Fly the good times
Kingfisher Airlines, India's favourite airline,is India's largest airline operating more than 400 flights a day and has network of 72 destinations, with regional and long-haul international services. Its slogan is " Fly The Good Times" .It is owned by UB Group ( United Breweries) based in Bangalore which is the worlds number three spirits company .Kingfisher is one of six airlines in the world along with Cathay Pacific Airlines , Asiana Airlines , Qatar Airways , Malaysia Airlines and Singapore Airlines to have a five-star rating from Skytrax, a UK based organisation which is the world's leading independent travel forum , it is the most recognized and prestigious award that honours airline Product and Service Quality Excellence.Indian Aviation Industry
India is one of the fastest growing aviation markets in the world, it is presently ranked number nine and is continuously growing at the staggering growth rate of 18 % and have the potential to grow further at a higher rate.
Indian aviation industry took it wings in December 1912 when first flight was operated between Karachi and Delhi , this flight was operated by the Indian air services in collaboration with UK based Imperial Airways as an extension of their London Karachi route .In 1932 , JRD Tata founded TATA airline , the first Indian airline . In 1948 TATA airline in collaboration with the government founded Air India.
The adaptation of open sky policy in 1990 made the industry undergo rapid and dramatic transformation , it allowed the foreign airlines of any country to operate and it also helped private companies to start off their operations in India.
Major key players in Indian aviation industry are Kingfisher Airlines , Jet airways , Air India , Spice Jet , Indigo Airlines etc.History
Kingfisher airlines started its operations on 9 May 2005 with four leased airbus A-320 aircrafts with its inaugural flight from Mumbai to Delhi , at the time the chairman Dr Vijay Mallya said that he is "committed to achieving the ambition of making Kingfisher Airlines India's largest private airline both in capacity and market share by 2010." he did proved it in the year 2009 itself .In the quarter ending Apr - Jun 2009, Kingfisher Airlines carried more than a million passengers in and across India , giving them the highest market share amongst airlines in India. It mergered with Air Deccan in December'2007 and renamed it as Kingfisher Red, Kingfisher Airlines low cost model in India.Destinations
Kingfisher Airlines presently serves 65 domestic and 7 international destinations in countries acrossAsia,Gulf andEurope.
Domestic Destinations include Major Cities like Delhi, Mumbai, Bangalore, Chennai, Calcutta, Hyderabad, Goa, Srinagar, Jaipur to name a few .
International Destinations Include London, Dubai, Hong Kong, Singapore, Dhaka, Colombo and Bangkok.Fleet Size
Kingfisher Airlines' fleet currently consists of ATR 42 , ATR 72 And Airbus A - 320 Family of Aircrafts for their domestic and short haul international flights and they use Airbus A 330-200 aircrafts for their long haul international flights. Presently there are 69 aircrafts in operation and the orders for another 34 aircrafts have been placed and are due for delivery in couple of years .The average age of the aircrafts in kingfisher airlines as on July 2009 was 2.9 years.
Current International Operations Management Strategy of Kingfisher Airlines.
In international operational management the main motive of the organisation is to manage its operations efficiently and effectively i.e. making best use of all the resources available to them and providing customers with the high value products and services.
As we all know money is the key driving force in aviation industry due to its huge set up cost and current fuel prices being at all time high so managing the airlines operations in a very efficient way is imperative to achieve low operating costs, keeping in mind the quality of service people perceive for the airlines.
Kingfisher's operational strategy is surrounded by the company's vision and valuesOur Vision
"The Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all our guests."Our Values Safety
This is our overriding value. In our line of business, there is no compromise.Service
We are all in the hospitality business; we must always seek to serve our guests and gain their trust, goodwill and loyalty.Happiness
We seek to build an organisation with people who choose to be happy, and will endeavour to influence our guests and co-workers to be happy too.Teamwork
We will succeed or fail as a team. Each one of us must respect our colleagues regardless of their rank, and we must work together to ensure our mutual success.Accountability
Each one of us will be held accountable for the successful execution of our duties, commitments and obligations, and we will strive to lead by example
The Transformational Model For Kingfisher AirlinesInputs
- Materials - It's the aircrafts that Kingfisher operates for its operations
- Information - Continuous Research and Surveys of the destinations where people want to fly
- Customers - It's the passengers who will get on the aircraft
- Facilities - Its the airport from where the passengers embark and disembark from the aircraft
- Consumables - It's the synergies between the operations and engineering and guest services department
- People - They are the most important factor while delivering the whole experience. It includes Pilots, cabin crew, ground staff, engineers etc.
