Kingfisher Airliance - Can still remain King of Good Times??

4. Story Begins…

5. one of India’s leading private
carriers — went off on the night
of February 17 when word
spread like wildfire that
something was amiss at
Kingfisher’s Kolkata station.

6. Earlier that week, the income
tax department had frozen the
airline’s bank accounts for non-
payment of tax deduction at
source (TDS).

7. By the evening of February 18,
the problem had become
serious enough for the airline to
issue a statement. But it was
too late.

8. But what led to the
latest edition of the
trouble that has
plagued Kingfisher?

9. Kingfisher has notched up a
debt of over Rs7,000 crore. Just
recently, the airline reported a
loss of `444 crore

10. But how did things come to
such a pass for Kingfisher, that
always had the image of a
premium airline where the
hospitality was king-size.

11. Expert views..
• “Kingfisher got their strategy wrong. Kingfisher lost
out since it thought it could capture the market by
offering frills,” - A prominent aviation analyst told CNN on
condition of anonymity.
• “For Kingfisher, it was a mish-mash of business
models. Their’s was a flamboyance-based aviation
model. Then they acquired a low-cost carrier like
Air Deccan but did not leverage it,” - A prominent
Analyst

12. Expert views..Contd..
• “There are deeper systemic flaws affecting all
carriers which too are responsible.” - Mr. Jitender
Bhargava (Former executive director of national carrier, Air India)
• “The main problem is that global oil prices have
been shooting up. The airlines do not increase
fares proportionally due to intense competition
among themselves. The result is more losses.” - Civil
Aviation Ministry

13. Kingfisher view..
“The airline industry in India is going through a tough
period due to high costs and lower yields. This is
evident from the unprecedented losses recently
reported. Kingfisher has not made any bailout request
to the Government. We have only asked our banks for
an increase in limits due to significant increase in
operating costs caused by increase in fuel prices and
rupee devaluation,” - the airline had stated last year.

14. But just who will the market forces
make the biggest beneficiary if
Kingfisher shuts shop??
Low-cost carrier IndiGo which is
making profits is now viewed as the
most successful airline with a sound
business model.

15. Now it's time to do what
managers usually do …;)

16. Analysis 1
Indigo Kingfisher Red
• 31 destination in india • 63 domestic destination in
• Focused & Profit Making india
routes • Many Unprofitable routes
• Low price compared to like Nasik, Hubli etc
kingfisher red • Grounding of 14 aircraft
• Low Terminal cost like D1 in • Operation shifted to New
new Delhi and 1B in Mumbai Terminal in Delhi & Mumbai
• Focus on Low Cost Airlines • Focus diverted from high
• Less Turn around time as services to low cost
compared to Kingfisher red. • More Turn around time as
compared to Indigo

17. Destination Map
To get more details about route map, You can visit
Indigo - http://book.goindigo.in/skylights/cgi-bin/skylights.cgi?module=C3&page=ROUTEMAP
Kingfisher - http://it.aviate-res.com/kingfisher-airlines/route-map.aspx

18. Analysis 2
Indigo Kingfisher Red
Standardized Aircraft Diversified Aircraft with
• Less Inventory Spares different capacities
• Less Training Cost • High Inventory Spares
• Less Maintenance Cost • High Training Cost
• Less Operational Cost • High Maintenance Cost
• Effective Terminal Use • High Operation Cost
• Easy Scheduling • Scheduling difficult
• More Human Resources
required.

19. what is the road
forward for Kingfisher
or is it pretty much the
end of the road?

20. FDI / EQUITY
In a recent media interview, Dr Mallya had indicated
that there were three investors ready to pick up stake
in the airline but added that they were waiting for
Government announcements on FDI to become policy.
The government is now set to approve a 49 percent
FDI limit for foreign airlines in Indian carriers.

21. Expert View..
“A total and urgent overhaul is needed. Only infusion
of more funds can ensure the revival. There has to be
a sound and well-thought out business model as the
airline cannot afford to go wrong again. Costs have
also to be scaled down. There are too many things to
be done.”
Mr Bhargava

22. My View..
Route Rationalization: Cutting back unprofitable
sectors and services to several cities
Debt recast: Asking bank to reduce rates or take a cut
on loans or find a "local investor“
FDI: If the FDI limit is raised and foreign airlines are
allowed to buy a stake. Mallya could recapitalize
kingfisher.

23. The End
Can He Ride This Out?

24. Thank You !!