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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)
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