TERM PROJECT
KINGFISHER AIRLINES BUSINESS STRATEGY AND MARKET ANALYSIS FOR INDIAN BUSINESS
Submitted by:
MakanN
KINGFISHER AIRLINES - BUSINESS STRATEGY AND MARKET ANALYSIS FOR INDIAN BUSINESS Aviation Aviatio n Sector in India – an Overview History of Civil Aviation in India.
1. The The hist histor ory y of civ civil il avi aviati ation on in in Indi India a bega began n in Dece Decemb mber er 191 1912. 2. Thi This s was was with the opening of the first domestic air route between Karachi and Delhi by the Indian state Air services in collaboration with the Imperial Airways, UK, though it was a mere extension of London-Karachi flight of the latter airline. Three years later, the first Indian airline, Tata Sons Ltd., started a regular airmail service between Karachi and Madras without any patronage from the gove governm rnmen ent. t. At the the time time of inde indepe pend nden ence ce,, the the numb number er of air air tran transpo sport rt companies, which were operating within and beyond the frontiers of the company, carrying both air cargo and passengers, was nine. It was reduced to eight, with Orient Airways shifting to Pakistan. These airlines were: Tata Airl Airlin ines es,, Indi Indian an Natio Nationa nall Airw Airways ays,, Air Air Servi Service ce of Indi India, a, Decc Deccan an Airw Airways ays,, Ambica Airways, Bharat Airways and Mistry Airways. 2. In ear early ly 194 1948, 8, a joi joint nt sec secto torr comp company any,, Air Air Indi India a Inte Intern rnat atio ional nal Ltd. Ltd.,, was was established by the Government of India and Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft. Its first flight took off on June 8, 1948 on the Mumbai (Bombay)London air route. At the time of its nationalisation in 1953, it was operating four four weekly weekly servic services es betwee between n Mumbai Mumbai-Lo -Londo ndon n and two two weekl weekly y servic services es between Mumbai and Nairobi. The joint venture was headed by JRD Tata, a visionary who had founded the first Indian airline in 1932 and had himself piloted its inaugural flight. 3.
A chr chron onol olog ogic ical al diary diary of majo majorr mil miles esto tone nes s is is as as giv given en belo below: w: (a) 1953: 1953: Nation Nationali alisat sation ion of Aircr Aircraft aft Indu Industr stry y. The asset assets s of 8 existin existing g comp compan anie ies s were were tran transf sfer erre red d to two two enti entiti ties es in the the aviat aviatio ion n sect sector or controlled by the Government into two companies viz. Indian Airlines, primarily serving domestic sectors, and Air India, primarily serving the international sectors. This had the following implications: Aviation Aviation became a preferr p referred ed mode of transport for elite class Restricted Restricted Growth of Aviation Industry High Cost structure Underdevelopment of infrastructure (b) (b) 1986 1986:: Privat Private e Secto Sectorr Playe Players rs perm permit itte ted d as Air taxi taxi operat operator ors. s. Jet, Jet, Air Sahara, etc. started service. (c) (c) 1990 1990:: The The Open Open-s -sk ky polic policy y came came in Apr April il 199 1990. 0. The The pol polic icy y allow allowed ed air taxi- operators to operate flights from any airport, both on a charter
and a non charter basis and to decide their own flight schedules, cargo and passenger fares. The operators were, however, required to use aircraft with a minimum of 15 seats and conform to the prescribed rules. (c) (c) 1994 1994:: Privat Private e Carri Carriers ers perm permit itte ted d to operat operate e sched schedul uled ed servi service ces. s. Six operators granted license, however only Jet and Air Sahara able to service. (d) (d) 2003 2003:: Entry Entry of low low cost cost carr carrie iers rs.. Air Air Decc Deccan an,, Spic Spice e Jet, Jet, Go Air, Air, Indigo. This had the following implications: Aviation becomes more affordable with check fares and discount schemes. Various Operators with different business model in the industry. Huge growth in Aviation sector. Regulatory Environment of Aviation Sector
