KINGFISHER AIRLINES Vijay Mallya is looking at reports of Q3 of 2008 , thinking that can there be any way to at least break

even in this critical time of economic slowdown. Aviation industry is very sensitive industry triggered hard by the recession across the world. Kingfisher reports Rs. 592.96 crore net loss (from exhibit- 1) for the quarter ended 31st December 2008.Indian aviation sector is buckling under rising fuel prices & manpower costs and falling air traffic. Sales stood at Rs 1,447 crore versus Rs 1,353 crore, in line with Jet Airways, which also posted a net loss of Rs 214 crore for the quarter under review because of poor load factors. The company claimed that technically, the financial results for the third quarter cannot be compared with the corresponding quarter because the Vijay Mallya-led Kingfisher was not listed last year and this years result include figures of erstwhile Air Deccan, which Kingfisher took over last year. High fuel and other operating costs coupled with lower load factors contributed to the losses at Kingfisher, an industry observer said. On the operational front, Kingfisher saw corporate traffic being hit during the quarter because of the economic slowdown. Yields and front-end load factor also suffered The full impact of the price reduction in aviation turbine fuel will lower the airlines operating costs, the spokesperson added.

CURRENT PROFILE IATA IT ICAO KFR Callsign KINGFISHER Founded 2002 Hubs Bengaluru International Airport

( Primary Hub) Chhatrapati Shivaji International Airport ( Secondary Hub) Indira Gandhi International Airport ( Secondary Hub) Focus cities Ahmedabad Chennai Hyderabad Kolkata Frequent flyer program King Club Fleet size 75 (+139 Orders, 25Options) Destinations 77 (Including routes servedKingfisher Red) Parent company UB Group Company slogan Fly The Good Times Headquarters Bangalore, India Key people Dr. Vijay Mallya, CMD Mr. Hitesh Patel, EVP Mr. Rajesh Verma, EVP Mr. A. Raghunathan, CFO

HISTORY Kingfisher Airline is a private airline based in Bangalore, India. The airline is owned by Vijay Mallya of United Beverages Group. Kingfisher Airlines started its operations on

May 9, 2005 with a fleet of 4 Airbus A320 aircrafts. The destinations covered by Kingfisher Airlines are Bangalore, Mumbai, Delhi, Goa, Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, Kolkata, Pune, Agartala, Dibrugarh, Mangalore and Jaipur. In a short span of time Kingfisher Airline has carved a niche for itself. The airline offers several unique services to its customers. These include: 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 personalised screens in the aircraft, sleeperette seats with extendable footrests, and three-course gourmet cuisine

CURRENT SCENARIO Kingfisher Airlines currently operates with a brand new fleet of 8 Airbus A320 aircraft, 3 Airbus A319-100 aircraft and 4 ATR-72 aircraft. It was the first airline in India to operate with all new aircrafts. Kingfisher Airlines is also the first Indian airline to order the Airbus A380. It placed orders for 5 A380s, 5 A350-800 aircrafts and 5 Airbus A330-200 aircrafts in a deal valued at over $3 billion on June 15, 2005. With the sign of trouble in aviation industry, Kingfisher airlines and Jet airways (used to be competitors), formed alliance (October, 2008) to significantly rationalize and reduce costs and provide improved standards and a wider choice of air travels options to consumers with immediate effect Kingfisher airline has won global awards at the SKYTRAX World Airline Awards ceremony held recently in Hamburg , Germany(2009). Air France KLM is in talks with Jet Airways and Kingfisher Airline

for having a code-share agreement .The conclusion ofthis agreement could help passengers , especially from smaller cities ,to travel further on the network of these global airline. Kingfisher Airlines has launched Five Star Privileges ,an exclusive program that entitles gueststo avail of great deals at partner establishment around the country.

