Kingfisher Airlines, an Indian private airline group set up in 2003, managed to rapidly grow into the biggest player in the Indian domestic airlines market within just five years from its establishment. However, the carrier did not enjoy its prime market position for long, as financial mismanagement and frequent strategy changes led to its sad demise.
Features and benefits
- This case study analyses the Indian aviation sector, its opportunities and threats.
- This case study analyses the competitive landscape, including major players and their revenues.
- This case study analyses Kingfisher Airlines and the failure of its inconsistent strategy.
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Passenger traffic in India is expanding rapidly and the country is currently ranked fourth globally in terms of domestic passenger volumes. Increases in per-capita income and the introduction of low cost airlines have contributed towards this rapid expansion. Further growth is however dependent on an expected increase in per capita GDP.
Despite fast increasing passenger volumes, the Indian aviation industry recorded a noticeable loss in 2013. The industry is facing great infrastructural issues associated with the need for large investment outlay, high taxes and airport charges and these factors combined make India one of the costliest places in the world to run a fleet of planes.
After a modest start, Kingfisher managed to quickly build strong brand reputation and high visibility, by becoming the first ever player in the Indian aviation sector, to operate in the lucrative niche of premium domestic flights. By 2009, Kingfisher was the largest passenger carrier in the country.
Your key questions answered
- How big is the Indian aviation sector and how fast is it growing? What are the main growth drivers?
- Why are most of the players struggling with falling income? Why is India one of the costliest places to run a fleet of planes?
- How has liberalization changed the competitive landscape of the Indian aviation sector? Who are the main players of the Indian aviation sector?
- Why did Kingfisher's strategy prove unsuccessful?
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Table of Contents
India Is The World's Ninth Largest Civil Airlines Industry
Double digit increase in passenger traffic for Indian Airports
Low penetration levels indicate strong growth potential
Tourism industry and increase in per capita GDP expected to boost air traffic
India the third largest aviation industry in the world by 2020
India is One of The Costliest Places In The World To Run A Plane
Despite rising passenger volumes, airline losses approached $2.0bn in 2012
Structural issues main reason behind Indian carriers' struggles
Fuel costs make up 45% of carriers' operating costs
One of the costliest places in the world to run a fleet of planes
Air India enjoys unfair advantages
Shortfall of personnel may put more pressure on airlines
Dramatic Changes in Competitive Landscape of Indian Airlines Industry
Over-capacity issues arising with emergence of no-frills airlines
Kingfisher exit impacted the competitive landscape in 2013
Most major carriers see revenue improvement, but net profits are falling
Emirates Airlines leading international routes for the first time in history
Kingfisher – King of Good Times
First airline in India to introduce premium flying experience in domestic travel
Modest start of a soon-to-be industry giant
Fly the good times with full of thrills Kingfisher
Kingfisher built strong brand value and reputation as a luxury carrier
Sudden End to Kingfisher's Reign
King of good times set for rapid expansion despite bad times approaching
Merger with Air Deccan was the beginning of Kingfisher's end
Kingfisher failed to report profit since inception
High expenditure behind Kingfisher's loses
Last desperate measures proved too little to keep Kingfisher afloat
Debt financing failed to provide a soft landing
King of good times forced to leave the sky castle
Frequent change of focus from full service to low-cost carrier failed to weather the storm
Kingfisher on the rocks does not work as well as vodka on the rocks
Ask the analyst
List of Tables
Table: GDP per capita comparison, 2010-2017, ($ bn)
Table: Market share of scheduled domestic Indian airlines, 2011-2013 (% of passenger traffic)
Table: Change in domestic Indian airlines' net income (loss) 2012 and 2013 ($m)
List of Figures
Figure: Indian airport industry passenger traffic, 2010-12 (passengers million)
Figure: India's middle class in 2011 and 2016, (million)
Figure: India's travel and tourism industry in 2012 and 2020, ($ billion)
Figure: India's business and leisure travel in 2012 and 2020, ($ billion)
Figure: India's passenger traffic in 2012 and 2020, (million)
Figure: Main airports in India: passenger traffic
Figure: Change in domestic Indian airlines' revenues 2012 and 2013 ($ m)
Figure: Airline market share on international routes to and from India, 2013
Figure: Kingfisher Airlines
Figure: Indian Airlines Customer Satisfaction Survey, 2009
Figure: Kingfisher's selected financial indicators, 2007-2013, ($m)
Figure: Kingfisher revenue vs expenditure, 2009- 2013 ($m)
Figure: Kingfisher expenditure by category, 2009- 2013 ($ m)
Figure: Kingfisher expenditure by category, 2012 and 2013 (%)