4. The regulat regulatory ory environ environment ment of of the Indian Indian Aviati Aviation on Industry Industry comprise comprises s the following: Federation Federation of Indian Airlines. (a) Federation of Indian Airlines is a body formed by the scheduled carriers in India. FIA, as the voice of India's airline industry, works to identify and take up issues on behalf of the the indu indust stry, ry, with with vario various us regu regula lato tory ry autho authori riti ties es,, gover governm nmen entt departments and other key stake-holders. The functioning of the FIA is guid guided ed by an Exec Execut utiv ive e Coun Counci cil, l, comp compris risin ing g chie chiefs fs of each each of the the member airlines. (b) The Mini Minist stry ry of Civi Civill Aviat viatio ion n in Ministry of Civil Aviation. The India is located at New Delhi. The ministry formulates national policies & prog program rams s for for deve develo lopm pmen entt & regul egulati ation on of civi civill aviat aviatio ion n & also also prepares schemes for the growth & expansion of Civil Aviation in India. The ministry also monitors airport facilities, air traffic services & the carr carria iage ge of pass passen enge gers rs & good goods s by air air. Un Unde derr its its purvi purview ew are are the the following Attached/Autonomous organizations: Directorate General of Civil Aviation. The Directorate General of Civil Aviation (DGCA) is a principal regulatory body for the aviation industry in India. DGCA is headquartered in Delhi. Bureau of Civil Aviation Security. Indira Indira Gandhi Gandhi Rasht Rashtriy riya a Uran Akademi Akademi set up at Fursatgan ursatganjj to stan standar dardi dize ze and impr improv ove e the the flyi flying ng trai traini ning ng facil facilit itie ies s in the the country, training pilots on fixed wing and rotary wing aircraft. Air India Ltd. & Indian Airlines Ltd, now merged under a holding company, viz. National Aviation Corporation of India Ltd (NACIL). Pawan Hans Helicopters Ltd. Airport Authority of India. (c) The missi mission on of Civi Civill Aviat viatio ion n Polic olicy y is to Civil Aviation Policy . The maintain a competitive civil aviation environment which ensures safety
and securi security ty in accord accordance ance with with intern internati ationa onall standar standards, ds, promo promotes tes effi effici cien ent, t, cost cost-e -eff ffec ecti tive ve and and orde orderl rly y grow growth th of air air tran transp spor ortt and and contributes to social and economic development of the country. The strategic objectives are as follows: (i) Trad Trade, e, tour touris ism m and over overal alll econ econom omic ic acti activi vity ty and and growt growth h is
encouraged. (ii) Safe, Safe, effici efficient ent,, reliab reliable le and widesp widesprea read d qualit quality y air transp transport ort services are provided at reasonable reasonable prices. prices. (iii)Effective systems are put in place for timely crisis and disaster management, including investigation of incidents/accidents Open Skies Agreement. (d) India an and th the Un United St State ates si signed a landmark agreement, permitting any number of airlines to operate any numb number er of flig flight hts s to any any poin pointt in each each othe other' r's s terr territ itor ory y. The The agreement will enhance passenger and cargo services between the countri countries, es, decre decrease ase airfar airfares es and accomp accompany any innovat innovation ions s and new partnerships in the aviation industry. industry.