Kingfisher Airlines captures market share with strong passengers in

February 2009 as per the latest ministry of Civil Aviation data. Kingfisher Airlines has deferred deliveries of some Airbuses (EAD,PA) aircraft, wary of overcapacity as airlines struggles to cut costs to offset high fuel prices and softer demand. The Airline , a unit of alcoholic drinks maker UB Group , has negotiated with Airbus to defer deliveries of32 A320-family aircraft to 2010-2012 from2008/09, Kingfisher, which owns discount carrier Deccan Aviation DECA.BO, has five A380 super jumbos on order , scheduledfor delivery from 2012 , as well as 20 A350 Aircraft scheduled for delivery from 2013. It also has a further 20 A330/200 aircraft on order , making it one of the single largest stakeholders in the Airbus order backlogby number of planes. Indigo ,paramount Mull joining Jet Airways (India) limited and

Kingfisher Airlines Ltd ties up Kingfisher Airlines Ltd plans to sell 25% stake to allow foreign

airlines to invest in domestic carriers, with a cap of just below 26%. Kingfisher AirlinesLtd in talks to lease out two of its Airbus A330 planes to Nigerias Ank Air. Recently, it has announced management change . Air India has rejected the Jet Airways(India) Limited-Kingfisher

Airlines Ltd offer to join their Alliance. Deccan aviation Ltd has changedits name to Kingfisher Airlines Ltd. Private air carrier Kingfisher Airlines has inked an agreement with

Citibank Cards which allows members of its 'King Club' holding the bank's cards redeem their points for flights on Kingfisher Airlines or its partner airlines. King Club is the airline's frequent-flyer programme.

"The association will benefit members of King Club, the frequentflyer programme of Kingfisher Airlines and Citibank cardholders who are King Club members SWOT ANALYSIS KINGFISHERS STRENGTHS Superior product on ground; in the air Jet business class is being equated with Kingfishers economy UB group backing for raising financing Well capitalised airline, prepared to take losses Better handling of employees and staff; less centralised style of functioning Chairman Mallyas grand vision where it is looking to be among the best in the world The Deccan deal which gives it market share, a new market segment and was cheap KINGFISHERS WEAKNESSES Kingfisher is yet to build itself into an organisation; structures yet to fall in place Not as professionally run as Jet; yet to build a professionally competent team Mallyas knowledge of the sector does not parallel Goyals Chairmans people skills are better but employees have to work very erratic hours Unable to leverage connections to the same extent while lobbying Kingfishers loads are lower than Jets, which could be a reflection of its marketing and sales ability

OPPORTUNITIES Under penetrated domestic market International market Untapped air cargo market Expanding tourism industry Fleet size expansion

THREATS Existing Operators Infrastructure issue Fuel price hike

Comparison between KA & other airlines KA **** **** **** **** Air India *** *** *** ** Jet Airways **** **** *** ***

Check-in Counter Flight attendants Seating space Punctuality

PEST ANALYSIS Political Factors

Ecological/Environmental Issues

Current Legislation Future Legislation Regulatory Bodies And Processes Government Policies Government Term And Change Trading Policies International Pressure Groups Economic Home Economy Situation Overseas Economies And Trends General Taxation Issues Seasonality/Weather Issues Interest And Exchange Rates

Social Factors Lifestyle Trends Demographics Consumer Attitudes And Opinions Media Views Law Changes Affecting Social Factors Brand, Company, Technology Image Major Events And Influences Sound Pollution Plane hijacking 9/11 Incident

Technological Factors manufacturing maturity and capacity information and communications technology legislation innovation potential technology access, licensing, patents intellectual property issues modernization of aircrafts modern tehnology like cat3 and ils Economical Factors Overall growth of the company Economic meltdown

Operating cost Capital Airlines acquisition/leasing cost Rising income level

Reduced fare but yet not enough

STATUS OF KINGFISHER AIRLINES (passanger based) Put Graph & chart

MERGERS AND ACQISITIONS

Dec. 2007Low-cost carrier Deccan and Vijay Mallya-led Kingfisher Airlines decided to merge and create a single corporate entity to cut down operational costs and accelerate their journey to profitability. Shares of Deccan Aviation have doubled in a little over a month in anticipation of a reverse merger of Kingfisher Airlines into Deccan Aviation. Details of Deccan-Kingfisher merger, valuations and swap ratio will be worked out byaccountancy firm KPMG. Mallya would be the chairman and CEO of the merged entity, while executive chairman of Deccan, Captain G R Gopinath would be the vice-chairman. STRATEGIC PARTNERS 1.Kingfisher Airlines Inks Strategic Alliance with American Express. Partners launch Indias first Airline Corporate Charge Card Program Fast track Corporate Savings with exclusive Rebates, Discounts, and Employee Rewards with King Club and Bonus Points. 2.Strategic and operational alliance with rival domestic carrier Jet Airways owned by Naresh Goel in 2009

