total 66 Total 42 15 10 67

• Fleet Strategy

– Airbus A 320 fleet in multiple configurations ( Single & Dual ) to aid a “map to market” capability

– ATR fleet to leverage growing underserved & underdeveloped markets

– Competitive A 330 aircraft designed with unique KF specs to create the “best product in the sky” for international
medium & long haul operations

22
 Leverage Strengths in Engineering & Maintenance

• ISO certification- twice a year audit done by BSI Management system, India, a subsidiary
Key Industry Standard
of British Standards Institute
Certifications
• IOSA certification- 3 Audits (KF standalone, DN standalone, KF & DN combined)

Fleet Management
• Self management of entire NSOP fleet – B727 / HS125 / Helicopter EC 155
Capabilities for
• Total care support to Reliance ACJ (VVIP Aircraft)
Specialized Purposes

• First organization to receive approval under CAR 145

High Operational
• Highest operational reliability of A321 fleet in world fleet & one of the best technical
Reliability and Safety
dispatch reliability in A320 family fleet
Management
• Safety management system is built into E & M policies through MOE & QMS

• Approvals obtained from Civil Aviation Authority of Singapore (CAAS), Qatar Civil Aviation
Foreign Regulatory
Authority (QCAA), Civil Aviation Authority of Srilanka (CAASL)
Approvals
• Approvals in process: General Civil Aviation Authority (GCAA-UAE), EASA

Third Party Handling

Support at Indian
Airports

23
Section 2

India Aviation Market

24
Most Attractive Aviation Market in the World

…Aviation traffic in India

Historical domestic passenger …Enabling conditions would
amongst lowest in
CAGR of 20%... ensure continued growth
BRIC countries…

Growth of Indian Aviation Industry Aviation Traffic Penetration in BRIC • Economy expected to
Countries
continue to grow at 7% – 9%
50.0 CAGR of 20% since FY 2004 25
44.4 45.1 23 • Ministry of Civil Aviation
39.4
envisages creating
40.0
35.8
20
infrastructure to handle 280
MM passengers by 2020
30.0 15
25.2 13
• Indian Middle Class to reach
20.0
19.4 50% of India’s population at
15.7 10
600 MM by 2025
10.0
5 4

0.0
0
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10E
Brazil China India
Annual domestic pax traffic (Mn)
No. of domestic passengers per 100 people

KPMG expects India’s air traffic to grow 2 – 3 times by 2012

Source: KPMG, MOCA, CAPA, McKinsey Global Institute 25

Highest Growth Aviation Market in the World

CIS
Europe 8.7%
7.9%
North America
10.5%
Middle East
11.5%
7.2%
Africa Asia-Pacific
8.3% 7.4%

India World
20-year 20-year
2007-2016 2017-2026 2007-2016 2017-2026
growth growth
9.7% 6.4% 8.0% 5.4% 4.4% 4.9%
Source : Airbus Estimates
26
Massive Infrastructure Investments Supports Growth

Massive Airport Investments Non-Metro Airports Identified for Upgrade and

• Over next 5 years, Airports Authority of India Modernisation
has planned an investment of US$3.1 Bn
Government policy support for Infrastructure
Jammu
• 100% FDI under automatic route is permissible Amritsar
Chandigarh
for green field airports Dehradun

• Private developers allowed setting up of Jaipur Agra Lucknow

Guwahati
Dimapur

captive airstrips and general airports 150 km. Udaipur

Varanasi Patna

Bhopal Agartala Imphal

away from an existing airport Ahmadabad
Indore
Khajuraho
Rajkot Ranchi
Vadodara
• 100% tax exemption for airport projects for a Nagpur Raipur
period of 10 years Aurangabad Bhubaneswar
Pune Vizag
• The Government is also planning to develop
around 300 unused airstrips Goa

Mangalore
Port Blair
Coimbatore
Agatti Trichy
Madurai
Trivandrum

Land Constrained Airports Unconstrained Airports

Source : CAPA
27
Move Towards a Rational Supply Environment

Avg. Monthly Seats Offered

Seats Offered
Industry (MM) Industry (MM) H-o-H ∆

6.5 2H 2008 4%
1H 2009 (16%)
6.1
6.0 2H 2009 3%
6.0 5.9
5.8

5.6
5.5 5.5
5.5 5.4
5.3
5.2 5.2
5.4
5.3 5.3 5.3
5.2 5.1 4.9 4.9
5.0 5.1
5.0 5.0

4.8
4.5 4.6

4.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CY08 CY09

Source : MOCA Website, PIB press releases

28
Government Policies Present Upside…

• Expected change in Government policies & in macro-economic environment would result in

lower operating costs for the industry

− ‘Declared Goods’ status for ATF would result in lower uniform taxation of 4% on fuel

