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Kingfisher Airlines
1) The document discusses the Indian aviation industry and analyzes Kingfisher Airlines using various frameworks like SLEPT analysis, Porter's 5 forces model, and SWOT analysis. 2) It notes that Kingfisher Airlines has faced financial difficulties due to factors like high operational costs, interest costs from aircraft purchases, and declining passenger traffic in the slowing economy. 3) Suggestions to improve Kingfisher's financial position include reducing costs through measures like removing uneconomical routes, focusing on smaller fuel-efficient aircraft, and avoiding aggressive fleet expansion.
In this document
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The Indian Aviation Industry is rapidly growing with about 0.05% of citizens flying. Predicted market growth to $51B by 2011. Airports handling 100M passengers by 2020.
The aviation industry is categorized into scheduled, non-scheduled, and cargo services. Key players include public, private, and start-up airlines.
Kingfisher Airlines launched in 2005, distinguishing itself with a 5-star service rating. Market share: 14.3% as of 2008.SLEPT analysis covering social, legal, economic, political, and technological factors affecting aviation.
Frameworks for analyzing Kingfisher's competitive environment and identifying internal strengths and weaknesses.
Kingfisher's international routes include key destinations like London and Colombo with expansion plans for more.
The impact of the economic slowdown includes passenger decline, reducing operations, and financial losses.
Presentation concludes with acknowledgments and thanks from the presenters.
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Kingfisher Airlines
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- 2. AGENDA Indian AviationIndustry Kingfisher Airlines SLEPT analysis Porter’s 5 Force Model SWOT analysis International Effects of Slowdown on Kingfisher Airlines Our Suggestions
- 3. INDIAN AVIATION INDUSTRYOne of the Fastest Growing Aviation Market There are approximately one billion people & only about 0.05% of them fly More and more middle class families now prefer air travel to traditional rail travel The Indian travel market is expected to triple to $51 billion by 2011 from $16.3 billion in 2005-06 AAI totally manages 127 airports Includes 13 International airports 7 Custom airports 80 Domestic airports 28 Civil enclaves
- 4. INDIAN AVIATION INDUSTRYOver 1100 registered aircrafts By 2020, Indian airports are estimated to handle 100 million passengers, including 60 million domestic passengers The amount of cargo handled will fall in the range of 3.4 million tonnes per annum
- 5. GROWTH OF THEAVIATION INDUSTRY
- 6. CLASSIFICATION Scheduled airtransport service Domestic and international airlines Non-scheduled air transport service Which includes charter operators and air taxi operators Air cargo service Air transportation of cargo and mail Players in aviation industry can be categorized in three groups: Public players Private players Start up players
- 7. ABOUT KINGFISHER AIRLINESKingfisher Airlines started it's operations on May 9th, 2005 and they began by leasing four Airbus 320 flights Coined the term "Value carrier" : that means they are not Like Air Deccan & will offer some frills Kingfisher has been certified as being one of six airlines in the world to have a five star rating from Skytrax Kingfisher Airlines has defined target audience - SEC A, SEC B+ (socio-economic class) in the age group of 25-45 years of age In July 2008 , Kingfisher's share of Indian aviation market stood at 14.3% while its sister carrier Air Deccan's share stood at 13.5%
- 8. OFFERINGS Kingfisher Airlinesoffers (First to do this) Brand new aircraft, Personal assistance in baggage handling Video on demand services Designer interiors Gourmet cuisine and In-flight entertainment (there are 5 channels of FUN TV and 10 channels of Kingfisher Radio, which are personalized)
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- 10. SOCIAL FACTORS Developmentof cities leads to better services and airports Employment opportunities Safety regulations Airlines has become a commodity business
- 11. LEGAL FACTORS Bilateraltreaties Airlines acquisitions and the leasing cost In the United States, low-cost airlines often operated from small airports that charged lower fees and that did not suffer from the congestion at large airports In India, however, government policy did not allow the creation of airports closer than 150 km from each other, and the old airports at Bangalore and Hyderabad were closed down when the new ones were started M&A Laws