5. The Ind Indian avi aviati ation ind industr stry is one one Sector structure/Market size. of the fastest fastest growing aviation industries industries in the world, with a growth growth rate of 18 per cent per annum. The government's open sky policy has led to many overseas players entering the market and the industry has been growing both in terms of players and number of aircrafts. Today, private airlines account for around 75 per cent share of the domestic aviation market. India has jumped to 9th position in 2009 in world's aviation market from 12th in 2006 2006.. Indi India a has has 454 454 airp airpor orts ts and and airs airstr trip ips. s. Of thes these, e, 16 are are desi design gned ed international airports. The scheduled domestic air services are now available from 82 airports. 6. The Indi Indian an Civi Civill Av Avia iati tion on mark market et grew grew at a Potential for Growth. The compound annual growth rate (CAGR) of 18 per cent, and was worth US$ 5.6 billion in 2008. The Centre for Asia Pacific Aviation (CAPA) forecasted that domestic traffic will increase by 25 per cent to 30 per cent till 2010 and international traffic growth by 15 per cent, taking the total market to more than 100 million passengers by 2010. By 2020 2020,, Indi Indian an airp airpor orts ts are expe expect cted ed to hand handle le more more than than 100 100 mill millio ion n passengers including 60 million domestic passengers and around 3.4 million tonnes of cargo per annum. Airport Infrastruct I nfrastructure ure. 7. Airport inf infrastructure is bei being dev developed at a fast pace to cope up with the growth of air transport operations. A simultaneous operation from parallel runways having facilities for category 3B level operations has now become a reality. Ground based communication, navigat navigation ion and survei surveilla llance nce facili facilitie ties s are now being being replac replaced ed by satell satellite ite based facilities. India is developing its new satellite based navigation system
Gagan, which will enable precision approaches at all airports in India. The following are the salient developments: Mumbai and Delhi airports have already been privatised and are being upgraded at an estimated investment of US$ 4 billion over 200616. b) Gree Greenf nfie ield ld airp airpor orts ts deve develo lope ped d by priv privat ate e conso consort rtia ia at Bang Bangal alor ore e and Hyderabad are now operational involving a total investment of over 800 million USD. c) A second greenfield airport being plann anned at Navi avi Mumbai is going to be developed using public-private partnership (PPP) mode at an estimated cost of US$ 2.5 billion. d) 35 oth other er cit city y airp airpor orts ts are are pro propo pose sed d to be be upgr upgrad aded ed.. The The city city sid side e development will be undertaken through PPP mode. e) Over Over the the nex nextt five five yea years rs,, AAI AAI has has plan planne ned d a mass massiv ive e inve invest stme ment nt of US$ 3.07 billion—43 per cent of which will be for the three metro airports in Kolkata, Chennai and Trivandrum, and the rest will go into upgradi upgrading ng other other non-me non-metro tro airpor airports ts and modern modernisi ising ng the existi existing ng aeronautical facilities. a)
8. The major policies supporting Aviation Investment Policy. infrastructure which are now in place are as given below. a) 100 per cent FDI under automatic route is permissible for greenfield airports. b) For For exi existin sting g airp airpo orts, rts, Fore Foreiign equi equity ty up to 100 per per cent ent is permitted through automatic approvals and up to 100 per cent through special permission (from FIPB, Ministry of Finance). c) Priv Privat ate e dev devel elop oper ers s all allow owed ed to setu setup p capt captiv ive e air airst stri rips ps and gene genera rall airports 150 km away from an existing airport. d) 100 100 per per cen centt tax tax exe exemp mpti tion on for for air airpo port rt pro proje ject cts s for for a per perio iod d of of 10 10 years. e) 49 per cent FDI is permissible in domestic air transport services unde underr the the auto automa mati tic c rout route, e, but but not not by fore foreig ign n airl airlin ine e comp compani anies es.. Foreign institutional investors might have shareholdings more than the limited limited 49% in the domestic domestic sector. 100 per cent equity ownership ownership by Non-Resident Indians (NRIs) is permitted. f) 74 per cent FDI is permissible in cargo and non-scheduled airlines. g) The Indian gover vernment plans to set up an Airport Economic Regulatory Authority to provide a level playing field to all players. Major Investments. During 2007-08, various companies have 9. shown shown an intere interest st in the Indian Indian aviati aviation on indust industry. ry. Invest Investmen mentt in airpor airportt infrastructure was over US$ 5 billion in 2008 and will go up US$ 9 billion by 2013, of which close to US$ 6.8 billion is expected to come through public
private partnerships (PPP) model, according to a study by research firm Frost & Sullivan. The major firms investing are as given below: a) Tata Tata Advanc Advanced ed System System Limit Limited ed (TAS), (TAS), to set up a US$ 113.63 113.63 mill millio ion n heli helico copt pter er manuf anufac actu turi ring ng unit unit at the the Aero Aerosp spac ace e Spec Specia iall Econ Econom omic ic Zone Zone (SEZ (SEZ)) in Ad Adhi hiba batl tla a vill villag age e near near the the Hyde Hydera raba bad d international airport. b) Glob Global al Vect Vectra ra Heli Helico copt pter ers, s, to inve invest st US$ US$ 130 130 mill millio ion n durin during g the next two years to increase its fleet strength as well as consolidate its operations. c) GMR GM R Infr Infrast astru ruct ctur ure e to inve invest st US US$ $ 151 151 mill millio ion n corp corpor orat ate e jet jet market in India, and US$ 60 million for a proposed JV with aircraft component manufacturers such as Honeywell and Safran to set up a components assembly plant in the country. d) Chan Changi gi Air Airpo port rts s Inter Interna nati tion onal al has has pic picke ked d up a 26 per per cen centt stak stake e for US$ 20 million in Bengal Aerotropolis Pvt Ltd (BAPL). 10.