Current strategy of Kingfisher Airlines Following strategies were followed to make it one of the leading Airlines in India. Functional strategies It planned to re-launch its commercial air service called UB Airway again which it had to withdraw it due to government restrictions. The company gave best services to its customers that were like providing world class interiors, and in-flight entertainment systems. The company came up with only one class airlines rather than other airlines that had Business Class; Economy Class the idea was to combine Business Class experiences

and Economy Class experiences in one. Having a single class freed up more leg space for passengers when compared to normal economy class flights. The company started addressing its customers as GUEST rather than passengers. The company made its mark by providing its guests with more legroom and bigger seats so as to provide better comfort. KFA has set its sight to become Indias largest airline both is capacity and in market share.

KFAs Promotional Strategies & Marketing Strategies It came up with a very appealing promotional line Fly the good times and it reflected in the experience the company offered to its passengers. KFA is also launched Kingfisher express in order to tap into the growing LCC segment. Also launched the facility of web check-in, allowing travelers to print their boarding passes viawww.flykingfishe r.com and the introduction of the Roving Agent at the airport. The Roving Agent is like a check-in counter on the move. You no longer need to go to the check-in counter andwait for long. As part of its promotional strategy the marketing team of KFA showcased the airline as the new flying experience. The following initiatives were taken as part of its promotional strategy Advertisements hoardings at airports depicted the stylish interiors of the Fun liners, which conveyed youthful, fun-filled, and world class image. INOX multiplexes in Mumbai publicized KFAs special offers for a month. KFA was the official travel airlines for the cast and crew of Mangal Pandey- the

movie. KFA made use of various fashion shows, celebrity golf matches, New Year parties all to build its Kingfisher brand. The UB groups monthly magazine called Pegasus published information about KFA along with other information related to UB group. KFA launched many attractive offers to promote its sales like the King Card in

association with ICICI Bank, in August 2005. This was meant to create loyal customers for KFA by providing benefits like privileged access to lounges, restaurants, free refreshments at airports, access to 180 golf clubs across India, special invites for lifestyle shows. In October, KFA launched Chill Times Offer in the month of August 2005 and September 2005. In October they launched the King Saver Offer which said Fly like a King, dont play like one. KFA targeted the frequent fliers business traveler segment, which was dominated by Jet Airways. By offering a King Saver Booklet, This booklet contained six free flight tickets and was presented as a free gift if the passenger bought two such booklets each worth Rs. 26,999.Passengers could avail off this offer if they showed there Jet Privilege Member (Gold or Platinum) card. Financial strategies: KFA came up with many new financial strategic moves that made it one of the leaders of

aviation industry the company had adopted following strategies: The company is planning to spend close to Rs 40 crore on various media and below-the-line marketing activities for the year 2009-10 Cut down the salaries of the staff like trainee pilot now drawing Rs20k as compare to Rs2.0lacs. To come over the financial crisis the KFL is considering an option of retrenchment. It purchased brand new A320 aircrafts powered by the cockpit that was a paperless environment. KFA was first Indian carrier to place an order for A380s. Expansion strategy To further its expansion plan KFA put in its bid to buy Sahara in November 2005.How ever negotiation came to a standstill when KFA felt the valuation of Sahara Airlines of around US$750mn to US$1 bn. was too high. KFA has plans to make an Initial Public Offer (IPO) and raise around US$200 mn that would be used for its fleet acquisition and route expansion activities. KFA set up Kingfisher International Inc. (KII), a subsidiary in US for its international operations. KFA plans to operate international routs by end of 2007. But KFA had yet to receive permission from the Indian government. According to Indian government domestic air carriers are not allowed to fly international routes without five year of domestic flying experience. But Mr. Mallya said if he failed to convince the government to change its rules, it would start an airline in a foreign country and fly it to India.

