synopsis tp1

8/3/2019 Synopsis Tp1

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TERM

PAPER

(MBA-IB 2010-12)

By:

Aastha Bindal

Sakshi Bhadauria


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KINGFISHER

AIRLINES


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TABLE OF CONTENTS

S.NO TOPIC PAGE No.1. Executive summary

2. objectives

3. Research Methodology

4. Aviation Industry

5. Kingfisher Airlines-Introduction

6. Branding Kingfisher

7. Marketing Mix for KFA

8. Kingfisher & Air Deccan Merger

9. Human Resource Management

10. International Expansion

11. Conclusions

12. Recommendations

13. Bibilography


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EXECUTIVE SUMMARY

INTRODUCTION

Kingfisher Airlines is an airline group based in India. Its head office is Kingfisher House in Vile

Parle (East), Mumbai. Kingfisher Airlines, through its parent company United Breweries Group,has a 50% stake in low-cost carrier Kingfisher Red.

Kingfisher Airlines is one of the only seven airlines awarded 5-star rating by Skytrax along withCathay Pacific, Qatar Airways, Asiana Airlines, Malaysia Airlines, Singapore Airlines, andHainan Airlines. Kingfisher operates more than 375 daily flights to 71 destinations, with regionaland long-haul international services. In May 2009, Kingfisher Airlines carried more than 1million passengers, giving it the highest market share among airlines in India. Kingfisher alsoowns the skytrax award for India's best airliner of the year 2011.

Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which Vijay Mallya also

owns.

The project studies about the marketing, finance, human resource management and internationalaspects of the airline. We discuss about the topics of winning promotional strategy, takeover ofair deccan, the financial turmoil, the human resource management, and how the KFA goesinternational.
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Vile_Parlehttp://en.wikipedia.org/wiki/Vile_Parlehttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/United_Breweries_Grouphttp://en.wikipedia.org/wiki/Low-cost_carrierhttp://en.wikipedia.org/wiki/Kingfisher_Redhttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Cathay_Pacifichttp://en.wikipedia.org/wiki/Qatar_Airwayshttp://en.wikipedia.org/wiki/Asiana_Airlineshttp://en.wikipedia.org/wiki/Malaysia_Airlineshttp://en.wikipedia.org/wiki/Singapore_Airlineshttp://en.wikipedia.org/wiki/Hainan_Airlineshttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Force_Indiahttp://en.wikipedia.org/wiki/Vijay_Mallyahttp://en.wikipedia.org/wiki/Vijay_Mallyahttp://en.wikipedia.org/wiki/Force_Indiahttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Hainan_Airlineshttp://en.wikipedia.org/wiki/Singapore_Airlineshttp://en.wikipedia.org/wiki/Malaysia_Airlineshttp://en.wikipedia.org/wiki/Asiana_Airlineshttp://en.wikipedia.org/wiki/Qatar_Airwayshttp://en.wikipedia.org/wiki/Cathay_Pacifichttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Kingfisher_Redhttp://en.wikipedia.org/wiki/Low-cost_carrierhttp://en.wikipedia.org/wiki/United_Breweries_Grouphttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Vile_Parlehttp://en.wikipedia.org/wiki/Vile_Parlehttp://en.wikipedia.org/wiki/India


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OBJECTIVES

To study kingfisher airlines international expansion. To study the marketing tactics of the company To have an overview of its HR and recruitment strategies To study and understand kingfisher-air deccan merger


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RESEARCH METHODOLOGY

The study is based upon qualitative research. Research is totally based on secondary data. The

research design is exploratory. The data collected is highly effective and gives the basic

information required for the work

Sources of secondary data:

Internet Journals Newspaper Research paper Books Internet


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AVIATION INDUSTRY IN INDIA

The aviation industry in India is one of those sectors that saw a constant pace of growth amongthe other industries in the world over the past many years. The open sky policy of thegovernment has helped a lot of overseas players entering the aviation market in India. From then,

it has only been growing in terms of players and the number of aircrafts. At present, privateairlines account for around 75% portion of the domestic aviation market.

The 9th largest aviation market in the world is India. Taking the help of the statistics from the

Ministry of Civil Aviation, approximately 29.8 million passengers traveled to/from India in

2008, showing a surge of 30% from 2007. The prediction stated that international passengers will

touch 50 million by 2015. More opportunities in the aviation industry in India are likely to make

way for about 69 foreign airlines from 49 countries.

GROWTH OFAVIATION INDUSTRY IN INDIA

The Indian Civil Aviation market grew at a CAGR of 18%, being valued round US$ 5.6 billion

in 2008. Further statistics revealed that the air traffic in August 2009 was a double digit figure.