− Escalation of airport costs at private airports expected to be charged as UDF from consumers. No

escalation foreseen for AAI airports, given the recent hikes in 2009

− Removal of expat pilots by July 2011 as per Government guidelines across Industry

29
 …And There Is Reason to be Optimistic
The big three players– Kingfisher Airlines (23%), Jet Airways + JetLite (25%) and Air India (18%) are
critical to the Indian economy (4)

• $14bn + aviation industry is similar in size to Indian railways ($18bn)

• Creates substantial impact on other allied industries – Tourism, Hospitality, Banking

– 4.5% of global GDP is attributed to the air transport component of civil aviation (1)
– Impact on indirect industry is estimated at 1-1.5 times size of aviation industry (2)

• Improved connectivity results in higher GDP growth

– $100 spent on air transport produces benefits worth $325 for the economy (1)
– Improves economic productivity of passengers (estimated at 50% of ticket prices) (3)

• Creates significant employment potential

– Direct ~ 100,000
– Indirect ~ 6 times (1)

Notes
1) Naresh Chandra Committee Report
2) Port Authority report on New York aviation market
3) IATA report
4) YTD FY10 market share
30
Indian Aviation – The Way Forward

• The economy continues to show signs of recovery with GDP growth estimates climbing back
over 7%
Favourable
• Passenger traffic has firmed up in Q4 and is expected to grow by > 15% in the coming year
Economic Outlook
as per CAPA estimates
• Premium traffic has also seen a comeback and growth is expected to continue

• Industry capacity is more aligned to demand after a series of sharp cuts in the early 2009,
Better Demand-
and capacity induction in the current year is expected to be <10 % as per CAPA estimates
Supply Match
• Yield improvements witnessed in Q3 are expected to continue given the narrowing of the
Should Improve
demand supply gap. CAPA expects domestic yields to improve by 5-7% in 2010-11 and as
Yields
high as 10% in Q3 of next year

• Rational pricing is expected from industry, going forward

Pricing and Policy
• Government is re-evaluating policies which might benefit industry – ATF taxation, FDI
Matters
norms, RDB guidelines

31
Section 3

Recent Performance and Continued Initiatives

32
 Kingfisher Has Actively Rationalized and Restructured
Capacity…

KFA Capacity Trend

Second round of capacity

rationalization to balance
demand supply

First mover to rationalize

industry capacity

Shift of capacity towards KFR to

address the tough market requirements

• KFA decreased capacity by 25% in the domestic market in Summer 2008 to rationalize industry capacity
• Capacity was further rationalized by 13% in June 2009 to balance demand and supply in a tough economic environment
• KFR contribution to total capacity increased from 40% to 65% to address the market requirements

33
…And Has a Well Calibrated Plan for its International
Operations…

KFA adopted a cautious approach to international operations due to the prevailing economic
conditions:

– Did not initiate Ultra-long haul A340 operations - sold out the Aircrafts

– Cautiously deployed the A330s to LHR, SIN and HKG markets to build operations into key
markets from India, along with potential alliances with other global carriers - a step towards joining
a global alliance

– Have identified lucrative short-haul markets - BKK, DXB, CMB, KTM & DAC - and deployed
narrow body capacity of existing aircraft to enhance utilization

– Future capacity deployment plans include increase of frequency to these destinations by further
exploiting narrow body fleet

– Currently KFA has an option to purchase 4 A 330s every year from 2012, the decision for which
would be taken closer to date, given the operating environment

34
…Which is Improving Operating Performance

Improvement in Overall Seat Uptick in KFA’s Domestic Rising Yields as Seen in

Factors of KFA Revenue (RASK-Fuel CASK) KFA’s Domestic ATV
% RASK (in Rs.) KFA ATV Trend – ATV (INR)
85 3.5
7,000

