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INTRODUCTION
Kingfisher Airlines Limited was based in India. It is the 5th largest airlines that provides domestic and
global, short and long services. Its H.Q. is located in Mumbai, with its parental company being United
Breweries Group. UB Group holds 50% stake in low-cost carrier Kingfisher Red. Kingfisher Airlines
had the biggest share in India's national airlines market. Though, the airline facing severe financial
crisis for couple of years, and at the commencement of 2012, the price of share fell abruptly (Sinha,
2012)
The carrier had blackout its set-ups and kept off its staffs for quite a lot of days. The company was
suspended as a result of the companys inability to show-cause notice issued by Government. But its
staffs decided to get back to work (Roychoudhury, 2012) The Indian government declared the removal
of both national and global airlines privileges assigned to the carrier (P.R.Sanjai, 2014)
their status falling to a huge devaluation of self-images. Marketers cannot accept this devaluation and
hence extend their despair by trying to carry on their overstated self-images.
Investors must avoid investments in corporations where managements allows self-pride to affect their
performance and this includes public sector companies too.
Government deferred the authorized license of Kingfisher Airlines. It was surprising that a bankrupt
company was permitted to sail for so long, causing unwanted troubles to staffs, investors and
stakeholders of the business. Kingfisher was declared bankrupt a couple of years later. That facilitated
relocation of scarce resources such as labour, airport slots etc. It aided investors to remain withdrawn
from investing hard earned money after bad (Parthasarathy, 2012)
COMPETITORS
Though competition is fierce in Indian Territory, with five carriers fighting one over other. Similarly,
Indigo, Go Air, Spice Jet and Jet Airways as old as Kingfisher but they have restructured their business
strategy with time and have followed their business model. All are low cost carriers but they have no
business class in their aircrafts after so many years of operation. The biggest advantage of low cost
carriers in India is that they have not compromised with quality and safety different from other low cost
carriers around the world.
Though Kingfisher was the favorite carrier for business class travelers it should have remained first
class business passenger carrier with five star services. If it had increased its price by 10%, business
passengers wont mind to pay with their world class service and timely arrival and departure.
Kingfisher believed that mass carrier is best than class carrier but they failed to understand that there
are five different players in aviation market to offer better service at a low cost, it was the only one to
serve the class people and to capitalize upon its strengths and USPs (Anon., 2011)
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AIRCRAFTS
Airplanes are the assets of Airlines Company. Choosing the right aircraft and inducting requires lot of
hard work and decision making skills. Kingfisher began using airbus A-320 and continued using the
same aircraft. The business model of Kingfisher does not have any airplane of its own. All the
airplanes are dry leased. Dry lease means that the owner of the aircraft leases out the planes to a
company for a period of two years without insurance, team, workforce, tools, maintenance etc. in this
case airplanes instead of being fixed assets remains as the working assets and plays a vital role in
cash flow of the company. Kingfishers dues pent up and on the goodwill of United Breweries leased
the aircrafts.
The amount kept increasing and finally the leaser filed lawsuits against Kingfisher all across the world
and enforced to ground many of the aircrafts for nonpayment of dues. Since it does not have any own
aircraft it cannot command any bargaining power over Boeing or Airbus but it can restrain from deceit
of work. Kingfisher operates both Airbus and ATRs. Kingfisher needs two different kinds of staff since it
operates two different kinds of aircrafts if it had depended only on one kind of aircraft it could have
reduced its operational cost. In Kingfisher had decided to enter aviation business for a long term, it
could have purchased aircrafts from Boeing and Airbus. Kingfisher wasted millions of dollars in
acquiring permit for A-380 jumbo aircraft but the government did not allow getting the same in India.
For the carriers which are using A-380 like Emirates and Qatar Airways, they have profits in their
books, insignificant domestic competition, and operates on a large scale unlike Kingfisher all over the
world where competition is high and operation is cost is high (Bhas, 2010)
banks will not pour any capital after a massive loss. The private promoters have to guarantee
to raise further funds.