The domestic airliners flew 3.67 million passengers in August 2009, as against 2.92 million in

the corresponding period of 2007, up by 26%. The Centre for Asia Pacific Aviation (CAPA) has

estimated that the domestic traffic will go up by 25% to 30% till 2010 along with a surge in the

international traffic by 15%. There would be more than 100 million passengers by 2010. Then

again by 2020, Indian airports will in all probability handle over 100 million passengers every

year. The investment plans to the tune of US$ 9 billion has been made by the Aviation Ministry

for modernizing the existing airports by 2010.

In terms of domestic passengers' volume, US have always been the leader with followers in the

league like China, Japan and India. The number of domestic flights went up by 69% from 2005

to 2008, with the domestic aviation sector growing at 9-10%.


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MARKET SHARE OF KEY PLAYERS IN AVIATION

INDUSTRY

Name of the players MarketShare

Kingfisher Airlines and Kingfisher Red (previously AirDeccan)

28%

Jet Airways and Jet Lite (previously Air Sahara) 25%

Air India and Indian (previously Indian Airlines) 16%

IndiGo 14%

SpiceJet 12%

GoAir 3%Paramount Airways 2%

MDLR Airlines 0.004%

FUTURE OF AVIATION INDUSTRY IN INDIA

The challenges of the Indian aviation industry are cited below:

Passenger traffic is estimated to grow at a CAGR of over 15% in the coming few years. The Ministry of Civil Aviation would handle around 280 million passengers by 2020. US$ 110 billion investment is envisaged till 2020 with US$ 80 billion solely for new

aircraft and US$ 30 billion for developing the airport infrastructure.


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KINGFISHER AIRLINES- INTRODUCTION

Kingfisher airlines is owned by India's biggest liquor baron, Mr. Vijay Mallya. Kingfisher

Airlines (KFA) is one of the finest luxury airlines of India. Based in Bangalore, the KingfisherAirlines started operations in May 2005 as a wholly owned subsidiary of the United BreweriesHoldings Limited. It entered the Indian aviation market at a time when the low cost servicemodel had galvanized the market and made air-travel accessible to the Indian middle class.

Kingfisher Airlines proved to be a stiff competition for other domestic airlines of India, with itsbrand new aircraft, stylish red interiors, stylishly dressed cabin crew and ground staff. The airlineintroduced in-flight entertainment (IFE) systems, for the first time to Indian consumers. The IFEsystems were provided on every seat, even on the domestic flights. The airline offers attractiveservices to its on board passengers. Years following its inception proved to be beneficial for theairline, in terms of its booming business, with a good track record of customer satisfaction.However, it faced a worsening economic scenario in 2008.

KFA today offers three unique classes of service -Kingfisher First, Kingfisher Class andKingfisher Red. Kingfisher First is the business class service of KFA focused on business classpassengers who are willing to spend for premium services. Kingfisher Class is the aspirationalpremium economy service of KFA focused on the growing middle-class that is trendy, savvy andupwardly mobile. Kingfisher Red is the low fare service of KFA focused on the growing middleclass who are price conscious. KFA has carved a distinct position for itself by its flamboyantlifestyle image and by offering a great flying experience with comfort seating, personalizedentertainment and services to its passengers. KFA has adopted a plethora of marketing strategiessince its inception and continues to do so in its growth stage. Its marketing efforts aimed atbuilding a distinct brand image for KFA play a huge role in the success of the airlines.

Kingfisher Airlines is one of the only seven airlines awarded 5-star rating by Skytrax along withCathay Pacific, Qatar Airways, Asiana Airlines, Malaysia Airlines, Singapore Airlines, andHainan Airlines Kingfisher operates more than 375 daily flights to 71 destinations, with regionaland long-haul international services. Kingfisher also owns the skytrax award for India's bestairliner of the year 2011.

Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which is also owned byVijay Mallya.
http://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Cathay_Pacifichttp://en.wikipedia.org/wiki/Qatar_Airwayshttp://en.wikipedia.org/wiki/Asiana_Airlineshttp://en.wikipedia.org/wiki/Malaysia_Airlineshttp://en.wikipedia.org/wiki/Singapore_Airlineshttp://en.wikipedia.org/wiki/Hainan_Airlineshttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Force_Indiahttp://en.wikipedia.org/wiki/Vijay_Mallyahttp://en.wikipedia.org/wiki/Vijay_Mallyahttp://en.wikipedia.org/wiki/Force_Indiahttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Hainan_Airlineshttp://en.wikipedia.org/wiki/Singapore_Airlineshttp://en.wikipedia.org/wiki/Malaysia_Airlineshttp://en.wikipedia.org/wiki/Asiana_Airlineshttp://en.wikipedia.org/wiki/Qatar_Airwayshttp://en.wikipedia.org/wiki/Cathay_Pacifichttp://en.wikipedia.org/wiki/Skytrax


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HISTORY

Kingfisher Airlines began its operations on 9 May 2005, following the lease of four Airbus A320aircraft. The inaugural flight was from Mumbai to Delhi. On June 15, 2005, it became the first

(and only) Indian airline to order the Airbus A380. It placed orders for five A380s, five AirbusA350-800 aircraft and five Airbus A330-200 aircraft in a deal valued at over $3 billion. Deliveryof the A330s was due to start in late 2007, followed by the A380s in 2010 and the A350s in2012.