Human Resource Strategies

Prior to launch, KFA signed a non-poaching alliance with Air Deccan under which both the airlines agreed not to hire each others employee. KFAs flight attendants called Flying models were selected through a national level model contest. KFA also stressed the fact that its employees had to be capable enough to meet the airlines high service standards. Mr. Mallya said Kingfisher Airlines Limited has a first class management team not just at top most level but also in the second line. This is part of the UB groups commitment to human resources. Recommended Strategies Should tie up with different state tourism (like Goa, Kerala, Tamil Nadu etc) to promote domestic air traffic. Running online contests to boost traffic Looking at partnering with premium hotels, so that the customers of hotels directly choose Kingfisher airlines for traveling. To minimize the air fuel cost and other operating expenses of aircraft they should purchase new more fuel efficient and advance technology based aircraft.

Code sharing with other airlines. Rescheduling of flights so that they can adjust the load. More tie ups are required like they can also be a part of STAR alliance. At the time of recession making collusions and cartels could be a good idea. In such a scenario it is imperative for any airline to build its brand and have a focused marketing strategy and created a new category of Aviation hospitality thus making service and hospitality as main focus. The company should join hands with certain banks like ICICI, SBI etc. to offer e-

ticketing

Income statement of KFA

Chart

Marketing Strategy and Selecting the Prospect Overview and Learning Objectives This class introduces the marketing strategy successful advisors use:identifying your natural market and penetrating it using a target mar-keting strategy. This class also discusses prospecting methods with anemphasis on referred leads.By reading the text, doing the exercises, and attending class sessions,you should be able to2-1.Describe the four characteristics of a qualified prospect2 -2.Describe the objectives of a marketing strategy2 -3.Define the natural market characteristics of affinity andaccess2-4.Explain the techniques for discovering ones natural markets2-5.Describe the four characteristics of a target market2 -6.Explain the roles of segmenting, targeting, and market research2-7.Describe the three sources of prospects and the prospecting methods for tapping these sources2-8.Describe what to say to get referrals and how to handle objections and concerns2-9.Identify preapproach activities that build prestige

Developing a Marketing Strategy As discussed in the previous class, your success begins with your skills,knowledge, and ideas. That is what clients really buythey buy your products, your solutions, your advice, and the knowledge and service youoffer. Marketing begins with your knowledge of the products and serviceyou are licensed and able to sell effectively. Now we will pursue themore challenging concept of finding the people who will buy.This section defines marketing and your general market. It concludeswith an explanation of the marketing strategy that is discussed in thisclass and throughout the rest of the course. Marketing Marketing Defined Marketing is the planning and implementation of a process dedicated toidentifying specific consumer needs, isolating groups of people who havethose needs, and then producing and customizing the products and servicesthat satisfy those needs. It is the art of planning when, where, why, howand to whom to sell. Successful marketing focuses on the needs of theconsumer and produces a mutually beneficial relationship between a buyer and seller. Marketing versus Selling Because marketing involves planning, muchof marketing does not involve interaction with a buyer for the purpose of making a sale. Many believe that marketing and selling are the same, butin reality selling is a part of marketing. Selling is the end result of successful marketing. It is the transaction resulting from the encounter between buyer and seller, the exchange of the product or service for the buyers cash.

Qualified Prospects Successful marketing focuses on the needs of theconsumer, specifically, consumers who have the means and motive to

Purchase a product. In other words, marketing is about finding qualified prospects people who: Need and value your products and services Can afford to pay for it Qualify for it (if applicable to the product) Can be approached by you on a favorable basis

Need and Value It is not enough for a prospect to need your productsand services; they must want them. It is usually the value portion of thedefinition that disqualifies many suspects. Many marketers fail becausethey confuse need and value. In most cases, the latter is the main reason people buy. For example, why do people buy vacation packages? Dothey really need a vacation to Tahiti? No, they want it. They perceive anintrinsic value of enjoyment and that is why they buy. While most peopledo not want life insurance in the same way they might want a vacation,many do value what it can do for them and that is why they buy it. Afford By afford, we are talking about two things. First, you should becareful selling a product to someone who will have a difficult time paying the premiums over the long haul. While some affordability problems can be solved with a budget, there will be times when a prospects income will make that extremely difficult. Second, theconcept of affordability is relative and is based on what the prospect feelsthey can afford. This ties directly into the relative value prospects placeon what the product can do for them. Even if you find the money in the budget, the prospect may not agree with you. They may truly feel thatother needs are more important. Qualify Unfortunately, there are people who need and want the productsyou provide but cannot qualify for them. An example of the latter is, in thecase of insurance, someone who is uninsurable. What do you do? You willneed to make a business decision about cultivating a relationship. While atfirst glance it might seem pointless, you might be able to help them out inother non-insurance ways and they may be a rich source of referrals. Thisis especially the case if they value your products and services. Remember,though, the relationship should be mutually beneficial. Approachable by You

