kingfisher strategies

8/3/2019 Kingfisher Strategies

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The UB G roup was founded by a Scotsman, Thomas Leishman, in 1857. At the age of 22, Vittal Mallya was elected as the company's first Indian

director in 1 947.

Turnover: US$ 2.6 bn

The UB Group, is the market leader in both Spirits & Beer business in

the country. Divisions:-

Fertilizer : Mangalore Chemicals & Fertilizers Ltd

Engineering : UB Engineering Limited

Beverage Alcohol : United Breweries Ltd , United Spirits Ltd

Aviation : Kingfisher Airlines


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Kingfisher Airlines is a private airline group based in India.

Its head office is Kingfisher House in Vile Parle (East), Mumbai.

It is owned by the Bangalore based United Breweries Group owned byVijay Mallya.

Kingfisher Airlines is one of the only seven airlines awarded 5-star ratingby Skytrax along with Cathay Pacific, Qatar Airways, AsianAirlines, Malaysia Airlines, Singapore Airlines, and Hainan Airlines.Kingfisher also owns the skytrax award for India's best airliner of the year

2011


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Kingfisher operates more than 375 daily flights to 71 destinations,with regional and long-haul international services

Kingfisher Airlines is also the sponsor of F1 racing outfit, Force

India, which Vijay Mallya also owns


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Kingfisher Airlines was established in 2003.

The airline started commercial operations in 9 May 2005 with a fleet

of four new Airbus A320-200s operating a flight

from Mumbai to Delhi.

It started its international operations on 3 September 2008 by

connecting Bangalore with London.

On 7 June 2010 Kingfisher became a member elect of the One

world airline alliance when it signed a formal membership agreement.


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Cab in classes Domestic (Kingfisher First , Kingfisher Class, Kingfisher Red)

International (Kingfisher First , Kingfisher Class )

In-flight entertainment : first Indian airline to have in-flightentertainment (IFE) systems on every seat even on domesticflights


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King Club : The Frequent-flyer program of Kingfisher Airlines is calledthe King Club in which members earn King Miles every time they fly with

Kingfisher

Kingfisher Lounge: Kingfisher Lounges are offered to Kingfisher

First passengers, along with King Club Silver and King ClubGold members Lounges are located in Mumbai, Kolkata, Kochi ,

Hyderabad, Delhi, Chennai


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Kingfisher Airlines frequent flyer programme, King Club haswon Top Honours at the 21st Annual Freddie Awards in the

Japan, Pacific, Asia and Australia region.

King Club has won the Freddie Awards 2008 for BonusPromotion, Customer Service

Kingfisher Airlines has received three global awards at

the Skytrax World Airline Awards 2010

NDT V Profit Business Leadership Award for Aviation


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It came up with a very appealing promotional line Fly the goodtimes and it reflected in the experience the company offered to its

passengers.

KFA is also launched Kingfisher express in order to tap into the

growing LCC segment. It planned to re-launch its commercial air service called UB Airway

again which it had to withdraw it due to government restrictions.

The company gave best services to its customers that were like

providing world class interiors, and in-flight entertainment systems.

The company came up with only one class airlines rather than otherairlines that had Business Class; Economy Class the idea was to

combine Business Class experiences and Economy Class

experiences in one.


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The company started addressing its customers as GUESTrather than passengers.

The company made its mark by providing its guests with morelegroom and bigger seats so as to provide better comfort.

Advertisements hoardings at airports depicted the stylishinteriors of the Funliners, which conveyed youthfull, fun-filled,and world class image.

INOX multiplexes in Mumbai publicized KFAs special offersfor a month.

KFA was the official travel airlines for the cast and crew ofMangal Pandey- the movie.

KFA made use of various fashion shows, celebrity golf matches,New Year parties all to build its Kingfisher brand.


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The UB groups monthly magazine called Pegasus published

information about KFA along with other information related to

UB group.

KFA launched many attractive offers to promote its sales like

the King Card in association with ICICI Bank, in August2005. This was meant to create loyal customers for KFA by

providing benefits like privileged access to lounges,

restaurants, free refreshments at airports, access to 180 golf

clubs across India, special invites for lifestyle shows . In October, KFA launched Chill Times Offer in the month

of August 2005 and September 2005.


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In October they launched the King Saver Offer which saidFly like a King, dont play like one.

KFA targeted the frequent fliers business traveler segment,

which was dominated by Jet Airways. By offering a KingSaver Booklet,


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First carrier in the country to offer live in-flight entertainment

Kingfisher Airlines Ltd and Dish TV have joined hands to

provide live in-flight entertainment on Kingfisher aircraft

The service would enable airlines customers to book air travel

ticket after securing ngpayapplication on their GPRS-

enabled mobile handsets


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Ambush advertising as shown in the strategic placement ofown advertisement hoardings vis--vis those of Jet Airways


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On the promotional front, Kingfisher has signed up the latestdiva of Bollywood Ms.Deepika Padukone as the Brand

Ambassador


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It purchased brand new A320 aircrafts powered by thecockpit that was a paperless environment.

In June 2005 KFA planned to order US$5 bn at the Paris Air

Show, for 5 new A350-800 aircraft, and five A330-200

aircraft. KFA was first Indian carrier to place an order for A380s.

In November 2005 it placed an order for 30 A 320 and 20

ATR72-500 aircraft at the Dubai Air Show. This ATR72-500

was worth US$750 bn.

To further its expansion plan KFA put in its bid to buy

Sahara in November 2005.


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KFA has plans to make an Initial Public Offer (IPO) and raisearound US$200 mn that would be used for its fleet acquisition

and route expansion activities.

