Competitive advantage:

 Provides 5 star services at cheapest prices when compared to the competitors

 Takeover of Air Deccan, Kingfisher planned its strategy for overseas operations,
anticipating Deccan’s eligibility to fly on international routes
 Revolutionized international air travel by extending some of the services
offered to first class and business class to economy class passengers with all
new aircraft.
 With the introduction of Kingfisher Red, Kingfisher has 3 product offerings:
premium business, premium economy and premium low cost. Kingfisher's
offerings span the entire market. This very positioning and market coverage
becomes a source of competitive advantage as it gives Kingfisher the flexibility to
consolidate its position

Further Initiatives to generate higher revenues & improve consumer connect

 –New frequent flyer program launched with unique features like non-air
rewards, family club etc.
 –New Internet booking engine driving greater consumer traffic towards online
bookings
 –Incremental passenger connections generated through launch of ‘One Stop
Connect’ campaign

Stringent actions planned and undertaken to keep costs under control

 –Reduced lease costs by >25% (over Q3 FY09) through redelivery of non-
operational aircrafts
 –Reduced personnel costs by >20% (over Q3 FY09) through replacing high cost
expats
 –Planned to reduce Engineering costs by 10-15% by induction of new key
vendor
 –Successfully implemented ‘Fuel Monitoring System’ for targeted reduction in
fuel consumption
 –Exercised stringent controls across over heads to reduce costs e.g. Optimized
office & warehouse spaces across all locations, planned reduction of
communication costs etc.

Planned expansion of International footprint

 –Plan to further utilize narrow body fleet on lucrative short haul markets

IFE MATRIX
Strategy formulation:

Weighted
Key Internal Factors Weight Rating
Score
STRENGTHS
Lower air fares of Kingfisher Red 0.10 4 0.40

Kingfisher is one of only 6 airlines in the 0.10 3 0.30

world to have a 5 star rating
Strong Brand value & Reputation in the 0.05 3 0.15
minds of customers.
Wide operating network - Operates more 0.05 3 0.15
than 400 flights a day, network of 77
destinations, with regional and long-haul
international services.
Kingfisher Airlines Ltd and Dish TV have 0.10 4 0.40
joined hands to provide live in-flight
entertainment on Kingfisher aircraft
Finnair to sell more Indian destinations 0.05 2 0.10
through Kingfisher

Alliance with Jet Airways 0.10 3 0.30

The opening up of new international routes 0.05 2 0.10
by Indian government

WEAKNESS
High operational cost for airlines. 0.10 2 0.20
Kingfisher has high debt in comparison to 0.10 2 0.20
its rivals

Still not a profit-making organization 0.05 3 0.15

Acute shortage of trained pilots and 0.10 2 0.20
technicians.
Training infrastructure incompatible both in 0.05 3 0.15
 terms of quality and quantity
Total 1.00 2.80

SWOT MATRIX:

SO STRATEGIES:

Introduction of kingfisher RED took advantage of Rising share of low

cost carriers .This is because of Increasing Consumerism and Affordability to
common man due to increase in disposable income

Alliance with other airways to meet the India's civil aviation passenger
growth, at 20 per cent, is among the highest in the world

Wide operating network to meet Growing outbound travel in India

Kingfishers in-flight entertainment will satisfy the needs of business

class and tourism department.

ST STRATEGIES:
Kingfisher airlines introduced kingfisher red to counteract high operating costs.

Kingfisher went into alliance with other airlines to meet Acute shortage of Pilots and
maintenance engineers

WO STRATEGIES:
 Even though kingfisher is not a profit making organization, the high outbound
travel population in India is a great opportunity to grow its customer base and
increase revenue.
 India's civil aviation ministry expects 100 million passengers by 2020, which is
also a good opportunity for kingfisher.

WT STRATEGIES:
 High operational cost for airlines is a huge drawback for kingfisher. Also, the
acute shortage of Pilots and maintenance engineers restrict operation at the
optimal level. If optimal level of operations are achieved, they can reduce
operational costs and increase the profit margins.
  A shortage of qualified instructors is faced by Kingfisher. Also, High security
threats in the subcontinent makes passengers look for safer options. If
qualified instructors are recruited and security measures are hiked by the
airline, the passenger count can be increased, thus making it more profitable

FINANCIAL ANALYSIS:

Financial Highlights: Q3 FY 10

Total Operating Revenues of Rs 1353 Cr (-7% over Q3 FY 09)

(Domestic Revenues of Rs. 1194 Cr vs. Rs. 1420 Cr in Q3 FY 09)
•EBITDAR profit of Rs 185 Crvs. Rs 65 Crprofit for Q3 FY 09