3.0
80

6,000
2.5
75

2.0

70 5,000
1.5

65
1.0
4,000

60 0.5

55 0.0 3,000

c- 9
Fe -0 9

Ju -0 9
M 09
Apr- 09

Au l-09
Se - 09
O - 09

09
ay 9
Ju -09

No - 09
v
n

n
Au l

c
g
p
M r

ar
b
ct
ay

Ju

De v-0
c- 9

M r- 0
Fe -0 9

Ju 0 9
M - 09
Ap - 09

Ap
Au l-09
Se - 09
O - 09

09
ay 9
Ju -09

No
No - 09

Ju

Ja
Se

De

Fe

b-
De v-0

O
M r- 0

g
p
ct
n-

a
Ja
n

ar
b

g
p
ct
Ja

2008–09 2009–10
SF KFC KFR Total

35
 Improvement Reflected in Y-o-Y Results…

Apr 09 - Dec 09 Apr 08 - Dec 08

(Rs. Cr) (Rs. Cr) Variance %
INCOME
Operating Revenue 3,776 4,168 -9%
Non Operating Revenues 43 16 +169%
Total Revenues 3,819 4,184 -9%
EXPENDITURE
Employee Remuneration & Benefits 531 620 -14%
Aircraft Fuel Expenses 1,319 2,267 -42%
Other Operating Expenses 1,484 1,739 -15%
EBITDAR 485 (442)
Aircraft Lease Rentals 840 900 -7%
Total Operating Expenditure 4,175 5,526 -25%
EBITDA (355) (1,342)
Depreciation 156 125 +25%
Interest 818 529 +55%
Total Expenditure 5,149 6,180 -17%
Loss before exceptional items and Tax 1,29 1,996 -33%
Exceptional Item 300 (459)
Provision for taxation (554) (482)
PROFIT / (LOSS) AFTER TAXATION (1,075) (1,055) +2%

36
 With This Stringent Cost Focus, Kingfisher Has Emerged as
the Lowest Cost FSC in the Current Year

Cost Comparison (Apr-Dec FY10)

KF
Cost Details
Rs. Cr Adjusted CASK (1)

Fuel Cost 1,102 1.24

Non-Fuel Cost 1,920 2.08
Employee 472 0.48 (1)
S&D 408 0.46
Other 1,041 1.14 (1)
EBITDAR Cost 3,021 3.32
Lease Cost 665 0.68 (1)
EBITDA Costs 3,441 3.72
Depreciation/Amortization 156
EBIT Costs 3,598 3.88
ASKM (Mn) 8,860 9,760 (1)
ASL 803
Seats/Flight 110

Notes
Costs include domestic operations, and include reversals undertaken in respective time periods
(1) Adjusted CASK refers to estimated CASK at higher capacity for full fleet operations for Apr-Dec FY10 ( assuming no grounding of aircrafts)

37
Kingfisher’s Multi Pronged Cost Reduction Initiatives Are
Expected to Further Reduce its Costs

Reduced Costs in 2010-11

• Focus on reviewing distribution channels and costs to reduce S&D costs to 8% of revenue
Rationalizing
Distribution – New IBE geared towards increasing website sales
Channels

• Overall S&D cost and achieving a cost of < $4 per RPB, by restructuring CRS/GDS contracts and increasing direct web
share
Renegotiating • Additional fuel discounts
Vendor Agreements • E&M costs with new vendor (Air France)
• In-flight & Catering costs through change in menu and additional volume discounts
• Renewal of operating leases at 20% discount to existing lease

• Reduce Rentals, costs of Transportation and local Conveyance, Communication

Control
Discretionary − Consolidate and optimize space (warehouses, offices, call centers)
Spend − Increase effectiveness of spends and increase barters to reduce Marketing costs

• Reductions in employee cost through sizing manpower with capacity

Head Count • Replacement of high cost expat pilots in narrow body fleet
Rationalization
• Reduction in excess AMEs/ ATR expat

• Reduce fuel consumption to less than 3,000 Ltr/BH for A320 and 750 Ltr/BH for ATR operations through targeted reviews
Operational • Target E&M spend reduction (in-house C-checks, controlled redelivery)
Efficiency

38
Summary of Seabury’s Mandate and Plan

Focus areas for Seabury include

• Draft 5 year business plan basis current operating dynamics

• Review all areas of operations

• Review fuel consumption process

• Implement leading practices in revenue management

• Review and help restructure Sabre contracts

• Review network strategy with focus on profitability

• Benchmark aircraft lease rentals and maintenance reserves to the best

• Evaluate profitability of ATR fleet

39
Further Market Share Opportunities

• Enhancement of day return product across key primary and secondary sectors

• Incremental passenger connections generated through launch of ‘One Stop Connect’

campaign

• Increased presence through expansion of inter-line agreements and evaluation of global

alliances

• Increased ancillary revenues through launch of cargo operations (Kingfisher Xpress)

• Strengthened loyalty through enhanced FFP program

• New Internet booking engine driving greater consumer traffic towards online bookings

• Leverage international POS to stimulate demand in key South East Asian markets

40