They all go through the transformational processOutputs
- Goods and services – It's the stage when you reach your final destination. It's the Overall experience of getting into the departure airport, then flying and then exiting the arrival area of the arrival airport.
Kingfisher terms its input as the number of seats available per aircraft and the output is the number of passengers flown on that aircraft.
Kingfisher presently flies to seven international destinations in countries acrossAsiaandEurope.
Kingfisher Airlines had adopted strategy of mergers and acquisitions and strategic alliances with different airlines companies both in the local and foreign markets to enter the global aviation market and then expand their international operations.
Kingfisher airlines started its operations on 9 may 2005 and wanted to fly overseas in 2008, as they were fairly new to the aviation market and Indian civil aviation ministry has a rule that no Indian carrier can get a license to fly abroad till the time they complete there five years in Indian skies, this prompted kingfisher to look for potential carriers who were near to there five years of completion with whom they could merge with and start their international operations. Finally there zeroed in on Air Deccan, a low cost carrier in India who were completing there five years of operations in August 2008 and kingfisher merged with them on 20 December 2007 and acquired 46 percent stake in Deccan aviation.
It was decided that the merged entity will b called as kingfisher airlines and the swap ratio was fixed at 7: 3, that meant the shareholders in UB group promoted kingfisher airlines will receive three shares of deccan aviation for every seven shares they held. The merger not only gave kingfisher airlines the licence to fly abroad but also gave them an opportunity to synergize the operations of both the companies in aircraft utilization and maintenance as both use Airbus and ATR's, cabin and cockpit crew , routes were rationalised , slots utilisation improved passengers got better connectivity as kingfisher flew to main metros and deccan was serving small cities . Air deccan has been renamed as kingfisher red which flies as a low cost model for kingfisher airlines.
Last year kingfisher had a very important strategic alliance with jet airways one of their main competitors in India. , this alliance had a major influence on the market share in the Indian aviation market as the share went on to nearly 58% , the major reason behind was the alliance was to help them reduce cost and increase efficiency .
The alliance involved code sharing agreements on each others flight on both domestic and international sectors joint fuel management, common ground handling staff and equipments, an interline agreement, cross selling each others flight through a global ticketing system, the alliance also enhanced the crew usage as both cabin and cockpit crew of similar air types could be used and they all could use the common training facilities and all the passengers could use the any of the frequent flying programmes of the two airline.
One of the major international strategies that kingfisher uses is of partnerships with various major brands of the world in various sectors namely airlines, credit cards, car rentals, hotels, publishing etc through their frequent flying program called king club .
It is India most rewarding frequent flying program in collaboration with premium partners such as:
These ties up with the big names in this aviation market gave them a big boost as it enhanced their brand image as well. Passengers were getting far more benefits after these tie up such as they got option to use their frequent flying mileage added on to the card of their choice on any one of the above mentioned airlines. They could use there free tickets earned through mileage on any of the partner airlines .They could use the facilities such as airport lounges of any of the stated airlines
The alliance with the credit card companies was an important move for kingfisher as earlier many people used to make there purchases from credit cards only in retail sector and now it also gave them an option to purchase tickets directly form the airlines and also use it as a frequent flying card and get the advantages of the card according to there tier benefits, such as redemption and upgrades.
These ties up with the rest of the car rentals, hotel and publishing companies gave them an edge as passengers could actually gain points on every transaction they were doing with these companies and all the points were getting accumulated under one card and hence giving them loads of benefits in a very short span of time.
Then came there sporting alliances which took them too new heights they tied up with Toyota Panasonic to create a Formula 1 team called Force India. They entered this collaboration as Formula 1 is one of the most popular and most viewed sports in the world and gave them a huge worldwide viewer ship and then came the biggest of them all when they bought a Indian premier league (Cricket) called Royal Challengers and was immensely promoted all over the world, both these mega sporting games, gave them a instant worldwide exposure.
This strategic alliance with different global brands not only put them on a global map but also increases their brand image and reputation in the mindset of the travellers.