KFA set up Kingfisher International Inc. (KII), a subsidiary in

US for its international operations. According to Indian government domestic air carriers are not

allowed to fly international routes without five year of

domestic flying experience. But Mr. Mallya said if he failed to

convince the government to change its rules, it would start anairline in a foreign country and fly it to India.


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KFA signed a non-poaching alliance with Air Deccan under which boththe airlines agreed not to hire each others employee.

KFAs flight attendants called Flying models were selected through a

national level model contest.

KFA also stressed the fact that its employees had to be capable enough to

meet the airlines high service standards.

Among one of the biggest HR move for KFA was addition of Nigel

Harwood as Chief Operating Officer with effect from August 1, 2005, to

strengthen its management team.

Mr. Mallya said KingfisherAirlines Limited has a first class management

team not just at top most level but also in the second line.


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AirlinesBeverages

Fertilizers &NDTV Good Times

Kingfisher Red


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Aviation industry is highly cost intensive.

The capital requirement

Expected retaliation

Shortage of pilots and high fuel costs

Threats of new entrants is Low


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Competitors like Jet Airways, Indian are some of the wellestablished players.

Low level of differentiation between the services offered by the

different airlines increases the risk of switching and thereby adds to

the competition

Like every industry mergers and acquisitions take place here too

which increases competitive rivalry between airlines which in turn

force more airlines to opt for mergers and acquisitions thus forming

a viscous circle of competition.

Competition Rivalry is High


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Power of the suppliers is limited.

Switching costs are High

High fuel costs

In case of other suppliers such as caters the bargaining power

of the suppliers is low therefore Kingfisher has many other

options of caters to contract to.

Bargaining power of suppliers is medium


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Minimal Fixed Cost

No differentiation among the players in the same segment

Bargaining power of buyers is low


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Product for product substitution

Substitution for need (Video Conferencing & Conference

Calls)

The introduction of high speed trains, high tech buses andother means of transport has given more options to people to

travel

Threat of Substitutes is High


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United breweries Holdings Ltd

Beverage Alcohol

Aviation

Fertilizers

Engineering


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In-flight entertainment.

KIOSK check in/internet booking system/print

boarding pass at home or office.

King Club. Kingfisher Lounge.

Kingfisher Red.

Kingfisher First.

Kingfisher Class.


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Shutdown of Kingfisher Red Aging Deccan ATRs.

High maintenance cost.

Lack of spare parts.

Planning to merge SPICE JET which will make KFA thehighest market share in domestic Indian aviation

Ordered 1st airbus A380 and various new aircraft for the global

dominance.


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Kingfisher Airlines new aircraft delivery scheduleAircraft 2012 2013 2014 2015 2016 TotalAirbusA320family

6 9 7 8 12 42

AirbusA330-2004 3 4 4 - 15

AirbusA350-800/A380-800

- - 12 6 12 32

Total 10 12 23 18 24 87


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Air Deccan airlines merged with Kingfisher Airlines anddecided to operate as a single entity in 2007.

It would be known by a different name-Kingfisher Aviation.

The merger came through on as Vijay Mallya from Kingfisher

airlines bought 26% of the stake in Air Deccan. After the merger, the company has a combined fleet of 71

aircrafts, connects 70 destinations and operates 550 flights in a

day.

The combined entity has a market share of 33%. Gopinathwould continue as the Executive Chairman and Malay would

take charge as Vice Chairman.


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The UB group made the money in two phases: Rs.150 Croreas initial investment & Rs396 Crore at the on or before the

end of June 2007.

Kingfisher Airlines and Air Deccan will, henceforth, work

very closely together to exploit the significant synergies thatexist in the areas of operations and maintenance, ground

handling, vastly increased connectivity, feeder services,

distribution penetration etc.

Kingfisher serve the corporate and business travel segmentwhile Air Deccan will focus on serving the low fare segment

but with improved financial prospects for both carriers.


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1st Phase:

- UB bought 2 6 % stake at Rs. 155 p.s. on 9th July,2007

- Paid Rs.550crores

2nd Phase:

- Open offer for additional 20% stake

- Additional Rs.4 1 8crores


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Ever Increasing Cost Compromise on quality

hits the brand

Unviable pricing

Competition

Increasing costs Difficulty in maintaining

brand image

Competition from low-cost

airlines Competition from

International Airlines


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Cash crunch

Leveragingmanagement and HR

Routes network

License to flyinternationally

Cash crunch

Leveraging management

and HR


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Economies of size Rationalization of Personnel

Increase in Customer base


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Fundamentally opposite models

Impact on masses -

-Fear of rise in fare prices

-Ignorance of target audience

Loss of individuality


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Operational Synergy in the form of cost cutting ( up toRs.300crs.)

Increasing market share (32-34%)

Have both direct and indirect connectivity to the US, Europe

and different Asian regions

Received in writing slots to operate flights in San Francisco,JFK (New York) and Heathrow (London)


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These destinations will be connected non-stop from

Bangalore, unique routes from India

Also applied for Mumbai Hong Kong, Mumbai-Londonand Delhi-Kathmandu routes.


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Different Cultures

Expected Job Cuts

Different Leadership Styles

Cont....


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Expected Industry impact

Further consolidation

Rise in fares

Greater shareholder value

Higher attrition rates in employees

Presented by:


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Thank You Abhishek Kumar (101004)Manish Kumar (101015)

Ridhesh Sadariwala (101030)

Sumit Choudhary (101032)

Ravi Verma (101036)

kingfisher strategies

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