The last part of the definition is critical. A prospect may have all of the other qualifications, but if you canno

General Market Where do you find prospects? You find them in places called markets .Right now, you may find yourself marketing without a clearly definedstrategy. Many refer to this as a shotgun approach to marketing. Themarket created by this approach is what we call your general or undifferentiated market. Boundaries There are some boundaries in the general market. Specifically, onedefinite boundary is established by where you and the company or companies you represent are licensed to sell. Beyond that, you shouldestablish some geographical boundaries by deciding the areas in whichyou are willing to market and sell. Identify your geographical area bytown names or communities within a metropolitan area, as well as bycounties and zip codes. The reason for using counties and zip codes is tomake sure that you have a territory that can be well enough defined toselect prospect lists from a list service, should you choose to do so. Listscan be used for direct mail, or you may be able to buy a very defined listof people in a market and use it to callthem on the telephone.Additional considerations you mighttake into account before deciding onyour territory would be the timerequired to get from one place to another between appointments, traffic patterns,and whether or not the cost of drivingthere every day is too high. In somecases the cost of parking may also be aconsideration. Advisors who sell for ahome service company may alreadyhave many of these questions answeredfor them by the geographic limits of their agencies

General Markets Necessity Your general market is necessary as long as you have not developed amore focused market that can support your current and future sales goals.What you will find is that marketing and selling only in your generalmarket will require a lot more work and more cold callinga task fewadvisors enjoy. That is why it is better to create a plan and approachmarketing in a strategic fashion.

Marketing Strategy Objectives of a Marketing Strategy We have already defined the goal of the selling/planning processtocreate clients. It would make sense, then, that you want to find a marketof prospects (since they have not bought your product yet). Any effectivemarketing strategy you create should accomplish four things: Create a perpetual qualified prospect machine. Decrease your appointments to sales ratio (efficiency in creatingclients). Decrease contacts made to appointments ratio (decrease theamount of time and energy devoted to prospecting). Focus and specialize to create a higher value for your services. Perpetual Qualified Prospect Machine By perpetual we meancontinuous flow of new prospects with little further intervention, that is,no cold calls. The best way to create such a machine is through referredleads. For example, if each good client gave you two referrals that turnedinto sales with clients like them (that is good clients), your businesswould grow exponentially.While this may not be your exact experience, the point is not thenumber but the concept that one client could result in multiple goodclients through referrals and each of them could result in multiplereferrals creating a perpetual stream of prospects in a manner requiringless time and resulting in more sales for your efforts.One other assumption made here is that people tend to associate withothers who share similar values, characteristics, and needs. If that is true,there is a good chance that the referrals they give you will be people likethem. IMAGE (mrktng strtgy) Lower Appointments to Sales Ratio Your plan or strategy shouldhelp you decrease the number of appointments it takes to generate a sale.The fewer appointments it takes to generate a sale, the better you aredoing in your sales interview, your prospecting and marketing, or both. If your strategy does not improve your ability to convert prospects intoclients, you need to revisit it. Lower Contacts Made to Appointments Ratio

You can also measurea strategys effectiveness by whether or not it is resulting in a lower number of contacts (presumably telephone or face-to-face appointmentsetting) needed to set an appointment. A good strategy will allow you tospend less time prospecting and more time helping your clients. Focus and Specialization If you had to have heart surgery, who wouldyou like to perform the surgery, a heart surgeon or a general surgeon? Inthe same way, a prospect will feel more comfortable with your services if they know you have done work with others who are like them, namelytheir peers and friends.A good marketing strategy will help you focus on a market or a fewrelated markets for which you can become the insurance or financialservices expert. By creating a marketing focus, you will be able to createa reputation that will precede you, which will greatly enhance your referability. Obviously, you will want to make sure the market youfocus on will be profitable (remember, mutually beneficial). This willhave a direct impact on your ability to see more qualified prospects andthus create more clients. It will not happen overnight and it certainly willnot happen if you do not have a plan or do not implement it

