This is a business ethics case analysis on “Kingfisher Airlines” narrated by Abhay K Ojha. The case analysis revolves around the effect on the various stakeholders due to 35 cancellations made by the Airlines on one day in November 2011. The case analyzes the various facts and situation given in the case to decipher the moral of decision-making using the seven steps Process Model.

What is the moral Issue and Key Choice to be made
• Moral Issue
The Integrity of a well-known luxury airline called Kingfisher was at stake when the company cancelled a number of its flights on a single day. The Chairman/owner Vijay Mallay of the company in a press conference addressed the media by lying to the employees, customers and the government that the cancellations were planned for a short period and did not anticipate the issue. One of the top officials blamed the cancellations due to sudden resignation of the pilots, which was also a lie as the company, had been facing financial crisis for some time and were not paying their employees. The airline industry was unable to pay employee salaries for some time which is unethical and lack of discipline. This attributed to resignations from the staff including pilots for some time and was not sudden as claimed by the company executives.
Instead of addressing the harm caused by the situation and creating a sense of responsibility, the owners tried to blame it to other facts. A moral dimension is to address the harm, which creates a sense of responsibility to the decision maker.

• Causes of the Issue
Kingfisher airlines like any other airline industry were facing financial problems in 2011 due to global downturn as well as rise in fuel prices. Due to the high demand and attractive incentives like cheap leases in airplanes, lower fixed cost there were a number of new entrants into airlines business. Vijay Mallya also choose the airline industry to make profits, but did not realize that it was easy to enter due to low entry barriers but was difficult to come out due to very high exit barriers and even more difficult to make profit.
The airline industry in India faced losses and challenges owing to government regulation to run on financially unattractive routes. Kingfisher had to compete with other airlines especially the government owned Air India to match the cutthroat fares, high fuel prices and high taxes.
Due to the heavy cancellations on one day the loyal customers preferred other airlines over Kingfisher and this attributed to poor seat factor which let to losses, on an average the operative expenses exceeded the operating revenues by about 20%.
Its passengers know kingfisher airlines for their top of the class service and star treatment. Most of their loyal customers choose the airline for the brand name. To compete with the cheap airlines and attract large passengers Kingfisher acquired the cheaper airline Air Deccan without performing a thorough analysis of the merger. Air Deccan was acquired by Kingfisher and was given the name Kingfisher red to attract passengers who preferred cheap rates and flights in operating in non-primary routes. But Kingfisher failed to recognize that their long-term loyal elite customers choose the airlines for their top of the line service and name brand. In spite of all the expansion the company was never able to make much profit. They lacked focus and should have stuck to one model full Carrie vs. low cost.

Facts of the Situation

Kingfisher once a leading top of the class airline industry in India is facing financial stress and has broken the trust of its stakeholders. To meets its operational expenses they have cancelled flights, downsized operations and have stopped paying employee wages. The pilots of the company have declared a strike.

The Director General of aviation was kept in the dark about the flight cancellations until it blew out of bounds.

The taxes and fees to various agencies like government, suppliers and bankers have mounted and have not been credited. Due to mismanagement the company has piled up losses and is having trouble managing its working capital.

The trust in the airlines from their loyal customers is in danger. The reputation of the airlines is becoming questionable.

To attract the low fare segment customers, Kingfisher brand originally known as a star services provider airline, bought low cost airline Air Deccan and renamed it to Kingfisher Red. The name change was a big mistake as the original customers who preferred Kingfisher airlines for its high class believed there was not much difference in the 2 airlines.

Who are the main players in the Case?

Primary Stakeholders: Interests and Power they have on the airlines.

1. Owners of Kingfisher airlines – Main interest to make profit and have the power to steer the company to success.
2. Employees of Kingfisher Airlines – Employees are the backbone of any business; interest is to receive compensation and benefits on time. Employees contribute to the success or failure of the company. Employees do not respect the company when they are not compensated for their work. They do have a sense of responsibility to their families and Kingfisher not paying them intensifies company losing their skilled workforce.
3. Customers - Consistent, reliable, they do not want to see reduction in service. Success to directly attribute to the company’s success.
4. Suppliers – The lenders interest is in a company’s successful business model so that the company buys more from them. With Kingfisher’s financial crisis they have released statements to cut down on fleet and cancel further orders. They would prefer to have a payment plan submitted for unsettled payments.