Ever since its launch in May 2005, Kingfisher Airlines has blazed a trail of innovations andintroduced a range of market-firsts that have completely redefined the whole experience offlying. By elevating its customers to a level of being guests and not just passengers, Kingfisher

Airlines has endeared itself to consumers. Kingfisher Airlines was the first Indian airline tointroduce in-flight entertainment (IFE) system on domestic flights. Passengers on-board areprovided complimentary welcome kit that contains a pen, facial tissue and headphone to use

with the IFE system. Kingfisher Airlines has made alliance with Dish TV to provide live TVentertainment to passengers.

As of July 2007, Kingfisher operates only on domestic routes; however it started its internationaloperations on 3rd September, 2008 with a flight between Bangalore and London, and later onadded new international destinations, namely Hong Kong, Dhaka, Colombo, Singapore, Dubaiand Bangkok. However, on 15th September 2009, Kingfisher Airlines withdrew the Londonservice.

On December 19th, 2007 Air Deccan and Kingfisher Airlines decided to merge. KingfisherAirlines parent company United Breweries (UB Group) have acquired 46% of Air Deccans

parent Deccan Aviation, which possesses 52% of the total stakes.

In May 2009, Kingfisher Airlines carrier over a million passengers that provided it the highestmarket share among the airlines in India

On 7 June 2010 Kingfisher became a member elect of the Oneworld airline alliance when itsigned a formal membership agreement. A firm date to join the alliance will be announced oncethe implementation process is underway, it possibly may take 18 to 24 months.


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KINGFISHER AIRLINES IN RECESSION

In 2008, due to the prevalent economic downturn, the civil aviation industry faced the worst

period in its history. It was the time, when air passenger traffic started dripping, and the aircraftfuel prices went sky rocketing. As a result, Kingfisher Chairman Vijay Mallya and his Jet

Airways counterpart Naresh Goyal announced an alliance, after a meeting. According to the

alliance, both the airline companies decided to implement code-sharing on both domestic and

international flights. It was a step to reduce the expenses. Subsequently, frequent flier programs

were announced by both the airlines, namely King Club and Jet Privelege.


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MARKETING

BRANDING SRATEGIES OF KFA

KFA is a pioneer in the concept of bringing luxury, glamour and lifestyle to the skies. The brandimage of the parent Kingfisher brand gave further credibility to its marketing campaigns,featuring India's then top models. Kingfisher airlines sold the concept of lifestyle through itsglamorous airhostesses, red-the color of vibrancy, and added hospitality which made everypassenger feel like a guest on board-a-craft. It marketed itself as a budget airline targeting themiddle of the market. It used multiple promotional campaigns, from having India's top modelYana Gupta on flight, to schemes on discounted tickets, initially, to invite people to experiencethe 'good flying' concept.

However, the airlines industry soon entered a phase of consolidation with mergers like Jet- AirSahara and Indian Airlines-Air India. This eroded the KFA value offering. Unfazed, Kingfisherevolved into a full-fledged carrier and continued to pursue aggressive marketing strategies,sometimes even entering into advertisement wars with its competitors. At the same time, theIndian economy started to boom and the airlines industry entered a phase of unprecedentedgrowth. This launched KFA in to its growth phase. Co-branding partnerships with like-mindedbrands and an aggressive strategy to promote its guest loyalty programme, King Club, would bethe major focus of UB Group's Kingfisher Airlines this year. The company is planning to spendclose to Rs 40 crore on various media and below-the-line marketing activities for the year.

The company launched Kingfisher First, which is a print campaign to promote its first classservice. It is a personalised campaign, which has Vijay Mallya, signing off by saying, "I have

created a product which is better than what I would have created for myself."

The company started up with a series of promotions for its guest loyalty programme. Thecompany tied up with a number of restaurants, the traffic into which they drove through agourmet guide. The company also tied up with Goa Tourism to boost domestic traffic duringmonsoon.

Strategic partnerships were the main focus of their marketing strategy. They did promos withMalaysia Tourism to organize a golf tournament for CEOs in Delhi.

The company launched a series of online promos to boost traffic in certain sectors such as

Mumbai-Kolkata. The online ticketing contributes almost 35 per cent to the company's revenues.The company stated online contests to boost traffic on these sectors and entered into partnershipwith premium hotels. In Kolkata, they entered into partnership with the Park Hotel."