A Marketing Strategy
Successful advisors have used different strategies to attain success. Wewill look at two of them in detail. While the strategies are presentedworking together, it is possible to work them as two separate strategiesand even combine them with other strategies you are using.The first strategy is selling in your natural market. By natural market, we mean approaching those with whom you have a natural affinity or to whom you have natural access . These individuals aregenerally familiar to you and usually involve people you knew when youentered the financial services business. Natural markets are a rich sourceof prospects and referrals because you are working with people whoeither already trust you or with whom you can easily build rapport.The second strategy is to target groups of prospects that havecommon needs, common characteristics, and a communication network in which they share information. These groups should be small enoughthat they are distinguishable but large enough that you will not run out of prospects. We call this approach target marketing

.We combine these strategies to help you focus first on those targetmarkets where you already know someone who may act as a center of influence a person who helps you get your name out in the market youare trying to reach.The steps that will be developed in the next two sections of thischapter and throughout the course are:1 . D e f i n e y o u r t e r r i t o r y a n d t h e p e o p l e a n d b u s i n e s s e s within it.2.Identify your natural market people to whom you have a c c e s s or common interest and ties.3 . I d e n t i f y p o s s i b l e t a r g e t m a r k e t s within your natural market.4.Understand the needs of each m a r k e t a n s w e r e d b y y o u r p r o d u c t and services.5 . I d e n t i f y a n d approach individuals in each market based on t h e i r needs.6 . O b t a i n r e f e r r a l s . By obtaining referrals, you implement the strategy that creates the perpetual prospecting machine. The more qualified prospects you obtainthrough referrals, the less cold-calling you will have to do. In general,your sales ratios will improvemore sales from fewer appointments, andmore appointments from fewer calls. A target market, by definition, callsfor specialization. Working with people with similar situations allows

DIFFERNTIATION STRATEGY
KFAs overall strategy was to provide value added air travel services at economical prices KFAs focus was on providing excellent service KFA called its aircrafts Kingfisher Funliners All the aircrafts had in-flight entertainment system and well designed interiors KFA provided more comfort in terms of larger seats with more legroom and adjustable headrests KFA had sophisticated navigational and communication systems in each Funliner and on the ground Specialized meals and beverages were served Kingfisher Airlines is the first carrier in the country to offer live in-flight entertainment. Kingfisher Airlines Ltd and Dish TV have joined hands to provide live in-flight entertainment on Kingfisher aircraft. The service would enable airlines customers to book air travel ticket after securing ngpay application on their GPRS-enabled mobile handsets.

 On the promotional front, Kingfisher has signed up the latest diva of Bollywood Ms.Deepika Padukone as the Brand Ambassador. Ambush advertising as shown in the strategic placement of own advertisement hoardings vis-vis those of Jet Airways, as shown in the picture below.

PROMOTIONAL STRATEGY

Advertisements hoardings at airports depicted the stylish interiors of the Funliners, which conveyed youthful, fun- filled, and world class image. INOX multiplexes in Mumbai publicized KFAs special offers for a month. KFA was the official travel airlines for the cast and crew of Mangal Pandey- the movie. KFA made use of various fashion shows, celebrity golf matches, New Year parties all to build its Kingfisher brand. The UB groups monthly magazine called Pegasus published information about KFA along with other information related to UB group. KFA launched many attractive offers to promote its sales like the King Card in association with ICICI Bank, in August 2005. In October, KFA launched Chill Time Ofers in the year 2005 In October 2005 they launched the King Saver Offer which said Fly like a King, dont play like one.

KFA targeted the frequent fliers business traveler segment, which was dominated by Jet Airways by offering a King Saver Booklet In November 2005 they launched the Power Flyer Offer targeted who took the same day return flight

KFA targeted specific passenger segment by announcing special fares In December 2005 KFA launched its service King Mobile