Road Ahead.
a) Pass Passen enge gerr traf traffi fic c is pro proje ject cted ed to to grow grow at at a CAGR CAGR of ove overr 15 per per cent in the next 5 years. b) The The Mini Ministr stry y of Civ Civil il Avi Aviat atio ion, n, env envis isage ages s crea creati ting ng inf infra rast stru ruct ctur ure e to handle 280 million passengers by 2020. c) Inve Invest stme ment nt oppo opport rtuni uniti ties es of of US$ US$ 110 110 bill billio ion n envi envisa sage ged d up to 2020 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure. d) Associated areas such as main aintenanc ance, repair and and overhaul aul (MRO) and training offer high investment potential. A report by Ernst & Young says the MRO category in the aviation sector can absorb up to US$ 120 billion worth of investments by 2020. e) Aero Aerosp spac ace e maj major Boei Boeing ng fore foreca cast sts s that that the the Indi Indian an mark market et wil will requ requir ire e 1,00 1,000 0 comm commer erci cial al jets jets in the the next next 20 year years, s, wh whic ich h will will represent represent over 3 per cent of Boeing Boeing Commerci Commercial al Airplanes’ Airplanes’ forecasted forecasted market worldwide. This makes India a US$ 100 billion market in 20 years. 11. Challenges for the aviation sector Rising fuel prices. Employee shortage Regional connectivity Gaps in infrastructure High input costs Overview of Domestic Dome stic Airlines Air lines Market
12. India at present has twelve competing competing airlines in the domestic domestic market as agai agains nstt a sing single le gove goverrnmen nmentt owne owned d airl airlin ine e in 1991 1991.. Accor ccordi ding ng to
McKinse McKi nsey y Quar Quarte terl rly y (200 (2005) 5) the the Indi Indian an airc aircraf raftt mark market et is the the worl world’ d’s s second second largest largest commerci commercial al aircraft aircraft market. market. On-time On-time performanc performance e and serv servic ice e leve levels ls have have rise risen n dram dramati atica call lly y and and fare fares s have have dropp dropped ed.. The The players in the current airline market include airlines like Indigo, Go Air, Spicejet and Kingfisher Red (Air Deccan) with low-cost, low-fare and no frill frills s alon along g with with prem premiu ium m airl airlin ines es lik like King Kingfi fishe sherr and and Jet Jet Airwa Airways ys,, in addition to the ‘National Carrier’ – Air India. Competition has brought in some price advantages to travellers and has converted many railway passe passeng nger ers s to airl airlin ine e trave travell ller ers. s. Beca Becaus use e of prol prolif ifer erat ated ed numb number er of play player ers s in the the airl airlin ine e indu indust stry ry,, airl airlin ines es may may enjo enjoy y new new busi busine ness ss opportunities along with high competitive threats. Key Players in Indian Aviation Industry
13. Air India is the national flag carrier airline of India with a network of passenger and cargo services worldwide. It is the merger of the erstwhile state-owned airlines in the country, Air India and Indian Airlines now known as National Aviation Corporation of India Ltd (NACIL). Air India has 44 world-wide destinations. The airline has been profitable in most years since its inception, but is facing an acute resource crunch these days. The Airline has approached the Govt for a ‘bail-out’ ‘bail-ou t’ package. 14. Other Airlines on Domestic Routes a)
airline.. Their marketing theme "offering SpiceJet is a low-cost airline
low 'everyday spicey fares' and great guest services to price conscious trav trave eller llers" s".. Thei Theirr aim aim is to com compet pete with the the Indi Indian an Rail ailways ays passengers travelling in AC coaches. Air Deccan (Kingfisher Red) is an airline based in Bangalore, b) India. It was India's first low-cost carrier. Air Deccan grew rapidly since it first started air operations in 2003, and despite its almost disastrous maiden inaugural flight (which caught fire), it continued to grow. The growing Indian economy and the increasing number of middle-class people in India has greatly helped its growth. The Airline changed its brand name to ‘Kingfisher Red’ after association with the Kingfisher Airline. c) GoAir The People’s Airline, a low cost carrier promoted by The Wadi Wadia a Grou Group p is a dome domest stic ic budg budget et airline based based in Mumbai Mumbai,, India established in June 2004. It’s a relatively small player as compared to other low cost airlines. Kingfish Kingfisher er Airlines Airlines is an airline base d) based d in Bangalore Bangalore,, India India.. Services Services started started on 9 May 2005 2005,, following the lease of 4 Airbus A320 airc aircra raft ft.. It init initia iall lly y oper operat ates es only only on dome domest stic ic rout routes es.. The The airl airlin ine e promises to suit the needs of air travellers and to provide reasonable air fares.