The response to the airline's guest loyalty was very unbeatable and enrolled 20,000 within twomonths of launch. Even in terms of market share, we already have an 8 per cent share within 10months.


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STRATEGIES USED TO MAKE KINGFISHR AIRLINES A

SUCCESS!!

Following strategies were followed to make it one of the leading Airlines in India.

It came up with a very appealing promotional line Fly the good times and it reflected inthe 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 other airlines that had

Business Class; Economy Class the idea was to combine Business Class experiences andEconomy Class experiences in one.

KFAs PROMOTIONAL STRATEGIES

As part of its promotional strategy the marketing team of KFA showcased the airline as the newflying experience. The following initiatives were taken as part of its promotional strategy

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

INOX multiplexes in Mumbai publicized KFAs special offers for a month. KFA was the official travel airlines for the cast and crew of Mangal Pandey- the movie. KFA made use of various fashion shows, celebrity golf matches, New Year parties all to

build its Kingfisher brand. 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 August 2005. This was ment to creat loyal customers forKFA by providing benefits like privileged access to lounges, restaurants, freerefreshments at airports, access to 180 golf clubs across India, special invites for lifestyleshows .

In October, KFA launched Chill Times Offer in the month of August 2005 andSeptember 2005.

In October they launched the King Saver Offerwhich said Fly like a King, dont playlike one.

KFA targeted the frequent fliers business traveler segment, which was dominated by JetAirways. By offering a King Saver Booklet, This booklet contained six freeflight tickets and was presented as a free gift if the passenger bought two such bookletseach worth Rs. 26,999.Passengers could avail off this offer if they showed there JetPrivilege Member (Gold or Platinum) card.


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MARKETING STRATEGIES

Marketing mix

1.Product : Kingfisher First( International& domestic routes) Kingfisher Class(International&

domestic routes) Kingfisher Red- formerly known as Air Deccan ( Domestic routes) Flying Chef.

2.Price : Kingfisher Airlines being a premium airline adopts a premium pricing strategy

Kingfisher Red its low fare arm adopts a low pricing. The pricing strategy aviation industry is

highly dependent on the behavior of the crude oil prces, dollar rates and competition. Fuel at

present accounts for 45 per cent of an airlines total operating cost.

3.Place : Kingfisher airlines operates services to 80 destinations domestic as well as

international. International operations started on 3 september 2008, with a flight from Banglore

to London. One of the reasons to acquire Air Deccan was to gain entry on to the international

circuit, by gaining advantage on air deccans eligibility to fly international (as per DGCA rules).It also has plans to add several international destinations such as Bangkok, Hong Kong, Karachi,

Kuala Lampur, Lahore, Male and Singapore in 2009.

4.Promotion : Kingfisher Airlines as a brand is promoted in many ways. When it was launched

Yana Gupta was the brand ambassador. Hoardings/ Press Releases Kingfisher Airline sponsors

ATP Open KF First sponsors Mtc style wards 06 Kingfisher kicks off Rs 1 billion campaign ( On

launch of its international flight to London) Formula ! team ( Force India) IPL team ( Royal

Challengers), Red Pouch The Color RED King Club frequent flier programme Vijay Mallya

himself is a brand ambassador for all hisd brands including Kingfisher Airlines.

5.Physical Evidence: KFA started its operations on May 9, 2005 with a fleet of 4 airbus A320

aircrafts. KFA was the first airline in India to operate with all new aircraft. On June 15,2005

KFA became the first Indian airline to order the Airbus A380, to be delivered by 2014 Fleet size

of 73 and 137 orders placed. The planes have the best in flight facilities that match world class

standards.

6.Process : KFAs tickets through ATMs. The Roving Agent Web Check-in FlyBuy, sMS Flight

updates, Mobile Ticketing.

7.People : Being a service industry it has two types of customers: External Customers

(Passengers) and Internal Customers (Employees). KFA uses the term Guests for its externalcustomers. Dr. Mallya tells his crew to treat every guest In the same was as if they have visited

his home. In an airline, Cabin Crew paly an important role because they are the ones who

deliver the service and therefore they are termed as The walking Billboards of an organization.


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THE WINNING STRATEGY OF KFA

Aviation companies usually refer to their big ticketing agents as business partners. Kingfisher

Airlines, promoted by liquor baron Vijay Mallya, can now go one step ahead and call them

financiers as well.

In a move that has caused disquiet among rivals, Kingfisher has turned to its big consolidators(so called because they buy tickets from all airlines in bulk at a discount and sell them to

travellers) to raise money. With bank lending drying up and equity markets not conducive,

India's second-largest airline by market share is relying on money released ahead of the

payments cycle by these consolidators to meet its expenses.

