Kingfisher Airlines Limited Case

Kingfisher Airlines Limited is an airline based in Bangalore, India. It is a major Indian airline operating 218 flights a day and has an extensive network to 37 destinations, with plans for regional and long-haul international services. Its main bases are Bangalore International Airport, Bangalore, Chhatrapati Shivaji International Airport, Mumbai and Indira Gandhi International Airport, Delhi. Kingfisher Airlines, through one of its holding companies United Breweries Group, has acquired 26% stake in the budget airline Air Deccan and has option to buy further of 20% stake from the secondary market. Kingfisher is one of only 6 airlines in the world to have a 5 star rating from Skytrax, along with Asiana Airlines, Malaysia Airlines, Qatar Airways, Singapore Airlines and Cathay Pacific Airways.

3. Situational Analysis

i. Steeple analysis

Sociological

Today’s air traveler is like any other consumer looking for value for money. Disposable incomes are on the rise and the consumer is willing to spend more for quality and brands. Air travel is no more about transporting passengers. It is more about the flying experience. People like travelling in planes. ‘Kingfisher airlines’ has a very good social image. Being a five star airlines, customers want to travel with Kingfisher. Also, the brand charges a premium price that is why only upper Socio Economic Class people prefer Kingfisher airlines. The lifestyle of the people is improving. Luxury is becoming necessary. They are ready to pay more for luxury services. Kingfisher has a strong advantage here. So, we can conclude that sociological conditions are favouring Kingfisher airlines.

Technological

People are becoming more and more tech-savvy. Kingfisher does provide a TV at the back of the seat. That means every commuter has his own TV. Apart from that, Kingfisher also has facilities such as e-booking. Now, commuters can even book the tickets by mobiles. So, it can be stated that Kingfisher’s image and sales are driven by technology too.

Economic

Figures indicate that purchasing power of Indians is increasing. People look for more options now, even luxury goods. Bank Credit is easily available in case of travelling. Economic slowdown is one of the major factor which is affecting the sales of aviation industry. In INDIA there is a mixed economy so private organization easily perform their tasks within any given economic system of course, organization are influenced by a variety of economic features over which they have little independent control, such as inflation, interest rates and recession Another important input to the enterprise is the nature of government fiscal and policies.

Ecological

One important factor is that how natural factor affects the aviation industry as whole. The most important factor is the stability of the weather. The timings of the flight are highly affected by shifts in weather. Also, it can be noticed that a highly unstable weather is directly proportional to the added costs to the company. For example, if there is a delay in the flight, the company has to provide facility for accommodations of commuters. In India, weather is quite stable in most of the time during the year. Thus, aviation is a profitable business in India, if we consider ecological factor.

Political

The political environment is stable. In India, government changes after 5 years. Also, it is a democratic country. Kingfisher has an added advantage over here that the owner of Kingfisher, Vijay Mallya has very good political network. That means even political environment favours Kingfisher airlines.

Legal

Aviation fuel prices in India are regulated by government. So the competition for price becomes quite still. All the companies in the industry have to pay the same amount for fuel. Now companies can increase or decrease the prices depending on the services they provide. A premium service provider, of course, would charge the prices for its services.

Ethical

Indians are highly ethical people. They always make a trade off between what is right and what is wrong before they make any purchase decision. For example, if a company says that 50% of their contributions will go for the charity, then Indians are more likely to buy products or services of that company. Kingfisher airline gives value for the money. It is India’s only five star airline service provider. Hence, considered ethical.

ii. SWOT analysis

Strengths:

• Kingfisher Airlines have targeted the Indian domestic luxury segment, therefore operating in a niche market.

• Kingfisher Airlines has a strong financial support from the parent company UB Group and “Kingfisher” itself is a well established brand.

• The customer service provided on Kingfisher is extremely exceptional for a domestic airline, hence providing an ultimate flying experience.

• Kingfisher Airlines is well known for its highly trained and attractive staff.

Weakness:

• The company has a immature organisational structure and lacks mature management practices.

• The company is unable to generate expected returns on the investments done.

• Loads are lesser than that of its competitor Jet Airways which is a reflection of its marketing and sales capabilities.

• The main weakness of the company is the overspending of funds.

Opportunities:

• The Indian aviation industry is a growing industry with a growth rate of nearly 24%.

• There are a large number of domestic untapped routes.

• There has being a growth in the disposable income of the people especially in the middle class, therefore more people can afford to fly by a luxury airline.

