INDIAN AVIATION INDUSTRY Low Cost Carriers (~ 70%) Indigo Spice Jet Go Air Jet Lite KingFisher RedSource : KPMG Report On Indian aviation Industry 2010
INTRODUCTION TO UB GROUP• Founded in -1857• Chairman – Dr.Vijay Mallya• Headquartered -Richmond Road, Bangalore• Products –Brewery, Alcohol Beverage ,Aviation, Chemicals & Fertilizers, Mangalore Chemicals and Fertilizers Ltd, UB Global (trading company)••
INTRODUCTION TO KINGFISHER AIRLINESVISION“The Kingfisher Airlines family will consistently deliver a safe, valuebased and enjoyable travel experience to all our guests.” Kingfisher Commenced its operations on May 9,2005.Sanjay Agarwal is the current CEO of the company .Kingfisher Airlines is also the sponsor ofF1 racing outfit, Force India.
CURRENT FINANCIAL STATUS Particulars Amount in crores (Rs.) Net Worth 2951.19 Total Loss 1027 Total Debt 7,057.08 Total Liabilities 4,105.89SHARE PRICE AS ON 7TH DEC’ 2011
ANALYSIS -1 INDIGO AIRLINES KINGFISHER RED 31 destinations in India 63 domestic destinations in India Focused & Profit making routes Many Unprofitable routes like Nasik, Hubli etc Low price compared to Kingfisher red Grounding of 14 aircrafts Low Terminal cost like D1 in New Delhi & 1B in Strict rules by DGCA on implementation of Time Table.Mumbai Multiple Hopping, leading to cascading effect. Hence, Focus on Low Cost Airlines delay of flight. Innovative and radical methods of airline back-end Operations shifted to New Terminals in Delhi &operations like financing, leasing. Mumbai. Less Turn around time as compared to Kingfisher red Focus diverted from high service to low cost More Turn around time as compared to Indigo
ANALYSIS - 2 INDIGO Standardized Aircraft Less Inventory of Spares Less Training Cost Less Maintenance Cost Less Operational cost Effective Terminal Use Easy SchedulingKINGFISHER RED Diversified Aircrafts with different capacities High Inventory of Spares High Training Cost High Maintenance Cost High Operational Cost Scheduling difficult More Human Resources required
ANALYSIS - 3 Rating of Airline Operators - OverallRating of Airline Operators - Based on service Quality Dimensions The survey was carried out by Monitoring and Research Systems Pvt. Ltd among 1,330 passengers who had taken at least four flights in the past one year. The sample was spread across 10 towns—Delhi, Lucknow, Kolkata, Guwahati, Mumbai, Pune, Ahmedabad, Chennai, Bangalore and Hyderabad.
RECOMMENDATION – 1 ( Marketing Strategy for KF-Red)• Holiday packages - @ unprofitable routes like Nashik, Auraangabad• Pricing - Should be at par with Spice jet and Indigo• Tie-ups with Corporate• Frequent flyer programmes• Better deals and offers for flyers in air
RECOMMENDATION -2 (Long Term Strategy) Features Airbus A380 Dreamliner 787 Unit Cost 375.3 million USD 193 million USD No of passengers 450-600 200-400 Fuel efficiency More consumption 20% less consumption Wing span 60 m 80 m Cruising Speed 900 kmp/h 1000 kmp/h Comfort level No noise during None take off and landingCustomization level High Low
RECOMMENDATION – 3 ( Strategy for KF-Red) BOMBARDIER Q400 -Bombardier Q 400 (Canada) - 80-100 passengers - Equivalent to ATR - 20 million USD COMAC C919-Comac C919 ( China ) - 190-220 passenger - Equivalent to Boeing 737 and Airbus A320 - Delivery by 2014
AIR ASIA – (Malaysia) • Skytrax best low cost airlines 2007,2009,2010 and 2011 • Head quarter Malaysia • operating cost $0.035 /seat-km • First airlines for ticket less air travel • 106 routes – Flies international
JETSTAR AIRWAYS – (AUSTRALIA)• World no 2 low cost airlines• Subsidiary of Qantas• Flight entertainment system using i-pad• Flies international• Has a business class
CEBU PACIFIC – (PHILIPPINES) • “Its time everyone flies”- slogan • From Pasay city- Philippines • For 15 January – Manila to Singapore – Singapore airlines 576SGD ( INR 23300) – Cebu pacific 99 SGD ( INR 3960) – no baggage – Cebu Pacific 165 SGD (INR 6600)- 30 kg baggage
CONCLUSION• Route rationalisation: Cutting back unprofi table sectors and services to several cities• Debt recast: Asking banks to reduce rates or take a cut on loans or find a local investor‘• Raising capital: It has plans to raise $200 million through GDR• FDI: If the FDI limit is raised and foreign airlines are allowed to buy a stake, Mallya could recapitalise Kingfisher