This is how it works: A big consolidator usually gets tickets from all airlines and sells it at a

discount to passengers. The payment is made every 15 or 21 days. About eight months ago,

Kingfisher requested the consolidators to pay for tickets at the beginning of the month itself,

instead of in cycles. In return, the airline agreed to pay 3% interest every month to the

consolidators.

It was supposed to be a perfect and cosy, though unusual, arrangement. The strapped airline gets

the money, while the consolidators get interest on the lines of a credit card issuing bank - 3% a

month or 36% per annum. The trouble is, it is not working out as planned. The airline has upset

rivals who blame the practice for the losses they suffer through discounted tickets.

"If an airline goes to the travel agent and gives 36% interest in a year against ticket money, it

becomes unviable to compete with it," a top official of another "If an airline goes to the travel

agent and gives 36% interest in a year against ticket money, it becomes unviable to compete with

it," a top official of another .
http://economictimes.indiatimes.com/kingfisher-airlines-ltd/stocks/companyid-276.cmshttp://economictimes.indiatimes.com/kingfisher-airlines-ltd/stocks/companyid-276.cmshttp://economictimes.indiatimes.com/search.cms?query=Vijay%20Mallyahttp://economictimes.indiatimes.com/search.cms?query=Vijay%20Mallyahttp://economictimes.indiatimes.com/kingfisher-airlines-ltd/stocks/companyid-276.cmshttp://economictimes.indiatimes.com/kingfisher-airlines-ltd/stocks/companyid-276.cms


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FINANCE

The present scenario of financial situation of KFA is not in its favor. The airline owes a lot of

money to the different parties involved with it. Its not been able to pay off its fuel dues to HPCL

and BPCL. In 2011, HPCL stopped the supply for 2hours due to the non-payment of dues. KFA

is not able to pay the lease rental for the aircrafts on time since the year 2008. To the worse, KFA

owes Rs. 208.06 crores to Airports Authority of India. One of the major move made by KFA was

the takeover of Air Deccan that is being discussed below.

KINGFISHERS AMALGAMATION WITH AIRDECCAN

WE ARE FROM DIFFERENT PLANETS, HE IS FROM VENUS, I AM FROM MARS.

CAPTAIN GOPINATH ON VIJAY MALLYA

KFA, on its merger with Air Deccan, retained the name 'Deccan' in the new entity because of its

tremendous recall value in the LCC segment; hence the tag 'Simplify Deccan'. Instead, had theydirectly changed the name to Kingfisher Red, it may have eroded the 'loyal' customer base thatAir Deccan enjoyed due to its 'emotional connect' with its customers. At the same time, KFAchanged the logo to the Kingfisher bird5 depicting vibrancy and activity. Kingfisher's red andwhite replaced Deccan's yellow and blue.

After a period of ten months, when Kingfisher had established the fact that people couldassociate 'Simplifly Deccan' with Kingfisher by means of the image makeover of the former'screw and fleet, Simplifly Deccan was rebranded to Kingfisher Red6, eliminating the Deccanname altogether, and establishing the movement of the airline towards the Kingfisher 'flyingexperience'7. While Simplify Deccan was a no-frills low cost carrier, Kingfisher Red highlightedthe 'delight of flying' in spite of offering low fares, keeping up Kingfisher's brand promise.

Kingfisher Red offered new features like web check-in, in-flight reading material, and frequentflier programs.

KFA is all set to redefine the low cost carrier (LCC) segment by using Kingfisher Red as aflanker brand. An exhaustive market survey done by Kingfisher revealed that an average fliereven in the low cost segment expects certain basic services. Kingfisher Red is positionedbetween a low cost and full service carrier. It is the only airline that offers additional servicescompared to other traditional low cost carriers and yet economical compared to full servicecarriers. Kingfisher Red has carved for itself a straddle position: low fare flying with theexperience of a premium one - a premium low cost carrier as it proudly calls itself. It hopes tofoster loyalty amongst its customers through such positioning.

Of late, Kingfisher is offering free wholesome Indian meals on its flights9, a move aimed toregain its lost market share from Indigo, which recently replaced Kingfisher Red at the top. Theremainder of this article analyses Kingfisher's strategic positioning and raises some pertinentquestions, the answers to which point out the shortcomings in the management's strategy.


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(i) Has Kingfisher Successfully Understood Customer Needs?

A typical LCC customer would have certain basic needs: economy, convenience, comfort andluxury. The fact that the customer chooses a LCC indicates one's sensitivity to price and henceeconomy seems to be the first basic need. This is followed by a need for convenience, whichwould translate into wants like punctuality, appropriate baggage handling etc. Following this is a

need for comfort, which includes in-flight reading material, food etc. that Kingfisher Red offers.And finally luxury, which would comprise the entire set of value added services likepersonalized entertainment that KFA (Class & First) provides. Perhaps, akin to the "Maslow'shierarchy of needs" concept, the higher order need might appeal only when the lower order onehas been satisfied.