• The air cargo market is still untapped.

Threats:

• Fierce competition from other airlines such as Jet Airways

• Cost cutting is become a prime need in the aviation industry, hence pressurising a lot of airline companies

• Infrastructure constraints the major rises in fuel prices

iii. Porter’s analysis

Porter’s 5 Forces for Kingfisher Airlines

Threats from competitors:

The level of threat from the domestic competitors is very high. Competitors like Jet Airways, Indian are some of the old well established players in the market which prove to be strong competitors for the emerging Kingfisher Airlines

Threats from new entrants:

The level of threat from new entrants is quite low such as Virgin Atlantic, Qantas. The major players in the Indian aviation industry form an obstacle to foreign airlines and moreover Indian flyers prefer to have an Indian experience on the flight.

Threats of substitutes:

The introduction of high speed trains, high tech buses and other means of transport has given more options to people to travel. Aviation in India is booming and with the entry of several new players in the market competition has stiffened. In such a scenario it is imperative for any airline to build its brand and have a focused marketing strategy in place

Bargaining power of suppliers:

The bargaining power of suppliers is medium. For example, Airbus and Boeing are the major aircraft manufacturers and there aren’t many aircraft manufacturers other than these two, this confines Kingfisher’s options therefore the bargaining power of Airbus or Boeing increases. In case of other suppliers such as caters the bargaining power of the suppliers is low therefore Kingfisher has many other options of caters to contract to.

Bargaining power of customers:

The bargaining power of the customers is low since kingfisher is designed to meet the total comfort and value for money; therefore customers aren’t reluctant to pay a little more sum to gain this experience.

iv. Customer Analysis

Kingfisher Airlines has a clearly defined target audience- SEC A, SEC B+ (socio-economic class) in the age group of 25-45 years of age. This segment has traveled extensively and is aware of international travel trends. They are modern, trendy and upwardly mobile looking for a great flying experience.
Kingfisher Airlines offers brand new aircraft, designer interiors, gourmet cuisine and in flight-entertainment (there are five channels of FUN TV and 10 channels of Kingfisher Radio, which are personalized). Today, the air traveler not only wants to commute faster but also be entertained
Kingfisher Airlines has a very well rounded marketing strategy in place. They apply a 360-degree approach towards marketing. They communicate with guests at multiple touch points. The idea is to create brand recall and get the message across effectively. Given this they use all media of communication be it television, print, radio, outdoor, malls, multiplexes, clubs, pubs, in-flight etc. Our guests are constantly informed of our new offers.

Kingfisher Airlines operates in the full service true value category and in that sense is not targeting the same consumer as the LCCs. Given that there is little reason for them to worry as in their category they offer the best service and have become the most preferred and favorite of our target audience.

Kingfisher Airlines won the Skywars Most Preferred Airlines Survey conducted by IMB across categories of consumers as well as the CAPA and Skytrax awards.

With our 360-approach Kingfisher finds it pretty easy to connect with their consumers both in-flight and on-ground. Their loyalty program/frequent flyer program better known as the King Club uses DM and CRM to keep all our King Club members constantly updated on the ongoing and upcoming offers apart from the day to day developments at Kingfisher Airlines.

They have over 100,000 members in their program and offer specialized offers to specific profiles among them depending on their interests. In the past, they have offered tickets to theatre screenings, fashion shows, sports screenings etc.

v. Competition Analysis

|Attributes |Kingfisher Airlines |Jet Airways |Indian |Spice Jet |
|Price |25% higher than Jet Airways|Lower than Kingfisher |Lower than Jet Airways |Extremely low |
| |and Indian |Airlines | | |
|Permission to fly to US |It has |It has |NA |NA |
|Permission to fly to UK |It hasn’t |It has |NA |NA |
|IPO |Floated |Floated |Not yet |Not yet |
|EMI scheme |It doesn’t |It doesn’t |It has |It doesn’t |
|Targeted Customers |Both ends of customers |Both ends of customers |Lower end of customers |Lower end of customers |
|Positioning |Premium segment |Two-class, full-service |Low fares |Lowest fares and no frills |
| | |airline that will further | | |
| | |leverage its domestic and | | |
| | |international reach | | |