(Domestic EBITDAR of Rs. 216 Cr vs. Rs. 182 Cr in Q3 FY 09)

•EBITDA loss of Rs. 77Crvs. loss of Rs. 297 Crin Q3 FY09

(Domestic EBITDA profit of Rs.11 Cr vs. loss of Rs 122 Crin Q3 FY 09)

•Revenue passengers carried 2.74 Mn vs. 2.63 Mn (up 4% over
Q3 FY09)

Financial Highlights: YTD FY 2010

•Total Operating Revenues of Rs 3776 Cr (-9% over YTD FY
09)

(Domestic Revenues of Rs. 3412 Cr vs. Rs. 4132 Cr in YTD FY 09)

•EBITDAR profit of Rs 485 Crvs. loss of Rs 442 Crfor YTD FY
09

(Domestic EBITDAR of Rs. 679 Cr vs. loss of Rs.246 Crin Q3 FY 09) -improvement
of Rs 925 Cr
•EBITDA loss of Rs. 355Crvs. loss of Rs. 1342 Crin YTD FY09

(Domestic EBITDA profit of Rs.15 Cr vs. loss of Rs 1058 Crin Q3 FY 09)

-improvement of Rs 1073 Cr
•Revenue passengers carried 8.22 Mn vs. 8.11 Mn (up 1.4%
over YTD FY09)
BUSINESS MODEL

Differentiated Strategy:

Kingfisher class
 Gourmet cuisine: Only domestic airline to provide gourmet menus created by
a team of renowned chefs.
 In – flight reading material: Their on board reading material is a mix of
international and domestic business, fashion and leisure magazines. The
newspaper selection ranges from The International Herald Tribune and The UK
Times to ethnic language publications.
 Kingfisher lounge in the air: Kingfisher first lounge on board is staffed by
professional trained bartenders offering signature cocktails in a luxurious
setting.
 In – flight guest amenities: Kingfisher first amenities (perfumes, moisturisers,
lip balm and sleeper suits) exclusively designed by Salvatore Ferragamo.
Kingfisher red
 Complimentary hot & filling on – flight meals: Only low cost airline to
provide complimentary meals including breakfast, lunch, snacks and dinner
depending on flight timings.
 In – flight reading material: Selection of Indian publications such as cine
blitz, Times of India, Economic Times and local newspapers as on board
reading material
 Efficient service at low cost: A judicious mix of customer service and basic
comforts provided at low cost. Delivers a delightful experience to the cost
conscious yet discerning travellers.
Segmentation
Kingfisher Airlines follow focused market segmentation
where they cater to few segments of the market.

Competitive Positioning - The Value-Creation Frontier

Strategies
Aviation offered extra ordinary growth potential in an emerging
economy like india

KFA Aviation business has been built on three core competencies of

the group

- Ability to deliver a unique experience while remaining

competitive
- Ability to manage scale up
 - Ability to tightly manage costs

At Corporate level KINGFISHER takes special care of the thrust areas

of the organization such as resource mobilization, effective use of
resources, mergers & acquisition, proper management of investment
and earnings.

At Functional Level special attention is given to different

departments which involves Technical, Marketing, Finance, H.R.,
Research, Corporate affairs, Legal & Secretarial.

Resource mobilization by cutting on unprofitable routes, reduce the

prices for high demand routes.

Effective use of resources:

Stringent actions planned and undertaken to keep costs under

control:

- Reduced lease costs through redelivery of non-operational

aircrafts
- Planned to reduce Engineering costs by 10-15% by induction
of new key vendor
- Successfully implemented ‘Fuel Monitoring System’ for
targeted reduction in fuel consumption
- Exercised stringent controls across over heads to reduce costs
- e.g. Optimize office & warehouse spaces across all locations,
planned reduction of communication costs etc.

KFA joined One world alliance :

World’s most profitable global alliance, bringing together the leading
airline carriers American Airlines, British Airways, Cathay Pacific,
Qantas, Finnair. It serves 800 airports in 150 countries. It operates
9000 daily flights, carrying 340 mn passengers annually, on a
combined fleet of 2500 aircraft.

Benefits to Kingfisher are:

- Access to market share and network without significant

addition of financial investments.
- Access to landing/parking slots and gates that are typically
leased to the larger airlines
- Significantly enhance customer proposition
o Top-tier qualifying miles
o Top-tier recognition
o Global lounge access
- Provide further opportunities for cost savings and access to
management best practices

KFA also has a Strong and Highly experienced management team

In addition to the company’s highly experienced management team,

 KFA’s flight attendants called “Flying models” are 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.