If some suicidal investors want to pour money in Kingfisher, the airlines could be restructured.
So the guarantors and Board of Directors must rearrange the complete business model before
they approach any investor. They must analyze and study the airlines models and frame the
company in such a manner that investors make money out of it.
The pilot and staff are unpaid for months. Their salary must be compensated with a long term
assurance of job safety. Many pilots have joined other good airlines for the sake of earning.
Kingfishers must cut cost on fleet and reduce further investment in getting A-380. Instead it
should own few flights as fixed assets and slowly get into a permanent business by buying
more number of aircrafts. Initially few aircrafts with minimum number of flights at remote areas
through unofficial routes will help them to curtail cost. So it would reduce operational cost and
slowly could profit marginally.
The government must give subsidy to cash strapped airliner. It can give some tax benefit to
the sinking company, reduce fuel cost for Kingfisher, and reduce their loan burden and rate of
interest so that they can restructure their organization.
Bank must convert the entire debt into equity as a part of investment. Banks must take stern
steps to reduce all luxuries and low cost tickets provided to customers. Instead economy
tickets would be provided with less of luxury facilities and minimum services. If its a business
class trip, then ticket fares must be high with five star services.
CONCLUSION
Considerably the influence of Kingfishers end has been a factor owing to their huge terminations and
unpredictable functioning. All the Kingfisher travelers have moved over to other players and market
assurance in Kingfisher is at the lowest recede. Though, the prices would descent to rational level due
to uninterrupted introduction of new airplane by IndiGo, SpiceJet, GoAir etc and price sensitivity of low
cost model.
Vijay Mallyas over interest to regulate the skies before analyzing its cost and cash flow
consequences. Inappropriately, Kingfishers difficulties increased with descending twist of the aviation
industry due to rising fuel prices. Every private airline in India is going through the same catastrophe,
but Kingfisher fell out of cash earlier.
World-wide air travel industry is going through tough times due to unmatched fuel expense for couple
of years, unstable monetary markets and financial downturn. In India since 2005 large numbers of
airlines were added but most of them deployed in metro cities causing desperate price war. Every
company is suffering from operational damages. In addition the antagonistic industrial situation, the
merging of Air Deccan is the main purpose behind Kingfishers disaster. Considerable liabilities and
repetitive losses of Air Deccan and the fiasco of Kingfisher management in synchronizing and
downsizing the two units is one remarkable issue mostly accountable for the existing Kingfisher
catastrophe.
Closing of Kingfisher resulted in profits and generates development for persisting airlines in India for a
transitory period. Prices would show rising tendency for a short time before settlement. A high price
command in Indian aviation segment owing to the fact that every functioning airline is continually
adding new aeroplane to its fleet and with price sensitivity, there is a danger that higher fares might
drop in number of travellers. So, airfares must remain low.
FDI equal to 49% in planned carriers in India is now in presence excluding that it confines foreign
carriers to capitalize in Indian aviation industry. Even with planned strategy modification of allowing
foreign airlines at the request of Vijay Mallya. In the beginning potential stakeholders will take time to
analyze their choices and start due meticulous practice. Most of the global airlines are going through
same financial situations which are disturbing the Indian airlines sector. Very few carriers have cash
assets and they are assuming careful tactic to combat financial crisis. Any commercial venture will
need investment when the business and its major competitors show profitability which is not the case
with the Indian aviation sector at present.
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The Government of India to escape Kingfisher since private enterprises should prosper or die on their
own competences in the market place. For last few years Kingfisher has been given relief by banks,
fuel companies and airport operatives, but it could not get over its disaster. In 2010, a confederation of
banks accepted an unusual renewal suite for the carrier, which gave them enough chance to
restructure their organization but they misused the cash in backing higher damages. Now the dues
repairing cost, except there is a considerable equity mixture to lessen the amount of dues, any more
mix of money would go into backing extra damages. Kingfisher till date has been unsuccessful to form
feasibility of its actions and supporters denial to deliver their own assurances replicate their own
qualms about the feasibility of the carrier (Vardhan, 2012)
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