(ii) Has it Ignored Points of Parity and Given Too much Importance to Points of Difference?

The Points of Parity comprise basic services like scheduling, connectivity, cleanliness, lowprice (especially) whereas Kingfisher Red's point of difference is clearly the comfort and thedelight experience that the airline highlights. While Kingfisher Red has focused on serviceslike tele-booking, free food etc, it has ignored the lower order needs of the customer likeeconomy and punctuality.


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Indigo is the most preferred choice of consumers in the LCC segment because it deliversextremely well on the price and punctuality dimensions. In Kingfisher Red's case, the key topositioning now remains not so much in highlighting the points of difference as much infocusing on the points of parity.

(iii) How Sustainable is the Concept of Premium Low Cost Carrier?

Costs increase in proportion to the services offered. The model of an increasing number ofvalue added services along with low prices seems like a 'best-of-both-worlds' that might bedifficult to sustain. Hence, any addition of value-added services would further erode the valueof the airline with respect to the prices that it can offer.

Taking the case of meals on the airline, a meal increases the price of a ticket by 300 - 400INR. Is the price-sensitive consumer ready to bear this for getting a 'free' meal? With the LCCcustomer being most concerned about price than any other dimension of value-added services,increasing fares in order to offer a not-much-sought-after 'free' meal may not be the best move.Perhaps the Spicejet model of selling food on-flight is a better answer, as it enables the airlineto cater to the needs of both the classes of customers, those who value economy and those who

don't mind paying an extra buck for grub.

(iv) How does Kingfisher Red's Promise Impact Customer Satisfaction?

With the Kingfisher Red campaign emphasizing the shift towards the spirit of 'good flying',customer expectations might be raised to the level of the experience that Kingfisher Classoffers. This would lead to dissatisfaction when the customer flies Kingfisher Red, as hisexperience would not live up to his expectations. This is so since Kingfisher Red is not evenremotely close to the lifestyle advantage offered by Kingfisher Class. Hence it might be betterfor the promotional campaigns of Kingfisher Red to highlight only what one can realisticallyexpect of Kingfisher Red. At the same time, there should be campaigns for Kingfisher Firstand Kingfisher Class that accentuate the flamboyancy and luxury offerings.

(v) Is Kingfisher Red a Threat to the Kingfisher's Brand Identity?

With Kingfisher Red not really gelling in with the entire Kingfisher portfolio of products andservices, the frugality of the brand may impact the brand equity of Kingfisher. After all,Kingfisher Red has tried to match up to Kingfisher in a number of stark areas, for example, thecolor red itself. Would it have helped to not associate the color Red with the Kingfisher Redand create a distinct image?

It may have been worthwhile to not donate the highest recall factor of Kingfisher to its flankerbrand's name in the first place. However, having already undergone rebranding twice, itwouldn't be wise to rebrand Kingfisher Red yet again. Instead, Kingfisher could focus on the

promotional campaigns which had been described earlier to distinguish between Kingfisherand Kingfisher Red.

(vi) Has Kingfisher Factored in the 'Brand Loyalty' that Operates in this Segment?

Delving into consumer psychology, it seems that once a passenger has a pleasant experiencewith a particular LCC and develops an image of reliability, he/she prefers to stick to the LCC.Taking an example from our survey, if a person has a built a good impression of Spicejet, hewould prefer to travel by Spicejet again, even if there are seats available in other LCCs within


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a similar price band. The person switches only when there is no flight from Spicejet at hisconvenient time of departure.

Therefore, there exists a strong case for Kingfisher to cash in on this brand loyalty found inLCC segment. For this to happen, it must first fix the points of dissatisfaction like punctualityand safety concerns. Once these concerns are addressed, people will tend to stick to Kingfisher

Red.

(vii) Is Kingfisher's Current Positioning and Market Coverage a Source of CompetitiveAdvantage?

With the introduction of Kingfisher Red, Kingfisher has 3 product offerings: premiumbusiness, premium economy and premium low cost. Kingfisher's offerings span the entire

market. Such a strategy is generally not a very good one, as it does not send out a very clearpositioning message and may only serve to drive away customers from both ends of themarket segment, instead of serving both.

However, in the current scenario, at a time when the future of the aviation industry isuncertain, this very positioning and market coverage may be the best thing to do. It becomes asource of competitive advantage as it gives Kingfisher the flexibility to consolidate itsposition, if need be, in any direction depending on the future course of the industry. Also, infuture, Kingfisher would have high flexibility to change its product mix amongst the threeclasses contingent on segment attractiveness and changing customer wants.