Kingfisher’s only strong obstacle proves to be Jet Airways, since Jet has control on both ends of the market and secondly it has penetrated into the international market as well. Benchmarking against Jet Airways, Kingfisher Airlines has acquired Air Deccan

which was one of the most profitable low cost airlines, hence kingfisher too has entered in the lower end of the market but bearing in mind that they haven’t changed the name “Deccan” to “Kingfisher Airlines” so that the brand doesn’t lower. Kingfisher is still testing the lower end of the market with Deccan. Kingfisher is also going to start non-stop flights to US so as to foray into the international market.
New players into the market
Name |Magic Air |Go Airlines |Indus Airways |Inter Globe |Air One |Crystal Air |Paramount Air |Visa Air |East West Airlines | |Type |No frills domestic airlines |Low Cost |Value carrier |Low Cost |Regional |Regional |Regional |Low Cost |Value carrier | |Kingfisher’s strategy to take on Major competitor, Jet Airways:

Kigfisher Airlines, positioning itself as a budget airline has announced fares for the Bangalore-Mumbai sector, which are 35 per cent lower than those of Indian Airlines and Jet Airways but lower than those offered by Air Deccan.
However, unlike Air Deccan, which is purely a low-frills airline, Kingfisher promises frills like in-flight entertainment with television sets for individual seats and professional models as flight attendants
The new fares may start a fare war among the domestic airlines, will be about 40 per cent lower than Kingfisher Airlines' competitors in the Bangalore-Delhi sector. The airline will operate on this sector from next month. Kingfisher's lowest fare is Rs3,900 for the Bangalore-Mumbai sector, with the next highest being Rs4,900 and the highest at Rs5,900.
About 30 per cent of the seats will be reserved for the first and the second set of fares and the rest for the highest priced fares. On the Bangalore-Delhi sector, Kingfisher Airlines has priced the first slab at Rs6,900, the next at Rs8,900 and the highest at Rs10,900.

Strategies:

Segmentation:

Customers are segmented into classes of status conscious air traveler, SEC † upper middle, HHI 25K+, Wired, Professional. Kingfisher Airlines has a clearly defined target audience- SEC A, SEC B+ (socio-economic class) in the age group of 25-45 years of age. This segment has traveled extensively and is aware of international travel trends. They are modern, trendy and upwardly mobile looking for a great flying experience.

Targeting:

The main target is executives and their family. They have targeted on passengers who are not really economy conscious but seeking an airline commensurate with their standing/status, who love to be pampered, are price insensitive, seek a pleasurable in-flight ambience and experience.

Position:

The airline is deliberately positioned as “A never before experience” and “Funliner”.

Differentiation:

The plane has only one class. There are no male pursers. Kingfisher has brand new A320. It provides personalised video screens with 5 channels and 10 kingfisher radio channels

7 P’s (with consumer analysis/consumer behavior)

Product:

Kingfisher Airlines provide a

Price:

Value

Promotion:

Print, outdoor, electrical, virtual

Place:

Online, Home delivery in Mumbai/Delhi, Agents

People:

Kingfisher has launched is the facility of web check-in, allowing travelers to print their boarding passes via www.flykingfisher.com.

Process:

Recently, the airline introduced two initiatives to enhance guest convenience. First of these is the introduction of the Roving Agent at the airport. Rather than waiting at the check-in counter to collect their boarding pass, travelers can directly approach the security check-in counters. Deployed outside the security check-in area will be airline’s Roving Agent, who will reach out to guests and check them in using a mobile digital device and printer. The Roving Agent is like a check-in counter on the move. Customer no longer needs to go to the check-in counter; Kingfisher has ensured that the check-in counter comes to the customer. So customer will be serviced on priority if he is a guest with only hand baggage. Kingfisher Airlines constantly innovate when it comes to providing added convenience to guests. And when customers say they want to enjoy the Good Times with airlines, Kingfisher does everything possible to ensure that.

Physical evidence:

Ansoff for Kingfisher Airlines

Market penetration

• Encouraging existing Customer to buy more Showing benefits for using more associating freebies/extra service/membership with primary offering.
• Try to look for foreign entrant’s weakness such as Virgin Atlantic which lacks in Indian values & tastes.
Product development

• Seek additional distribution channels such as more tie ups & collaboration, try seeking collaboration with international carriers, bilateral discussions over seats and code-sharing between the carriers.
• New product development.
Market development

• Try to find out new customer group such as Old-retired persons.
• Special offering for first time fliers
Diversification

• May go for other services like international flights (concentric diversification).
• May go for arrangement fashion shows (horizontal diversification).