ENTERPRENEURSHIP

MANAGEMENT

FAILED VENTURE
KINGFISHER AIRLINES

Presented By-
Aman Harshvardhan
Shreya Savarn
 Kingfisher Airlines

Kingfisher Airlines was Founded by the well-known

industrialist Vijay Mallya, Kingfisher Airways is positioned in
the market for providing a never-before flying experience to
its customers since 2003. Each of its guests is treated with
warmth, exceptional service and care. This has led to the
airline receiving many achievements in the industry like:
Best Airline in India and Central Asia, Best Economy
Class Seats and Staff Service Excellence Award for
airlines in India and Central Asia in World Airline Awards in
2010
'5-Star Airline' award by Skytrax for the third consecutive
year in 2010
Currently this airline is non-operational.
 Kingfisher Airlines

Kingfisher Airlines Ltd. (KAIR) is a private airline

based in Bangalore, India.

Owned by Vijay Mallya of United Beverages Group.

Tag line- FLY THE GOOD TIME.

Kingfisher Airlines started its operations on May 9,

2005, with a fleet of 4 brand new Airbus - A320.

It started its international operations on 3 September

2008 by connecting Bangalore with London.

Until December 2011,KFA had the second largest

share in Indias domestic air travel market
 Cont.

Kingfisher Airlines is one of the only seven

airlines awarded 5-star rating by skytrax.

Kingfisher operates 400 daily flights with

regional and long-haul international services.

In May 2009,KFA carried more than 1 million

passengers, giving it the highest market
share among airlines in India.

First Indian Airlines to have in flight

entertainment systems on every seat with
guest being able to watch TV in flight.
 CURRENT SCENARIO

The DGCA suspended its flying

license on October 20,2012.

KFA has temporarily shut down

its operations
 Onboard Services and Facilities

In-flight entertainment

TV in flight

Full course meals

Kingfisher radio

Personal television

Headphones

Alcoholic beverages

Seat massagers
 Financial Crisis
The Kingfisher Airlines financial crisis refers to a series of
events that led to severe disruptions withing Kingfisher airlines

After acquiring Air Deccan, Kingfisher suffered a loss of over

1,000 crores for 3 consecutive years

By early 2012, the airline accumulates losses of over 3000

crores.

It created following payment problems:

Bank Arrears
Delayed salary
Fuel Dues
Government Dues
Aircraft Lease Rental Dues
 FINANCIAL TURMOIL
# From To Months Total Income Cost Net Profit EPS

01 Apr-05 Jun-06 15 1,352 1,689 -337 -68

02 Jul-06 Jun-07 12 2,142 2,562 -420 -42

03 Jul-07 Mar-08 09 1,546 1,734 -188 -11

04 Apr-08 Mar-09 12 5,577 7,186 -1,609 -55

05 Apr-09 Mar-10 12 5,271 6,918 -1,647 -54

06 Apr-10 Mar-11 12 6,496 7,523 -1,027 -16

07 Apr-11 Sep-11 06 3,410 4,142 -732 n/a

Total 78 25,793 31,754 -5,960

 REASONS OF FINANCIAL CRISIS
Cannibalization by Kingfisher Red

Flawed Strategies after Merger

Low Customer Base for Premium Class

Policy Issues

Price Wars

Over ambition

Lack of Management
Vijay Mallya assumed that he could succeed by his old
tactics of stylising and glamorising the services offered by
Deccan and adding extra services and frills. For instance,
meals, newspaper and other entertainment services that
were available with other full service fleets were
introduced. Mallya thought that by providing more facilities
he will be able to extract more money. However, it was in
contradiction to the very core low cost operating structure
and philosophy of Air Deccan.
What followed was a rebranding exercise under which the
Deccan brand was brought under the parent brand name
and introduced as Kingfisher Red. This led to a blurring of
the brands as there was hardly any distinction between the
full service (represented by Kingfisher) and the low-cost
brand (Deccan/Kingfisher Red). Both brands looked similar
and had a similar service. Kingfisher Red became neither
full service nor low cost. It was floating somewhere in the
middle of the two classes. This blurring eventually led to
cannibalisation of parent company brand name as
Kingfisher's full-service economy passengers were left
Flawed Strategies after Merger:-
 COMPETITOR ANALYSIS
ATTRIBUTES KINGFISHER JET AIRWAYS SPICE JET

Price 25% higher than jet Lower than Extremely low

Airways and Indian Kingfisher airlines

Permission to fly to NO YES NA

US
Permission to fly to YES YES NA
UK
IPO Floated Floated Floated

Targeted Customer Both ends of Both ends of Lower end of

customer customer customers
Positioning Premium Domestic Premium Domestic Lowest fares and
Segment Segment and no
international frills
Segment
 - More than 80 destinations
- Quality service WEAKNESS
- UB is a parent company - High maintenance cost
-Reputation in the minds of customers - High ticket price
- Heavy debt
- Brand value
- Unable to generate expected return on -
STRENGTHS investment
- No own aircraft
- Over spending of funds

SWOT
ANALYSIS - Infrastructure issues
OPPORTUNITIES - Economic slowdown
- One of the fastest growing aviation Fluid)
- 0.05%people are flying out of 1.2 billian - ATF prices(Automatic Transmission
- Middle class families are choosing travel - Over capacity in the skies
by air
- Higher disposable income of customer
- Falling demand
- Expanding tourism
- Large number of domestic untapped THREATS
routes
 Top reasons for failure

High Operating Cost and fuel

prices amounts to more
than90% of Income (FY12)

Airlines was unable to make

profit and keep on piling debts.

Acquisition of Air Deccan.

Depreciation of Indian Rupees

Lack of Long-term strategy

Unprofitable Route.
 SUGGESTED SOLUTIONS
Leasing out their planes (unused or minimally used planes) to
other carriers.

Cancelling all orders of airplanes.

Transparency and confidence building measures firstly amongst

its own employees and then the customers.

Cut costs by not flying to expensive sectors and airports resulting

in huge parking costs and low returns.

Focus on tier II ND tier III cities where other airlines may n have
made considerable inroads and judge the operating costs of the
same.
 Cont.

FDI in aviation must be permitted.

Change the management.

Change the entire board of directors.

Management should be given to

different or new system.

Decentralization in authority.