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Kingfisher Airlines going against the LCC trend

Kingfisher Airlines, which has struggled to operate a low-cost and premium brand under a singlemanagement structure, is certainly going against the trend in a market that is moving toward lowcost. Half of the six major airlines are budget carriers, withSpiceJet,IndiGoandGoAiramongthe nations fastest growing carriers. The strategy is also diametrically opposite to that ofJetAirways. Jet Airways, the nations largest domestic airline grouping, in Aug-2011 stated it wouldincrease its proportion of seats in the low-cost category.

Kingfisher Airlines' premium service strategy, which comes at a time of widespread losses in theIndian airline industry, also foreshadows a period of slower growth at Kingfisher Airlines, as thefull-service market, while still growing, is expanding at a slower pace than the LCC operators.This could impact Kingfishers market share while simultaneously increasing the prominence ofLCC rivals, who no doubt see an opportunity to fill the space left by the exit of Kingfisher Redcapacity.

The strategy will also create a differential offering in the market for the carrier. The carrier hopesto improve the profitability with the move, with Dr Mallya noting that "the margins ofKingfisher class are higher than Kingfisher Red. That's because the yields are better.
http://www.centreforaviation.com/profiles/airlines/spicejet-sghttp://www.centreforaviation.com/profiles/airlines/spicejet-sghttp://www.centreforaviation.com/profiles/airlines/spicejet-sghttp://www.centreforaviation.com/profiles/airlines/indigo-6ehttp://www.centreforaviation.com/profiles/airlines/indigo-6ehttp://www.centreforaviation.com/profiles/airlines/indigo-6ehttp://www.centreforaviation.com/profiles/airlines/goair-g8http://www.centreforaviation.com/profiles/airlines/goair-g8http://www.centreforaviation.com/profiles/airlines/goair-g8http://www.centreforaviation.com/profiles/airlines/jet-airways-9whttp://www.centreforaviation.com/profiles/airlines/jet-airways-9whttp://www.centreforaviation.com/profiles/airlines/jet-airways-9whttp://www.centreforaviation.com/profiles/airlines/jet-airways-9whttp://www.centreforaviation.com/profiles/airlines/jet-airways-9whttp://www.centreforaviation.com/profiles/airlines/jet-airways-9whttp://www.centreforaviation.com/profiles/airlines/goair-g8http://www.centreforaviation.com/profiles/airlines/indigo-6ehttp://www.centreforaviation.com/profiles/airlines/spicejet-sg


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HUMAN RESOURCE MANAGEMENT

Prior to launch, KFA signed a non-poaching alliance with Air Deccan under which boththeairlines agreed not to hire each others employee. KFAs flight attendants called Flyingmodels 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 highservice standards.

Among one of the biggest HR move for KFA was addition of Nigel Harwood as Chief OperatingOfficer 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 topmost level but also in the second line. This is part of the UB groups commitment to human

resources.

DELAYED SALARY

In Aug 2011, KFA has staff strength of 6,000 and spends 58 cr on salaries a month. According

to the first quarter financial results, it has 173.66 cr under the employees cost head, which has

increased from 163.40 cr during the same quarter last year.

KFA delayed salaries of its employees for the month of July 2011. The management stated that it

does not have the money, and has not given any date for the payment. But KFA stated that due to

the bank strike, the salaries could not be processed.

The date for the payment of salaries has been changed to the 7th of every month. Earlier, the

company used to pay on the 31st.

Then in the month of Oct 2011, salary payment for the month of Sep 2011 had been delayed.

Salaries were normally credited to the accounts of its employees on the 7th day of every month.

It has also been alleged that the tax company deducted from the salaries wasnt being paid to the

tax department.


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INTERNATIONAL EXPANSION

With its takeover of Air Deccan, Kingfisher has pre-planned its strategy for overseas operations,

anticipating Deccans eligibility to fly on international routes by August 2008. But as per Indian

government regulations for international operations, it would need to increase its ownership

stake to 51% from the current 46% to qualify to fly on overseas routes, or it should sport

Deccans colours to its tail. For its overseas operation, Kingfisher planned to adopt a game -

changing model, offering nonstop flights on long-haul route, first among Indian overseas flights.

Kingfisher planned to position itself as a first class (one first class seat equals between eight and

ten economy seats) and business class (one business class seat equals between six and eight

economy seats) airline in outbound category. It also planned to revolutionize international air

travel by extending some of the services offered to first class and business class in outbound

category to economy class passengers with all new aircraft. Initially, Kingfisher intended to

target the key US-India route, which is already occupied by other international rivals like Air

India, Delta Air Lines, and Continental Airlines. Analysts pointed out that, Kingfishers plansmight be right for overseas operations but were skeptical in the wake of its domestic losses.

Whether, Kingfisher would be able to succeed in the highly competitive international airline

market needs to be seen.

In September 2008 Kingfisher Airlines, which was one of only six 5-Star airlines in the world launched

international service from India with the debut of daily non-stop flights between Bangalore and London-

Heathrow.