Future capacity deployment plans include increase of frequency to

the lucrative short-haul market destinations by exploiting narrow
body fleet.
Fleet Strategy:

– Airbus A 320 fleet in multiple configurations ( Single & Dual ) to aid

a “map to market” capability

– ATR fleet to leverage growing underserved & underdeveloped

markets

Competitive A 330 aircraft designed with unique KF specs to create

the “best product in sky” for international medium & long haul
operations.
For the year 2012 KFA has scheduled delivery of 6 A320 and 4 A330 (total of 10). This is
because, they need more fleets to add to their capacity after joining the ONE WORLD
alliance and also they need to expand their domestic capacity to support the expected increase
due to Common Wealth Games.

For 2013 they are again scheduled delivery of 9 A320 and 3 A330 (12 total).

Partnerships and Frequent Flyer Programmes

1. Partnership :
a. More than 88 bilateral and unilateral interline partners across the world
b. Focused on attaining code share
c. Only Indian private carrier slated to join a global Alliance- One World, which is expected to
further enhance revenue and streamline costs
2. Frequent Flyer Programme :
a. Huge member base in just four years of launch
b. Very high cabin penetration levels indicating affinity to the product
(Kingfisher First penetration is appx 68%)
c. Significant ancillary revenue generation through 57 partners across 10
verticles (Banking, Hotel, Retail)
3. New Developments and way forward:
a. Launch of an auto-sweep co brand credit card (current and new partner)
expected by Q2 FY11
b. Launch of debit co-brand card expected by Q4FY11
c. Extension of King Miles as a preferred loyalty currency by increasing width
of partners
d. Increases CRM based analytics and campaigns

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.

KFA’s Promotional Strategies & Marketing Strategies:

 It came up with a very appealing promotional line “Fly the good times”
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.
 Also launched the facility of web check-in, allowing travelers to print
their boarding passes via www.flykingfisher.com and the introduction of
the Roving Agent at the airport. The Roving Agent is like a check-in
counter on the move. You no longer need to go to the check-in counter
and wait for long.

Business Strategies

 Kingfisher Airlines was the first carrier to introduce first-class

premium cabins onboard its flights. It started with just four
flights daily and now, it offers 218 flights daily connecting 38
key Indian destinations and has won several prestigious
awards.

 Kingfisher Airlines in the past few years of its operations has

redefined the way the Indian air traveller perceives flying.
“Kingfisher Airlines is not merely into the business of
transporting people from point A to point B. They have created
a new category of Aviation hospitality thus making service and
hospitality their main focus. The results are for everyone to see.
This clear positioning has compelled others in the business to
follow suit”. It was a great challenge to create this new
 positioning. They have through their very well laid out
marketing strategy successfully accomplished (such
positioning).

 The airline introduced two initiatives to enhance guest

convenience. First of these is the introduction of the Roving
Agent at the airport. Rather than waiting at the check-in
counter to collect their boarding pass, travellers can directly
approach the security check-in counters. Deployed outside the
security check-in area will be airline’s Roving Agent, who will
reach out to guests and check them in using a mobile digital
device and printer. They also launched the facility of web
check-in, allowing travellers to print their boarding passes.

 Looking at all international airlines we notice that no one is

selling an air ticket any more, they are selling an experience -
that of luxury, comfort, enjoyment, relaxation. At Kingfisher
Airlines they follow the same and they do not believe that they
are into the business of transportation; they are in the Aviation
Hospitality Space and believe in offering their guests that
ultimate experience 30,000 feet in the skies. The fact that their
average loads are over 70 percent at any given time, they have
touched the consumer pulse. Their guests keep coming back for
more of the `Good Times’ onboard Kingfisher Airlines.

 Kingfisher Airlines has a clearly defined target audience- SEC A,

SEC B+ (socio-economic class) in the age group of 25-45 years
of age. This segment has travelled extensively and is aware of
international travel trends. They are modern, trendy and
upwardly mobile looking for a great flying experience.

 Kingfisher Airlines offers brand new aircraft, designer interiors,

Gourmet cuisine and in flight-entertainment (there are five
 channels of FUN TV and 10 channels of Kingfisher Radio, which
are personalized). They were the first and only airline in the
country to offer this facility on the domestic circuit.

 They offer personalized valet service at all airports to assist

their guests through the check-in procedure. All this at no extra
cost. Their guests definitely saw tremendous value in flying the
Good Times with Kingfisher Airlines.

 Kingfisher Airlines has a very well rounded marketing strategy

in place. They apply a 360-degree approach towards marketing.
They communicate with guests at multiple touch points. The
idea is to create brand recall and get the message across
effectively. Given this they use all media of communication be
it television, print, radio, outdoor, malls, multiplexes, clubs,
pubs, in-flight etc. Their guests are constantly informed of their
new offers.