Kingfisher airlines outsource there ground operations in their bases outside India they only have 4 to 5 direct employees in every country where they operate that include station manager, guest services manager, guest services supervisor, marketing and sales manager rest all are outsourced from the ground handling company, they take care of the check in, engineering and rest of the airport operations.
There ground handling company in London is (CGSL) Cobalt Ground Solutions Limited (a merger between Air France Services Limited AFSL and KLM Ground services KGS), in Singapore they are handled by (AAT) Asia Airfreight Terminal and in Hong Kong by (JASL) Jardine Airport Services Limited .Future of kingfisher airlines
Kingfisher airlines have major international expansion plans and their current international strategy seems to be feasible but to remain sustainable they have to continuously innovate and improvise.
Airlines also plans to raise nearly 600 Million dollars out of which 400 million dollars will be raised through private equity , another 100 million through right issue and rest 100 million dollars by global depository receipts (GDR), by march next year .
To accommodate this huge future international expansion kingfisher plans to add more wings they have placed orders for new aircrafts to airbus for the international and domestic use
To strengthen its current international operations strategy of mergers and acquisitions kingfisher needs a long term strategic operations planning which will cater to its huge expansion in couple of years that would in particular cater to the Structural decisions making areas such as
- Facilities and infrastructure
Airports is one the most important factor when any airlines consider there international operations. Kingfisher flies international presently from Mumbai, Bangalore and Calcutta airports, but soon they would be flying from Delhi as well which is the biggest international airport in India. Bangalore has recently got brand new airport with excellent facilities and other international airports are being upgraded, a new international terminal (T3) is being built at Delhi Indira Gandhi International Airport and Mumbai Chattarpati Shivaji International Airport .
The capacity is measured in terms of the number of seats on the aircraft and the capacity of the airports to handle the passengers . kingfishers presently flies with 30 first class and 187 economy seats on their A 330 on their long hauls flights, according to the present ATF (aviation turbine fuel) prices kingfisher break even when they have load factor of 70 percent . They calculate their revenues and seating capacity with the following ratios
- Revenue passenger mile =
- Revenue per available seat mile =
- Available seat mile =
(No. of revenue paying passengers) X (No. of miles flown during the period)
(No. of seats available)
(No.of seats available for passengers) X (No. of miles flown during the period)
The capacity of the international airports are also continuously being increased to meet the growing demand of international passengers , a new international terminal building is being made in Delhi international airport that will be functional in three months time it will be able to handle 60 million passengers per annum (mppa), to the current capacity of 25 million.
Kingfisher have reengineered there operational strategy by introducing a world class IT application to give them an edge and optimize their operations and it was done by shaking hands with Sabre airlines solutions which is a global airlines software and services company . Its main aim was to provide more than 20 enterprise applications such as passenger reservations, pricing, ticketing and check in software's to increase their operational efficiency. They also signed a direct connect availability agreement with sabre which enables kingfisher to market and sell its products through all sabre connected terminals worldwide
They use Roving agents as well for check in, when its busy they there ground staff personnel holding PDA's and a small printer. They approach these passengers waiting in the queue and they check them in and issuing boarding cards there and then they can drop off their bags at the special counter without any need to stand in the queue. It's the first time this kind of mobile check in services are being provided in India .
Even the new aircrafts they have ordered are all equipped with latest technology with all the innovative safety features plus they are fuel efficient and create less pollution than the traditional aircrafts.
Very important from the point of view of an airline that it has the most appropriate supply chain networks, those facilitate their overall operations. Timing is the key in aviation and all the supply chain partners' work in tandem to keep the aircrafts on time and thus helping airlines to maintain the OTP (On Time Performance).
Some of the departments are in house like engineering , operations , cabin appearance , dispatch , guest services , cargo and security , few of them are outsourced like catering , refuelling etc.
It is imperative and the second most costly resource after aircrafts that the airlines spend money on. It includes recruiting and training Captains, pilots, engineers, cabin crew, ground staff, ground handlers etc.
Kingfisher spends a lot of revenue to upkeep these valuable resources , the expatriate captains cost a lot of money so now they are training more and more pilots so that they can reduce the cost for this they have opened there own training academies.
Staff well being have always been the prime agenda for kingfisher airlines and it even reflects in their vision and values .