- 12. ECONOMIC FACTORS Contributionto the Indian economy Rising cost of fuel Investment in the sector of aviation The growth of the middle income group family affects the aviation sector Shortage of the infrastructure capacity
- 13. POLITICAL REGULATORS DirectorateGeneral of Civil Aviation Controls Flying Licenses, Pilots, certifying aircrafts, and all procedures to govern airports and airspace Bureau of Civil Aviation Security AAI (Airport Authority of India) : Assigned the responsibility of managing national and international airports and administration through ATC (Air Traffic Control) IATA (International Air Transport Association) International Route Regulation
- 14. POLITICAL FACTORS Foreignairlines are not allowed to buy a stake in domestic airlines The five categories proposed in the Cabinet note for FDI review include: Maintenance Training facilities Cargo handling Passenger handling Chartered services
- 15. POLITICAL FACTORS -FDI FDI limits: 100% for Greenfield airports 74% for the existing airports 100% through special permission 100% for NRIs FDI ceiling in Airline sector is 49% currently
- 16. TECHNOLOGICAL FACTORS Thegrowth of e-commerce and e-ticketing Mobile and online check-in Modernisation and privatisation of the airports Upgradation of ATC
- 17. PORTERS FIVE FORCE MODEL
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- 20. International Routes OperatedBy Kingfisher :- - Bangalore-London Heathrow Airport- (Began Sep 3rd, 08) - Mumbai-London Heathrow Airport- (Began Jan 5th, 09) - Bangalore-Colombo- (Began Jan 19th, 2009) - Chennai-Colombo- (Began Jan 19th, 2009) Kingfisher Airlines plans to add several destinations such as Dubai, Singapore, Bangkok, Dhaka, Hong Kong, Kuala Lumpur and Maldives in the first quarter of 2009 Kingfisher Airlines announced its alliance with Hilton HHonors the guest rewards program KINGFISHER GOING INTERNATIONAL
- 21. Plans to strengthenits overseas operations with the induction of upto 5 more A330s during 2010 Break-even They should get revenues of around $3,00,000 a flight from Bangalore-London and Mumbai–London The airline has already got a 70 per cent seat factor on its Bangalore-London route and about 60 per cent on the Mumbai-London route For short haul international flights, it could deploy its low fare offering, Kingfisher Red KINGFISHER GOING INTERNATIONAL
- 22. EFFECTS OF SLOWDOWNON KINGFISHER AIRLINES
- 23. EFFECTS OF SLOWDOWNON KFA Due to decline in the passenger traffic and intense competition in the industry, the aviation industry considering allowing foreign airlines to buy up to 25% stake in the domestic airlines Vijay Mallya's Kingfisher Airlines has decided to sell its 25% equity for around Rs 2,000 crore - The decision comes as a part of the carrier's operational and financial restructuring plans - International airlines like Virgin Atlantic, Kuwait-based low-cost airline Jazeera Airways and British Airways Plc have expressed their interests in buying stakes in Indian carriers
- 24. Large part ofits fleet is leased and not owned Returning surplus aircrafts and is deferring the deliveries of the new ones Airline is also returning 9 aircrafts to the leasing companies and some of them have already been returned Kingfisher's operations shrank 21% in 6 months to December 2008 Kingfisher Airlines posted a loss of Rs 626 crore in the third quarter ended December 31, 2009 Kingfisher will not take delivery of any wide-body aircraft before 2012 EFFECTS OF SLOWDOWN ON KFA Contd…
- 25. REASONS FOR KFAIN LOSSES Huge interest outgo due to heavy investments in purchase of aircrafts Highly competitive industry Non-remunerative airfare structure Long gestation periods Operating in non-profitable sectors High operational costs The increase in loss in the quarter was on account of initiation costs of international operations (Rs174 crore) and the exchange rate impact of dollar-denominated expenses (Rs60 crore)
- 26. SUGGESTIONS TO KFARemove the flights from low frequency routes Try to bring down the cost-per-flight i f an airport services more number of flights Improve revenue-per-passenger Avoid aggressive expansion of fleets Avoid full-course meals, give snacks Try to focus on smaller aircrafts (50-70 seaters) and fuel efficient planes for short distance For a long term strategy, internationally focus should remain on one region at a time
- 27. PRESENTED BY: APARNANARAYANAN – 07 AMOL SHAH – 85 VENKATESH SHANKAR - 111
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