e)
IndiGo Airlines is a new and a private domestic airline based in
India. IndiGo placed an order for 100 Airbus A320 aircraft during the 2005 Paris Air Show. Show. The total order was worth US $6 billion; one of the highest by any domestic carrier during the show. The low-fare carrier has started operations from 04 Aug 06. Jet Airways a “regular” airline which offers normal economy and f) business class seats. Jet Airways, along with Air Sahara, is the only airline which survived the dismal period of 1990s when many private airlines in India were forced to close down. Jet Airways is an airline based in India serving domestic and international routes. The airline operates over 300 flights to 43 destinations across the. Air Sahara has now merged with Jet Airways and changed the brand name to Jetlite . 15. Market Share. The The mar mark ket shar shares es of the the Maj Major or Airl Airlin ines es (Fir (First st quar quarte terr 2009) are as given in the pie chart below: (a) Kingfisher: 26.08 % (b) Jet Ai Airways:16 :16.72 % (c) Jetlite: 7.39 % (d) Air India: 17.66 % (e) Indigo: 13.75 % (f) Spicejet: 11.72 % (g) Go Air: 4.29 % (h) Paramount: 2.27 %
General Segmentation Segmentatio n Trends: The Airline Industry
16. 16. Most Most airl airlin ines es use use a very very trad tradit itio iona nall segm segmen enta tati tion on stra strate tegy gy,, divi dividi ding ng passengers into Business travellers and Economy travellers (mostly leisure travellers). The common strategy is to squeeze as much profit as possible from Business class passengers who are attracted by superior services and corresponding high prices and, at the same time, to try and fill the rest of the seats and ensure growth by attracting Economy class passengers with lower fares. 17. Business Passengers. They are crucial for the profitability of airlines. With less spare time and more cash in their pockets, they agree to pay a premium price for a premium service. Today business passengers account for approximately 48% of passengers, and these 48% contribute 66% of airlines' revenue. The premium prices they pay provide wider and more comfortable seats, better choice of meals and seats, luxurious lounges. 18. 18. Airl Airlin ines es can can choos choose e from from a multit multitud ude e of premi premium um servi service ces s to offer offer to business travellers. Some of these extras range from seats equipped with faxes and telephones, to gambling machines, showers, massage services and suit ironing services in the recently introduced arrival lounges. Business passengers passengers believe believe it is worth extra money money if they can save time and arrive lookin looking g fresh fresh for an import important ant meetin meeting. g. Busine Business ss passen passenger gers s will will avoid avoid transit flights even if a longer flight could save them money. But amongst other perks, flexible reservation services are probably the most important to them. Reservations for business trips are often made just a couple of days in advance. A no penalty cancellation policy is also very important to business passengers. 19. 19. It is is observ observed ed that that the best best way way to reac reach h busine business ss trave travelle llers rs is throug through h printed advertising. Many airlines design special promotional programs that target target corpora corporate te booker bookers s and meetin meeting g planne planners, rs, who are respon responsib sible le for business trips reservations. Frequent flyer programs are an added bonus for business passengers. Leisure Travellers. 20 They They rep repre rese sent nt a tot total ally ly dif diffe fere rent nt mar marke ket. t. The The most important consideration for most of them is the price. The lower the airfare, the more people will fly the respective airline. By and large, with the exception of wealthy travellers, this segment will not pay extra for premium services and will agree to change several planes during their trip if this option costs less than a direct flight.
