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Kingfisher Airlines LTD.: Submitted by

Kingfisher Airlines was established in 2003 by United Breweries Group to operate as a full service airline providing a premium travel experience. It aimed to be the market leader in India by 2010 through its five star amenities and service. However, intense price competition from low cost carriers, high operating costs, and rising debt led to financial troubles. The acquisition of Air Deccan in 2007 increased costs and diluted Kingfisher's premium brand positioning. By 2011, Kingfisher Airlines was forced to ground its flights due to its inability to pay salaries and large debt obligations.

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Ankit Goel
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76 views3 pages

Kingfisher Airlines LTD.: Submitted by

Kingfisher Airlines was established in 2003 by United Breweries Group to operate as a full service airline providing a premium travel experience. It aimed to be the market leader in India by 2010 through its five star amenities and service. However, intense price competition from low cost carriers, high operating costs, and rising debt led to financial troubles. The acquisition of Air Deccan in 2007 increased costs and diluted Kingfisher's premium brand positioning. By 2011, Kingfisher Airlines was forced to ground its flights due to its inability to pay salaries and large debt obligations.

Uploaded by

Ankit Goel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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KINGFISHER AIRLINES LTD.

Submitted by:
Section F-Group 1
Ananya Mukherjee(PGP/17/308)
Ankit Goel(PGP/17/309)
Harsheen Jammu(PGP/17/321)
Parul Singh(PGP/17/331)
Prakhar Garg(PGP/17/333)
Surbhi Paliwal(PGP/17/350)

Case Facts
1) Established in 2003, and promoted by Bengaluru based United Breweries Group
2) Chairman- Mr. Vijay Mallya
3)9 may 2005- Started commercial operations with a fleet of four Airbuses A320-200S
4) Kingfisher airlines known as the only five star airlines in Indian skies
5) Two subsidiaries: Northway aviations and Vitae India Spirits
Vision
To deliver a safe, value based and enjoyable travel experience to all their guests
Mission
Be the most successful full service ,true value airline operating in India
Creating a following of fans and not just loyalists
Drive not just loyalists Addiction to Kingfisher
To be the market leader by 2010
Strategy
Provide superior experience in air travel through a five element through a high seat pitch ,
personalized entertainment, hot meals, home delivery of tickets ,valet service ,treating
travellers as guests not passengers.
To use standard Airbus A320 Aircrafts to reduce operational costs before acquisition of
Air-Deccan
Focus on increasing market share
Strategic Fit
Competition was becoming intense with a large number of new entrants
Carriers like Indigo , Spicejet and GoAir retained their LCC business model
To maintain a fit between internal and external environment it looked for ways to expand
in an inorganic manner
Problems faced by Kingfisher Airlines
No bargaining power over suppliers as all the aircrafts were dry leased
Failure to manage Operational Strategic and Financial Risk

Limited organic growth opportunities due to congested airport infrastructure


Intense competition by new entrants
Could not expand internationally due to government restrictions
Increase in operating costs due to duplicity of tasks post-merger(two different aircrafts)
Marketing issues-Price war with LCC, long gestation period in airline business,
Compromised image
Cash Flow problems due to rising fuel costs
Increasing Dues- debt servicing costs more than value of market capitalisation

D/E ratio
1500
1000

20
10
0

D/E ratio

500

-10

Gross Margin
Profit Margin

-20

-30
0
2006 2007 2008 2009 2010 2011 2012 -40

Steps that could be taken

Acquiring Air Deccan was not consistent with mission and vision of Kingfisher Airlines
which aimed at providing high quality service
To increase market share other acquisition targets should have been looked upon
Focus on increasing margins. Increase in market share should not be at the cost of
decreasing margins.
Selling a substantial stake to a foreign airline to infuse much needed cash

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