 A sound business model is imperative for any airline to survive.

With their 360-approach they find it pretty easy to connect
with their consumers both in-flight and on-ground. Their loyalty
program/frequent flyer program better known as the King Club
uses DM and customer relationship management to keep all
their King Club members constantly updated on the ongoing
and upcoming offers apart from the day to day developments
at Kingfisher Airlines.

 They have over 100,000 members in their program and offer

specialized offers to specific profiles among them depending on
their interests. In the past, they have offered tickets to theatre
screenings, fashion shows, sports screenings etc.
  Their Partners Program has been very successful. They have
tied up with the best of brands across industries. Tata Tetley,
Pepsi, Microsoft, Inox, Kenzo , IFB, Taj, Park Hotels and Oxford
book stores have been some of their partners.

Future projections:

  2009-10 2010-11 E 2011- 2012-13 E CAGR

12 E
Revenues (in million, Rs) 5,271.00 5800 6,450 7,385 5.782063
% change   10 11 14.5  
           
% change          
market share (as a percentage) 23 23.75 26 30 4.527903
% change   0.75 2.25 4  
Profits after tax (in millions, Rs) -1647 -1050 -250 110  
% change 36.24 76% 144  
No. of employees 7950 7970 9120 10380 4.545426
%change   0.25 14.42 13.81  
Employee cost (in millions, Rs) 689 700 791 900 4.553172
% change   1.5 11.41 13.52  
no. of departures 1,33,352 139112 150240 166350 3.753768
% change   4.3 8 10.72  
ASKM(available seat 11,810 12873 14353 16218 5.428469
kilometres)
% change   9 11.5 13  

FACTORS TAKEN IN WHILE DETERMING THE FUTURE FINANCIAL

PROJECTIONS OF KINGFISHER AIRLINES
 The Commonwealth Games, to be held in October 2010, is also likely to add to the demand
for travel. Air cargo traffic is likely to grow by six per cent due to a full recovery in India’s
foreign trade. Also Cricket world cup to be held around April-May 2011 in India is likely to
see revival in demand for domestic air routes.
 Strong resurgence in Indian market.
 Debt burden is the greatest obstacle for Kingfisher airlines .
 Operating costs controlled where possible: This is evident from Kingfisher airlines financial
performance for the quarter ended 30th June 2010 where it reported a positive PBDIT after
14 quarters. This was due to a decline in its wage and lease expenses, and a slower growth in
other expenses as compared to income.
 Slot constraints in metro airports create entry barriers for new players.
  Low employee/aircraft ratio at 115; Non-unionized workforce ; Outsourced model ensures
low fixed costs.
 Average oil price has been stable around $74 during the past 3 quarters with the exception
of April’10 ($85).
 Consolidation will take place in airline industry around in the FY 2011 and FY 2012 which will
increase the market share of Kingfisher airlines.
 Currently KFA has an option to purchase 4 A 330s every year from 2012, the decision for
which would be taken closer to date, given the operating environment.

 Domestic capacity is expected to expand lower than growth in demand; resulting in

steep increase in industry load factors

Cost Reduction Initiatives: Kingfisher’s Multi Pronged Cost Reduction Initiatives are expected to
further reduce its Costs following are the cost reduction initiatives.
• Rationalizing Distribution Channels & routes
• Renegotiating Vendor Agreements
• Control Discretionary Spend
• Head Count Rationalization
• Operational Efficiency
Favourable Economic Outlook: The economy continues to show signs of recovery with GDP growth
estimates climbing back to 7% and expected to grow at 8% and above.
• Premium traffic has also seen a comeback and growth is expected to continue as global economy is
recovering.
Efficiency improvements:
Kingfisher management along with Seabury has identified several initiatives to be
rolled out in the current year which would help in enhancing operational efficiency.

Initiatives to enhance cost competitiveness:

 Renegotiation of GDS contracts and channel shift to reduce distribution costs

 Renegotiation of E&M contracts including engine contracts
 Improvement in manpower productivity through rostering & planning initiatives
 Other initiatives like fuel consumption reduction
Initiatives to enhance Revenue productivity:
Improvements in system usage and processes for revenue management
Improvements in cargo revenues through revenue management opportunities

Opportunities to increase the market share: The airline has opportunities to increase its
market share by using the following strategies
 Enhancement of day return product across key primary and secondary sectors
 Incremental passenger connections generated through launch of ‘One Stop
 Increased presence through expansion of inter-line agreements and evaluation of global
alliances
 Increased ancillary revenues through launch of cargo operations (Kingfisher Xpress)
 Strengthened loyalty through enhanced FFP program
 New Internet booking engine driving greater consumer traffic towards online bookings