21. 21. Despit Despite e lower lower margi margins ns provid provided ed by this this segm segment ent,, leisur leisure e travel traveller lers s are very important to the bottom line of airlines. Part of the reason is that technological progress in the area of tele-conferencing and increased use of the internet for business communications is expected to reduce the number
of business travellers. Thus, airlines are counting on the leisure segment to provide further growth. 22. 22. The The tough tough issue issue in airli airline ne marke marketi ting ng manag managem emen entt is how airli airline nes s can benefit from the growth opportunities in the leisure segment without losing imme immedi diate ate prof profit it oppo opport rtun unit itie ies s in the the busi busine ness ss segm segmen ent. t. By impro improvi ving ng services and reducing prices for economy class passengers, airlines risk that some business passengers will switch to economy class. Since business class passengers are not many, a company relying mostly on business travellers will will often often end up flying flying half-e half-empt mpty y planes planes,, losing losing the potent potential ial revenu revenue e generated by lower priced economy seats. 23. On the the other ther hand, and, few few airl irlines ines cat cateri ering sole solely ly to econ econom omy y clas class s passengers can be successful because a low fare carrier must fill the entire plane if it is to generate revenue from its low-margin operations. Thus the airline tries to sell the economy seats at a cheaper price early, while keeping enough seats reserved for business travellers, who usually book at the last minu minute te.. Keep Keepin ing g just just the the righ rightt amou amount nt of busi busine ness ss seat seats s rese reserv rved ed is important: selling too few economy seats in advance may result in a lessthan-full plane while selling too many economy seats may result in a full plane, but with insufficient revenue to gain a profit.
A Study of Kingfisher Airlines 24. Introduction to UB group UB group based in Bangalore, is a conglo conglomer merate ate of differ different ent compan companie ies s with with a major major focus focus on the brewe brewery ry (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 Grou Group p was found ounded ed by a Scot Scotsm sman an,, Thom Thomas as Leis Leishm hman an 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 moved into into agro-b agro-base ased d indust industrie ries s and medici medicines nes when when Mallya Mallya acquir acquired ed Kissan products and formed a long-term relationship with Hoechst AG of Germ Germany any to crea create te the the Indi Indian an pharm pharmac aceu euti tica call comp compan any y now now known known as Aventis Pharma, the Indian subsidiary of the global pharma major SanofiAventis. The UB Group’s Brewing Entity - called United Breweries Limited (UBL) (UBL) - has also also assume assumed d undisp undispute uted d market market leader leadershi ship p with with a nation national al market market share in excess excess of 50%. Through Through a process process of aggressive aggressive acquisition acquisition and and mark market et pene penetr trat atio ion, n, The The UB Grou Group p today today cont contro rols ls 60% 60% of the the tota totall manufacturing capacity for Beer in India. 25. Kingfisher Airlines Kingfisher Airline is a private airline based in Bang Bangal alor ore, e, Indi India. a. The The airl airlin ine e is owne owned d by the the Un Unit ited ed Beve Bevera rage ges s Grou Group. p.
