This document provides background information on the decline of Kingfisher Airlines. It discusses how Kingfisher Airlines was initially successful by providing luxury amenities but later struggled due to frequent changes in focus, costly international expansion before stabilizing domestically, high operational costs, lack of stable management, and inability to pay employees and debts. Kingfisher's chairman Vijay Mallya claims to have funds to pay salaries but the airline's future remains uncertain.

1. Business ethics and leadership
Case study on kingfisher airlines
Members
 Ayushi Anand
 Rahul Sinha
 Shashi Sangeeta
 Sneha Singhania

2. DECLINE OF
KINGFISHeR
AIRLINE

3. Introduction
Ethical issues are becoming a serious concern in any kind of business
organization. People would find few coverage of an ethical issue
sometimes just by browsing through the daily newspaper (Carroll,
2013). Basically, there is no shortage of the stories on several ethical
issues. Therefore, this study has basically aimed to cover some of the
ethical issues that the Kingfisher airlines as well as Vijay Mallya have
been faced.

4. background
Kingfisher Airlines Ltd. (KAIR) is a private airline based in Bangalore, India.
Currently, the Indian carrier is struggling with a cash shortage and losses, it
will end international flights and cut many local routes as it seeks funds to
revive operations. KAIR is India's largest domestic airline. Owned by Vijay
Mallya of United Beverages Group, Kingfisher Airlines started its operations
on May 9, 2005, with a fleet of 4 brand new Airbus - A320. He took over the UB
Group even before he turned 30 after his father, Vittal Mallya, passed away
suddenly in 1983. Since then, he has consolidated the group holdings, shed
those companies, including a car battery making venture, won a corporate
battle and Manu Chabbria’s Shaw Wallace. Today, his beer business controls
half the domestic market while the liquor business controls three-fourths of

5. facilities
Retrospection on Kingfisher Airlines history proves that it was a stiff
competition for other domestic airlines of India. It provides :
• Brand new aircraft, stylish red interiors, stylishly dressed cabin crew and ground
staff added to glamorous flying.
• The airline introduced in-flight entertainment (IFE) systems, for the first time to
Indian consumers. The IFE systems were provided on every seat, even on the
domestic flights.
• Facilities like personal valet at the airport to assist in baggage handling and
boarding, exclusive lounges with private space, accompanied with refreshments
and music at the airport, audio and video on-demand, with extra-wide personalized
screens in the aircraft, sleeper ette seats with extendable footrests, and three-
course gourmet cuisine.
• Years following its inception proved to be beneficial for the airline, in terms of its
booming business, with a good track record of customer satisfaction.
• Kingfisher Airlines was the first airline in India to operate with all new aircrafts. It

6. REASONS FOR THE DOWNFALL OF KINGFISHER AIRLINES
Frequent Changes On Focus
Kingfisher first launched all economy class with food and entertainment system,
they shifted focus to luxury business class on their aircraft, a lot of air travellers
the hospitality, aircraft condition and it’s ambiance when Kingfisher focus was on
After acquiring the Air Deccan they suddenly shifted focus on low-cost
air traveling, frequent changes in the hospitality and aircraft ambience
made travellers lose their interest in the brand, they didn’t focus on
highly profitable routes in domestic area, acquired Air Deccan air crafts
use to run at the same time as Kingfisher airlines, there was no
proper syndication between Kingfisher Lite & Kingfisher Airlines.
Mr. Gopinath who is ex-founder of Air Deccan expressed his view that Kingfisher
treated Air Deccan as a stepchild, they never syndicated the operations for

7. Acquisition For Expansion
Kingfisher airlines acquired the Air Deccan for the sake of
expansion, as per the international airline policy, any airline
s should have minimum five years of domestic experience in
their respective area to get the international routes license, for the
international route license Kingfisher acquired the Air Deccan, they
tried to syndicate these two companies to improve their profits with
merger.
Without stabilizing in the domestic market to know the ground
the airlines industry, Kingfisher stepped into the international routes
the competition is very high compared to the domestic airways, when
planned about the international routes they hardly have three years
experience, acquisition and expansion these two factors started

8. Economic Slowdown
Another external factor for the Kingfisher downfall is economic
2008, Kingfisher first started it’s international route from Bangalore to
in
2008, same year recession affected the whole world,
which is indirectly affected the air travel occupancy in
international routes, because of the recession, airplane
fuel prices raised, airport charges for landing are very
costly in international airports around the world.
Lack of Management
There was no single CEO continued for one year in Kingfisher airlines,
a frequent change in the top level management, Mr. Vijay Mallya never
any serious interference in day-to-day operations, Kingfisher was a gift
Siddarth Mallya(son of Vijay Mallya) by his father on his birthday,

9. The company not even thought of making Mr. Gopinath (Ex founder of Air
Deccan) as CEO of the Kingfisher airlines to bring the company into a
profitable business, lack of proper expertise and experience in the airline
industry.
High Operational Cost
Operational costs of the airline industry are very high compared
to any industry, companies have to buy the licenses for the routes,
companies should invest in the aircraft maintenance, salaries for the
employees are very high.
Airports charges fees for landing and parking, aircraft fuel frequently
changes as per the international crude oil rates, the government collects
huge taxes from the airline companies, there is a lot of competition
between airline companies, all these high operational costs without good
profit margin caused the Kingfisher to downfall.

10. Employee retention
With increasing debts and the declining trend in the aviation industry,
failed to deliver its services and it was not able to pay back salaries to
employees. In the past few months over 60 pilots have resigned their
which crumpled their operation leading to reduction of flights from
flights per day.
Chairman Vijay Mallya's communication to the employees
conceals more than it reveals. While he claims over 75 %
staff have been paid, he conveniently ignores the fact that
he has still to pay four months' salaries to them. Now we
have come to a situation where we are left with no option
but to move the labour court over the issue," airline sources said

11. Financial crisis
1. Financial Crisis Ever since the airline commenced operations in
been reporting losses. After acquiring Air Deccan, Kingfisher suffered a
over 1,000 crore (US$199.5 million) for three consecutive years.
problems(Delayed salary, Fuel Dues, Aircraft lease rental dues, Income
Non-payment of dues to lenders).
2. The aviation ministry has, however, made it clear
it will not pull the plug on Kingfisher, which has a
debt of over Rs 7,000 crore with banks - mostly
public sector banks - and its total liabilities-cum-
losses are over Rs 10,000 crore "It is not up to the aviation ministry to
down Kingfisher as the government is not keen on such a move. If
closes, uncomfortable questions would be raised on why banks -
public sector ones - lent Rs 7,500 crore to a commercial entity that

12. Will kingfisher bounce back
Vijay Mallya Says, “ We have funds stuck in various accounts (over 50
accounts were frozen) and as each account has been de-frozen and
access to our funds, the immediate priority is to pay salaries”(april)
He is willing to take suggestions from lenders on possible
board changes to revive the flagging airline. He is also talking to
strategic and non-strategic investors and looking forward to the
government notification on allowing foreign airlines to buy an up to
cent stake in domestic airlines.

13. NOWTHE HOUSE IS OPEN
FOR QUESTIONS
??
THANK YOU