Story Begins

one of Indias leading private carriers went off on the night of February 17 when word spread like wildfire that something was amiss at Kingfishers Kolkata station.

Earlier that week, the income tax department had frozen the airlines bank accounts for nonpayment of tax deduction at source (TDS).

By the evening of February 18, the problem had become serious enough for the airline to issue a statement. But it was too late.

But what led to the latest edition of the trouble that has plagued Kingfisher?

Kingfisher has notched up a debt of over Rs7,000 crore. Just recently, the airline reported a loss of `444 crore

But

how did things come to such a pass for Kingfisher, that always had the image of a premium airline where the hospitality was king-size.

Expert views..
Kingfisher got their strategy wrong. Kingfisher lost out since it thought it could capture the market by offering frills, - A prominent aviation analyst told CNN on
condition of anonymity.

For Kingfisher, it was a mish-mash of business models. Theirs was a flamboyance-based aviation model. Then they acquired a low-cost carrier like Air Deccan but did not leverage it, - A prominent
Analyst

Expert views..Contd..
There are deeper systemic flaws affecting all carriers which too are responsible. - Mr. Jitender
Bhargava (Former executive director of national carrier, Air India)

The main problem is that global oil prices have been shooting up. The airlines do not increase fares proportionally due to intense competition among themselves. The result is more losses. - Civil
Aviation Ministry

Kingfisher view..
The

airline industry in India is going through a tough period due to high costs and lower yields. This is evident from the unprecedented losses recently reported. Kingfisher has not made any bailout request to the Government. We have only asked our banks for an increase in limits due to significant increase in operating costs caused by increase in fuel prices and rupee devaluation, - the airline had stated last year.

But just who will the market forces make the biggest beneficiary if Kingfisher shuts shop??
Low-cost carrier IndiGo which is making profits is now viewed as the most successful airline with a sound business model.

Now it's time to do managers usually do ;)

what

Analysis 1
Indigo
31 destination in india Focused & Profit Making routes Low price compared to kingfisher red Low Terminal cost like D1 in new Delhi and 1B in Mumbai Focus on Low Cost Airlines Less Turn around time as compared to Kingfisher red.

Kingfisher Red
63 domestic destination in india Many Unprofitable routes like Nasik, Hubli etc Grounding of 14 aircraft Operation shifted to New Terminal in Delhi & Mumbai Focus diverted from high services to low cost More Turn around time as compared to Indigo

Destination Map

To get more details about route map, You can visit Indigo - http://book.goindigo.in/skylights/cgi-bin/skylights.cgi?module=C3&page=ROUTEMAP Kingfisher - http://it.aviate-res.com/kingfisher-airlines/route-map.aspx

Analysis 2
Indigo
Standardized Aircraft
Less Inventory Spares Less Training Cost Less Maintenance Cost Less Operational Cost Effective Terminal Use Easy Scheduling

Kingfisher Red
Diversified Aircraft with different capacities
High Inventory Spares High Training Cost High Maintenance Cost High Operation Cost Scheduling difficult More Human Resources required.

what is the road forward for Kingfisher or is it pretty much the end of the road?

FDI / EQUITY
In a recent media interview, Dr Mallya had indicated that there were three investors ready to pick up stake in the airline but added that they were waiting for Government announcements on FDI to become policy.

The government is now set to approve a 49 percent FDI limit for foreign airlines in Indian carriers.

Expert View..
A total and urgent overhaul is needed. Only infusion of more funds can ensure the revival. There has to be a sound and well-thought out business model as the airline cannot afford to go wrong again. Costs have also to be scaled down. There are too many things to be done.
Mr Bhargava

My View..
Route Rationalization: Cutting back unprofitable sectors and services to several cities Debt recast: Asking bank to reduce rates or take a cut on loans or find a "local investor FDI: If the FDI limit is raised and foreign airlines are allowed to buy a stake. Mallya could recapitalize kingfisher.

The End

Can He Ride This Out?

Thank You !!