Kingfisher Airlines started its operations on 09 May 05 with a fleet of 4 Airbus A320 A3 20 aircraf aircrafts. ts. The major major desti destinat nation ions s covere covered d by Kingfi Kingfishe sherr Airli Airlines nes on domestic routes are Bangalore, Mumbai, Delhi, Goa, Chennai, Hyderabad, Ahme Ah meda daba bad, d, Coch Cochin in,, Gu Guwa waha hati ti,, Kolk Kolkat ata, a, Pu Pune ne,, Ag Agar arta tala la,, Dibr Dibrug ugar arh, h, Mangalore and Jaipur. 26. 26. It is a major major Indi Indian an luxu luxury ry airl airlin ine e opera operati ting ng 218 218 fligh flights ts a day and and has an extensive network to 37 destinations, with plans for regional and longhaul international services. It has announced plans to start flights to the USA with Airbus A380 aircraft. Its main bases are Bangalore International Airport, Bangal Bangalore ore,, Chhatr Chhatrapat apatii Shivaj Shivajii Intern Internati ational onal Airpor Airport, t, Mumbai Mumbai and Indira Indira Gandhi Internationa Internationall Airport, Airport, Delhi, with a hub at Sardar Vallabhbhai Vallabhbhai Patel Intern Internati ational onal Airpor Airport, t, Ahmeda Ahmedabad. bad. Kingfi Kingfishe sherr Airli Airlines nes,, throug through h 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. 27. 27. King Kingfi fish sher er is one one of onl only y 6 airli airline nes s in the the worl world d to have have a 5 star star ratin rating g from from Skytrax Skytrax,, along along with with Asian Asian Airli Airlines nes,, Malaysi Malaysia a Airlin Airlines, es, Qatar Qatar Airway Airways, s, Sing Singapo apore re Airl Airlin ines es and Cath Cathay ay Paci Pacifi fic c Airw Airways ays.. In a shor shortt span span of time 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 video on-dem on-demand and,, with with extraextra-wid wide e persona personaliz lized ed screen screens s in the aircraf aircraft, t, sleepe sleeperet rette te seats seats with with extend extendabl able e footre footrests sts,, and threethree-cou course rse gourme gourmett cuisine. 28. 28.
The follow following ing are the major major attr attribu ibutes tes of the Airlin Airline: e: (a) “The Kingfisher Airlines family will consistently Vision : deliver a safe, value-based and enjoyable travel experience to all our guests.” Safety: (b) This is an overriding value. In this line of business, there is no compromise. Service: (c) In hospitalit hospitality y business business customer customer satisfactio satisfaction n is very important and building trust, goodwill and loyalty of customers is at prime focus. (d) Kingfisher se seeks to to bu build an an or organisation wi with Happiness: people who choose to be happy, and will endeavour to influence their guests and co-workers to be happy too. Teamwork : (e) Kingfisher be believes th that “We wi will su succeed or or fai faill 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: Eve (f) Every empl employ oyee ee in King Kingfi fish sher er will be held held accountable for the successful execution of their duties, commitments and obligations, and they will strive to lead by an example.
29.
Product: Premium class seats (a) Sleeperette seats with extendable footrests. 48" seat pitch and a
125° recline. Fully-adjustable headrests. (b) Laptop and mobile phone chargers in each seat. (c) Comfortable pillows and snug blankets. 30. 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’ ‘Low-Cost’ option to compete compete with other ‘No-frills’ ‘No-frills’ airlines. airlines. It is important important to note that the Kingfisher Red serves complementary meals on board, thereby increasing the perception of ‘More Value for Money’ for the passengers. 31. Promotion: Various promotional str strategies have bee been ado adopted by Kingfisher airlines like the following: The 'Power Flyer' a consumer incentive offer targeted at the corporate traveller (b) Passen Passenger gers s are offere offered d in flight flight entert entertain ainmen mentt option options s and contests like ‘Kingfisher Flying Face of the Month ' and attractive discounts of branded merchandise. Offer Offer in-fligh in-flightt silent silent auctions auctions for lifestyle lifestyle products products and in-flight in-flight (c) sales of dry packaged food and beverages. The marketing department showcased the airlines as ‘ The new (d) flying experience’. (e) Kingfisher Airlines has announced special fares for all personnel servin serving g in the Indian Indian Armed Armed Forces Forces,, the Union Union Govern Governme ment, nt, State 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) (f) The The comp compan any y has has just just laun launch ched ed Kin Kingf gfis ishe herr Firs First, t, whi which ch is is a prin printt camp campai aign gn to prom promot ote e its its firs firstt clas class s serv servic ice. e. It is a pers person onal aliz ized ed camp campai aign gn,, wh whic ich h has has Vija Vijay y Mall Mallya, ya, sign signin ing g off off by sayi saying ng,, "I have have created a product which is better than what I would have created for myself." (a)
SWOT ANALYSIS 32. 32.
