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In the past decade, air travel has grown by 7% per year. Travel for both
business and leisure purposes grew strongly worldwide. Scheduled airlines
carried 1.5 billion passengers last year. In the leisure market, the availability
of large aircraft such as the Boeing 747 made it convenient and affordable
for people to travel further to new and exotic destinations. Governments in
developing countries realized the benefits of tourism to their national
economies and spurred the development of resorts and infrastructure to lure
tourists from the prosperous countries in Western Europe and North
America. As the economies of developing countries grow, their own citizens
are already becoming the new international tourists of the future.
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Since then, airlines have had to recognize the need for radical change to
ensure their survival and prosperity. Many have tried to cut costs
aggressively, to reduce capacity growth and to increase load factors. At a
time of renewed economic growth, such actions have returned the industry
as a whole to profitability: IATA airlines' profits were $5bn in 1996, less
than 2% of total revenues. This is below the level IATA believes is
necessary for airlines to reduce their debt, build reserves and sustain
investment levels. In addition, many airlines remain unprofitable.
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Despite this, the airline industry has proceeded along the path towards
globalization and consolidation, characteristics associated with the normal
development of many other industries. It has done this through the
establishment of alliances and partnerships between airlines, linking their
networks to expand access to their customers. Hundreds of airlines have
entered into alliances, ranging from marketing agreements and code-shares
to franchises and equity transfers.
The outlook for the air travel industry is one of strong growth. Forecasts
suggest that the number of passengers will double by 2010. For airlines, the
future will hold many challenges. Successful airlines will be those that
continue to tackle their costs and improve their products, thereby securing a
strong presence in the key world aviation markets.
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Jet Airways
Jet Lite
Kingfisher Airlines
Air India
Indian Airlines
IndiGo
SpiceJet
GoAir
Paramount Airways
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Company’s Profile
Kingfisher Airlines
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There will also be greater coordination between the two brands, with
Air Deccan to adopt the Kingfisher image in its logo and to switch to a red,
rather than a blue color scheme. The combined Kingfisher/Deccan group has
a market share of just over 30% and a product range spanning from the
price-sensitive, first-time flyer, to the high yield business traveler, making it
one of the key pillars of the airline industry.
The airline which started its operation on 9th May 2005, following the
lease of 4 Airbus A320 aircraft. As of July 2007, Kingfisher operates only
on domestic routes, however it has announced plans to start flights to the
USA with Airbus A380 aircraft. The airline is owned by the United
Beverages Group under the leadership of Vijay Mallya (which also owns the
popular Indian beer of the same name). The airline promises to suit the
needs of air travellers and to provide reasonable air fares. Kingfisher
Airlines' main "luxury" component is its In-Flight Entertainment System, a
first among Indian airlines. The airliners in-flight Mobile Phone and Internet
Services will be provided by On Air starting 2008 for long haul flights.
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VALUE PROPOSITION
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PROMOTIONAL STRATEGIES
One world brings together some of the best and biggest names in the
airline business - American Airlines, British Airways, Cathay Pacific, Finn
air, Iberia, Japan Airlines, LAN, Malév Hungarian Airlines, Mexicana,
Qantas and Royal Jordanian, and around 20 affiliates including American
Eagle, Dragon air, 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.
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It is the only alliance with any airlines based in South America, Australia or
Asia’s Middle East.
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The team at Kingfisher Airlines also believes that a consumer does not
select a brand in isolation. Taking this insight forward, an extensive on-
ground activation programme has been launched that is aimed at
communicating the Good Times experience of Kingfisher Airlines outside
the air travel context as well.
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Vijay Mallya has most definitely been looking to overtake something and
ensure that he is the first to cross the line with the chequered flag. Spyker
Ferrari is most likely what it is. Mallya has decided to get himself a Formula
One team, happily investing a cool €90 million over a weekend, and in the
process, exponentially expanding marketing opportunities for his flagship
brand, Kingfisher.
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branded credit card that will allow its members a host of privileges and
would also serve as an incentive to become loyal travelers of Kingfisher
Airlines.