They are best in the Indian aviation industry and have received several awards for their service quality and are also rated as a 5 star airline by skytrax as mentioned earlier , this is all because of the world class cabin crew , captains , ground personnel which speaks a lot about ther human resource policies .
A comprehensive competitive advantage needs to be maintained as the airlines operates in a highly competitive industry and the following porters five forces model will helps them analysing their position in the market and position themselves accordingly .
Porters five forces Model
- Bargaining Power Of Suppliers –
- Bargaining powers of customers –
- Threat of new entrants –
- Threat of substitutes –
- Competitive rivalry within the industry -
In this Case the Bargaining power of suppliers is quite low, as there are mainly three suppliers in aviation industry namely Airbus,Boeing and ATR. Kingfisher places all there orders to airbus and are they have a strong relationship with them. Switching to a new supplier would mean a very high maintenance cost for another type of planes and training the cockpit an cabin crew another time and money consuming act .
The bargaining power of customers is quite high as it's a highly competitive market and with so many airlines flying to the same destination it gives the passengers the choice to choose the airline and hence all airlines generally charges minimum of fare in accordance to their competitor 's price to fill their aircrafts .
The aviation industry as a whole is highly competitive and there are chances that few airlines that may just fly domestic may also soon start flying international, governments can change their sky policies at any given time and can ease the norms for domestic players to fly abroad. Otherwise a typical new entrant is quite hard top get into as the aviation industry is also suffering huge losses and the cost of entering this industry is substantial.
The threat of substitutes is negligible as you can either travel by air, road or water. A customer flying domestic may still get a chance to get on the road or a small trip down in cruise to go to a nearby place but not on international scenario it's more time consuming and unrealistic.
It operates in a highly competitive environment thus resulting in very low returns as the cost of competition is so high , the main competitors for kingfisher is virgin Atlantic , British airways , jet airways , emirates and Singapore airlines .
Challenges that kingfisher is currently facing and will face in future
- Rising ATF costs
- Carbon Footprints
- Government Policies and other regulatory
Rising price of Air Turbine Fuel (ATF) is one major concerns for all the airlines worldwide , presently its costs around 76$ per barrel and experts are saying it will go upto 100 $ per barrel in couple of months as crude oil prices are increasing again , but this is still better as last august 2008 the ATF was costing them 150 $ per barrel , it was the common cause for all the airlines to file losses and infact many airlines went bankrupt. These high fuel costs triggers all airlines to increase the fares thus resulting in less people travelling and hence loss of revenue.
The amount of CO2 emissions from the aviation sector is rapidly increasing and currently is growing around 3 – 4 % per year. Hence more modern fuel efficient and less CO2 emitting aircrafts are the need of the hour.
These days airlines worldwide are pledging to reduce the carbon emissions by 50% by 2050 that will be compared with 2005 levels and also to make the industry growth carbon neutral by 2020.Hence kingfisher airlines while placing orders for there future aircrafts have kept all these points in mind.
We can calculate are carbon footprints per flight by clicking on the following link
It is a constant threat from the government bodies as they can come up with new open sky policies allowing more competition and more flights to be operated and also from other regulatory as they can come up with a new regulation and norms regarding flying conditions , labour laws that can cause a industrial unrest resulting in strikes .Conclusion
Thus we see that Kingfisher's international operations strategy is based on mergers and acquisitions and how closely they monitor there structural based decisions areas as discussed above to optimize their operations.
They have massive ties and partnerships with global brands all over the world these strategic alliance with different global brands not only put them on a global map but also increases their brand image and reputation in the mindset of the travellers many folds. Kingfisher airlines have major international expansion plans and their current international strategy seems to be feasible but to remain sustainable they have to continuously innovate and improvise
The future for kingfisher's operations is based on massive expansion they are planning to start next year as soon as they start getting new aircrafts and approvals from the civil aviation ministry, we also highlighted how few factors can affect them and what they can do to minimize them.
Hence we can see that how kingfisher's international operations work and what's the future of this elite airline and why does it has the tag line "Fly the Good Times".
- Kingfisher Airlines Company website www.flykingfisher.com
- UB groups website www.theubgroup.com/.india
- Barnes, D. (2008) Operations Management: An international perspective
- Marketing Management twelfth edition (2007) Philip Kotler, Kevin Lane Keller, Abraham Koshy , Mithileshwar Jha