Kingfisher Airlines was the first airline to operate between India and UK with industry-leadingin-flight entertainment including live TV channels such as BBC World, CNN International,

Bloomberg and EuroSport/ESPN via satellite at every seat as well as some 357 hours ofprogramming on 36 channels.

Along with impeccable cuisine by London`s famed Chutney Mary`s restaurant, KingfisherAirlines offers guests innovative product offerings including mood lighting, web chat and email,USB connectors and in-seat plug/chargers throughout the aircraft. In Kingfisher First, pamperedguests also enjoy in-seat massagers, a bar and bartender, a jacket pressing service, and evenspectacles cleaning.The flight is from Bangalore to London Heathrow`s Terminal. It is a 13 hours journey. Theflights will be operated using a brand new Airbus A330-200, widely billed as the best A330 everbuilt for any airline.

Kingfisher set new standards in international travel with the unique Kingfisher experience thathas earned us a 5-star rating from Skytrax. Our customers are our guests, not passengers, andthis is reflected in the unique levels of comfort and entertainment, including live television, andfine dining options on board together with the warmest Indian hospitality offered by a hand-picked and extensively trained crew- Vijay Mallya


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In 2011 KFA announces three new international routes connecting key south Indian cities withColombo. Kochi-Colombo-Kochi, Thiruvanthapuram-Colombo-Thiruvananthapuram andThirucirapali-Colombo-Thiruchirappali are the three new international routes announced byKFA. The newly announces flights offer convenient connectivity and the option of early arrivalin Colombo, said a statement issued by the company. Apart from this, the new initiative provides

more flights in and out of South India. Apart from this, the new initiative provides more flightsin and out of South India. KFA flies to 59 cities in the country and 8 internatonal destinantions.Ithas over 325 daily departures with a fleet of 66 aircrafts.


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CONCLUSION

The company has suffered substantial financial losses and therefore its net worth haseroded.

The KFA brought new trends in line and has a good ability but due to its financial turmoiland mismanagement is not able to work efficiently.

King Club is a great way to attract more customers. Being a private carrier it has potential to improve on its margins with effective cost

reduction policies.

The strategy of Vijay Mallya is that he uses Kingfisher Airlines to popularize his beerKingfisher thus helping him to leverage his brand name to a win-win situation in both

his businesses.


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REFRENCES

http://www.makemytrip.com/flights/kingfisher_airlines-history.html

http://www.zoomtra.com/airlines/Kingfisher.html

http://drypen.in/marketing/kingfisher-airlines-marketing-hr-financial-strategies.html

http://www.marketing91.com/marketing-mix-kingfisher-airlines/

http://articles.timesofindia.indiatimes.com/2007-06-01/india-business/27963983_1_air-deccan-capt-g-r-

gopinath-mallya-s-ub-holdings

http://economictimes.indiatimes.com/
http://www.makemytrip.com/flights/kingfisher_airlines-history.htmlhttp://www.makemytrip.com/flights/kingfisher_airlines-history.htmlhttp://www.zoomtra.com/airlines/Kingfisher.htmlhttp://www.zoomtra.com/airlines/Kingfisher.htmlhttp://drypen.in/marketing/kingfisher-airlines-marketing-hr-financial-strategies.htmlhttp://drypen.in/marketing/kingfisher-airlines-marketing-hr-financial-strategies.htmlhttp://www.marketing91.com/marketing-mix-kingfisher-airlines/http://www.marketing91.com/marketing-mix-kingfisher-airlines/http://articles.timesofindia.indiatimes.com/2007-06-01/india-business/27963983_1_air-deccan-capt-g-r-gopinath-mallya-s-ub-holdingshttp://articles.timesofindia.indiatimes.com/2007-06-01/india-business/27963983_1_air-deccan-capt-g-r-gopinath-mallya-s-ub-holdingshttp://articles.timesofindia.indiatimes.com/2007-06-01/india-business/27963983_1_air-deccan-capt-g-r-gopinath-mallya-s-ub-holdingshttp://economictimes.indiatimes.com/http://economictimes.indiatimes.com/http://economictimes.indiatimes.com/http://articles.timesofindia.indiatimes.com/2007-06-01/india-business/27963983_1_air-deccan-capt-g-r-gopinath-mallya-s-ub-holdingshttp://articles.timesofindia.indiatimes.com/2007-06-01/india-business/27963983_1_air-deccan-capt-g-r-gopinath-mallya-s-ub-holdingshttp://www.marketing91.com/marketing-mix-kingfisher-airlines/http://drypen.in/marketing/kingfisher-airlines-marketing-hr-financial-strategies.htmlhttp://www.zoomtra.com/airlines/Kingfisher.htmlhttp://www.makemytrip.com/flights/kingfisher_airlines-history.html

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