Kingfisher Airlines has become the first Indian carrier to sign a firm contract
with Airbus for the A350 and A380 – the company’s newest and largest
aircraft, respectively – as well as for the A330. The order is for five A350-
800s plus five A380s for intercontinental services, and five A330-200s for
regional routes.
Deliveries of Kingfisher’s Airbus A330s are due to begin in the third quarter
of 2007, those of the double-deck A380s in 2010, and those of the A350s in
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2012. Engine selections have yet to be announced. Kingfisher will use its
A330s on regional routes, including flights to Europe, while the A350 and
A380 are destined for longer nonstop flights – such as to the USA.
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SWOT ANALYSIS
STRENGHTS
Large Fleets
Experienced Staff
Dedicated Departure terminal at Delhi
Connectivity with the reservation centers and agents are good
Adequate infrastructure and large network
People are loyal towards the national carrier
Kingfisher Airlines has a modern and complete in – house training
facility
WEAKNESSES
OPPORTUNITIES
THREATS
Competitors
Infrastructure issues.
Fuel price hike.
Tourism saturation
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Economic slowdown.
Promotions and sponsorship declining.
PEST ANALYSIS
POLITICAL FACTORS
ECONOMICAL FACTORS
4) The growth of the middle income group family affects the aviation
sector.
SOCIAL FACTORS
2) Employment opportunities.
3) Safety regulations.
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TECHNOLOGICAL FACTORS
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Market Penetration
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Product Development
Market Development
Diversification
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Kingfisher acquired 26% share in Air Jet airways acquired Air Sahara in
Deccan in 2007. 2006.
In a short span of 2 years its market Jet Airways has its market share 31%
share has become 28% including Air including Air Sahara.
Deccan.
It was awarded the ‘Best New Airline Jet Airways won Double Honor
Of the Year’ award in 2005. Travel Trade Gazette Travel award in
2007.
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The losses of the airline are also mounting. For the quarter ended
December, the net operating loss was Rs 626 crores. However, after making
some adjustments, the net loss was Rs 413.93 crores. If one goes by the net
operating loss, the airline’s daily operating loss is just over Rs 7 crores. The
company’s debt-equity ratio, which was at 5.12:1 as of FY2007-08, is
believed to have shot up significantly.
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The huge debts also imply that several banks have a huge exposure to
the airline. It is common knowledge that ICICI Bank — one of the major
lenders to the airline — has refused it any further loans.
The fact that the airline is finding it hard to make ends meet has been
evident in the small things it does — or does not do. At many airports, for
instance, even when aerobridges are available, the airline has been shunning
their use (and thereby payment) and using the buses to cart passengers.
However, the fiscal and quarterly results are even gloomier. In the first nine
months of FY2008-09, Kingfisher Airlines has incurred a net loss of Rs
1,054 crores on operating income of Rs 4,168 crores. In comparison, in FY
2007-08, it had a net loss of only Rs 188 crores on operating income of Rs
1,441 crore.
The suit was filed on 16th July 2010 and will be heard by the Queen’s
Bench division’s commercial court. A source from DVB Aviation, who did
not want to be named, said the suit has been filed after the airline failed to
pay dues for the last three months. These payments are made on monthly
basis. “There is a grace period given for seven to eight days but in this case
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dues have been pending for the last three months.” The official spokesman
of DVB Aviation refused to comment. An e-mail query to KFA’s
spokesperson did not elicit any response.
A total of 100 pilots have left the company in the past year, 16% of its
total strength of 600. The Kingfisher spokesperson confirmed that the pilots
had resigned, but said this was in no way out of the ordinary.
Kingfisher has reduced its fleet size from 88 at the beginning of 2009
to 66 now by returning planes taken on lease. This has meant it has more
pilots than it needs. Airlines usually do not own their aircraft, instead they
prefer taking them on lease from finance companies such as GE Capital, an
arm of General Electric.
to the air because of technical problems with their engines. ET wasn’t able
to ascertain the exact number of planes which are currently grounded.
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CONCLUSION
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