MARKET ANALYSIS

OF

KINGFISHER AIRLINES

SUBMITTED TO Ms. SONIA TAKKAR

SUBMITTED BYANSHUM KUNDRA PGP20101042

AVIATION INDUSTRY
Aviation industry is one of the fastest growing industries in India. It is growing at the rate of 18% per annum. India is 9th largest aviation market in the world. First airline which got operated in India , was between Karachi and Delhi in December 1912. Today private airlines account for 75% share of domestic aviation market. The governments open sky policy has led to many foreign players entering into the aviation market of India, and, thus, it has increased the number of aircrafts, number of players in the market and the competition within the industry. Airport Authority of India manages 128 airports, which include 15 International airports, 8 Custom airports, 81 Domestic airports, and 21 Civil Enclaves at Defence airfields. There are over 450 airports and more than 1,000 registered aircrafts in India. Passengers are projected to grow at CAGR of 15% in next 5 years. The vision 2020 statement by Ministry of Aviation Industry is to handle 280 million passengers by 2020. Investment opportunities of US$ 110 billions envisaged up to 2020 with US$ 80 billions in new aircrafts and $ 30 billions in development of airport infrastructure. CLASSIFICATION OF INDIA AVIATION SECTOR

AVIATION SECTOR SCHEDULE D AIRPORT SERVICE NONSCHEDULE D AIRPORT SERVICE AIR CARGO SERVICES

SCHEDULED AIRPORT SERVICES- It includes domestic and international airlines. NON-SCHEDULED AIRPORT SERVICES- It includes charter operator and air taxi operator. AIR CARGO SERVICES- it includes transportation of cargo and mails. There are three public players in Aviation industry PUBLIC PLAYERS- Air India, Indian Airlines and Alliance Air. PRIVATE PLAYERS- Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan etc.

KINGFISHER AIRLINES
It was Indias largest airlines and it is based in Bangalore. Kingfisher Airlines is the only Indian and one of the airlines in the world to get a five-star rating from Sky trax. Kingfisher Airlines is owned by the United Beverages Group under the leadership of Dr. Vijay Mallya. Indian luxury airline operating an extensive network to over 70 destinations. It promises to suit the needs of air travellers with reasonable airfares. Kingfisher's main luxury component is its in-flight entertainment system and meals. It started operations on 9th May 2005. It has brand ambassador- Ms. Deepika Padukone. On 13 October 2008, Kingfisher chairman Vijay Mallya and his Jet Airways counterpart Naresh Goyal announced a strategic alliance after a meeting in Mumbai. The alliance was formed to implement code-sharing between the two airlines on both domestic & international flights, joint fuel management to reduce expenses, common ground handling, joint utilization of crew & sharing of their frequent flier programmes, namely King Club & Jet Privilege. Kingfisher Airlines Expands Route Network with the Introduction of Services on Four New Routes New Delhi, November 23, 2007 - Kingfisher Airlines announced that it has further expanded its route network with the introduction of three new services and the addition of two new destinations. The newly introduced services connect New Delhi with Jammu with a daily direct flight in either direction. The second new service launched by Kingfisher Airlines is a daily direct flight from New Delhi to Lucknow. The Company has incurred substantial losses and its net worth has been eroded. However, having regard to improvement in the economic sentiment, rationalization measures adopted by the Company, fleet recovery and the implementation of the debt recast package with the lenders and promoters including conversion of debt into share capital, these interim financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities". On 15 November 2011 the airline released poor financial results, indicating that it was "drowning in high-interest debt and losing money". Mallya indicated that his solution was for the government to reduce fuel and other taxes. The government was engaged in assessing whether to bail out the company and other airlines or let market forces determine which ones survive.

SWOT ANALYSIS
STRENGTHS Brand positioning Associated with UB group (as UB group is parent company of Kingfisher Airlines) Quality services More than 70 destinations it covers.

WEAKNESS Price per ticket is very high. Not able to pay its debts. It is facing tough competition from other domestic and international flights. It is yet struggling to reach breakeven point.

OPPORTUNITIES It can tap the international markets, which are still remaining untapped. It can enter into Cargo market. It can expand its business by entering into tourism sector as their international flights have alot of tourists to visit India and vice-versa, so it can provide guidance to tourists as an additional service.

THREATS High fuel prices. Payment of lease for the aircrafts. Infrastructure issues. Economic slowdown.

PORTERS FIVE FORCES

BARGAINING POWER OF SUPPLIERS Bargaining power of suppliers is medium as suppliers for food, fuels etc. if dont render their service will act as threat for Kingfisher but at the same time airline has power to switch to other suppliers for better and low cost service.

BARGAINING POWER OF CUSTOMERS Bargaining power of customers is low There are travel agents, business travellers etc. are involved as third party, so less chance of low cost tickets and also of less bargaining power.

THREAT FROM NEW ENTERANTS Very less chance of threat from new companies which are entering in aviation sector like Vergin Altlantic etc. because of its strong service factor.

THREAT FROM COMPETITORS It faces high threats from its competitors like Jet Airways, Indian Airlines etc.

THREAT OF SUBSTITUTES It experience mid level of threat from substitutes as if people do not feel comfortable in travelling from airlines they can use other modes like railways and roadways for domestic travelling but they have no other substitutes for travelling to foreign countries, so their lies less threat from substitutes like roadways and railways.

RECOMMENDATIONS

To increase the market share of the company, Kingfisher Airlines can take the following steps They should get smart on fuels purchase. Simplify flight operations. Offer more transparent pricing policy. Reduce their labour cost. Try to come up with solution to fight the crisis as soon as possible.