A SWOT SWOT analy analysis sis carried carried out on on the the Airli Airline ne revea reveals ls the the foll followi owing: ng:
(a) Strengths: Strong Brand value & Reputation in the minds of customers. Quality of the service. First airline to have hav e new fleet of airbuses. a irbuses. (b)
Weaknessess:
High Ticket prices. Still not a profit-making organization. (c)
Opportunities:
The expanding tourism Industry. Industry. Untapped Air cargo market. Under penetrated Domestic Market. (d)
Threats:
Competitors. Fuel Price Hike. Economic Slowdown/Recession. Slowdown/Recession. Alienation of Government passengers. The Government servants travelling on Official Duty have to use Air-India only. only. Tourism Saturation. Declining Promotions and sponsorship. 33. MARKETING STRATEGIES Kingfisher Airlines is the first carrier in the country to offer live in-flight entertainment. Kingfisher Airlines Ltd and Dish TV have joined hands to provide live inflight entertainment on Kingfisher aircraft. The service would enable airline’s customers to book air travel ticket afte afterr secu securi ring ng ‘ngp ‘ngpay’ ay’ appl applic icat atio ion n on thei theirr GP GPRS RS-e -ena nabl bled ed mobi mobile le handsets. On the promotional front, Kingfisher has signed up the latest diva of Bollywood Ms.Deepika Padukone Padukone as the Brand Ambassador. Ambu Ambush sh adve adverti rtisi sing ng as show shown n in the the strat strateg egic ic plac placem emen entt of own own advertisement hoardings vis-à-vis those of Jet Airways, as shown in the picture below.
33. Union with Air Deccan. Kingfisher Airlines, through one of its holding holding companies companies UB holdings Ltd, has acquired acquired 26% stake in the budget airline Air Deccan and has option to buy further of 20% stake from the secondary market. Air Deccan is now known as “Kingfisher Red”. The main aim behind the union is to optimise the operations of the two airlines by working closely together to exploit the significant synergies that exist in the areas areas of operat operation ions s and mainte maintenanc nance, e, ground ground handli handling, ng, vastly vastly increa increased sed connectivity, feeder services, distribution penetration etc. The Kingfisher-Air Deccan group is one of the largest domestic airline with a fleet of 71 aircraft including 41 Airbus Airbus aircra aircraft ft and 30 ATR aircraf aircraft. t. This This combin combined ed airli airline ne powerhouse covers all segments of air travel from low fares to premium fares and offer the maximum number of 537 daily flights covering the single larges largestt networ network k in India India connec connectin ting g 69 cities cities whilst whilst taking taking advanta advantage ge of unparalleled synergy benefits arising from a common fleet of aircraft.
34. 34. The marke markett leader leadershi ship p of Kingf Kingfish isher er Airli Airlines nes is is eviden evidentt from from the pres present ent market share as indicated in the chart below:
References :
1. 2. 3. 4. 5. 6 7. 8.
Indi India an Bra Brand equit quity y Founda undati tio on web webs site, ite, www.ibef.com www.ibef.com.. Assam times, Community Newspape paperr Busin usines ess s sec sectio tion of of we websi bsite Maps Maps of of Ind India ia..com. com. En.w En.wik ikip iped edia ia.o .org rg/w /wik iki/ i/Ai Airl rlin ine# e#Ai Airl rlin ine_ e_pe pers rson onne nell www. ww w.in indi dian anch chil ild. d.co com/ m/in indi dia_ a_ci civi vil_ l_av avia iati tion on.h .htm tmll Kingfisherblog.wordpress.comhttp www.iloveindia.com/economy-of-india www.bangaloreaviation.com
