a case study of kingfisher airlines

A Case Study on the Downfall of Kingfisher Airlines

Journal of Management Research and Analysis, April-June, 2019;6(2):81-84

4 Pages Posted: 15 Jul 2019

CMA(Dr.) Ashok Panigrahi

SVKM's Narsee Monjee Institute of Management Studies (NMIMS)

Antra Sinha

Mpstme, svkm’s nmims university, department of management, students, anshul garg, astha mehta.

Date Written: June 30, 2019

Kingfisher Airlines Ltd. was owned by biggest liquor tycoon of India with an ambition to become an industry leader. Growing share in the aviation market, a wide number of destinations and numerous awards, depicted a very attractive and innovative picture for the company. Kingfisher airlines achieved success in gaining customer satisfaction by offering a great and comfortable flying experience to its passengers. However, in the Indian aviation sector, Kingfisher Airlines had a short but lasting impression. By the end of 2011, Kingfisher Airlines suffered a huge financial crisis. Kingfisher Airlines, UB Holdings Ltd. was provided loan by many private and public sector banks in India, considering the reputation of its CMD. He was unable to repay loans to many public sector banks, however, private banks recovered all loans. This paper describes the downfall of Kingfisher Airlines and the study of the financial condition of United Breweries Holdings. Here, we have tried to understand the business of Kingfisher Airlines and studied the role of banks in extending loans and recovery attempts. Moreover, we have attempted to emphasize the reasons behind the financial failure of the company from the point of view of mistakes in strategic decision making.

Keywords: Kingfisher airlines, Vijay Mallya, Aviation industry, Bankrupt

Suggested Citation: Suggested Citation

Ashok Panigrahi (Contact Author)

Svkm's narsee monjee institute of management studies (nmims) ( email ).

Narsee Monjee Institute of Management Studies Mukesh Patel Technology Park Shirpur, MS 425405 India 8888810975 (Phone)

HOME PAGE: http://nmims.irins.org/profile/149882

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Kingfisher Airlines Case Study: The Downfall Of A Premium Giant

Supti Nandi

April 11, 2024

Kingfisher Airlines- once a symbol of luxury turned into an epitome of failure… It soared a sky-high success before crashing dramatically, leaving behind a trail of debts and broken dreams. In this Kingfisher Airlines Case Study, we will examine all the factors that led to its downfall.

Stay tuned!

(A) Kingfisher Airlines: Synopsis

Kingfisher Airlines was an Indian airline group that began in 2003 and launched flights in 2005. It was linked to another company called the United Breweries Group, and they both owned part of another airline called Kingfisher Red, which was more budget-friendly. 

By the end of 2011, Kingfisher Airlines was the second biggest in India for people flying within the country. 

Kingfisher Airlines is the base of our case study. So without any delay, let’s glance at its profile –

But here’s the sad part- right from the beginning, they were losing money and racking up huge debts. How? We will discuss it in the upcoming sections. This ended up with them shutting down on October 20, 2012. And then, to add to the “failure saga”, the chairman, Vijay Mallya, apparently took off to London to dodge people he owed money to. Till today he hasn’t returned to India to avoid creditors.

(B) Vijay Mallya: The Man Behind Kingfisher’s Rise & Fall

The infamous fraudster Vijay Mallya, a well-known figure in India’s business world, wasn’t just any liquor tycoon. He was vibrant, stylish, and knew how to make a mark.

Little did anyone know that he would commit a significant white-collar crime in his motherland, evading punishment and living the high life in England.

Taking over his family’s business at the young age of 28, he quickly became famous for his lavish lifestyle and sharp business acumen. Using his charisma, he boosted the reputation of the United Breweries Group and coined the catchy slogan “ King of all times ” for their beer.

Let’s dive into detail how he impacted Kinfisher’s rise and fall-

(B.1) The Birth of Kingfisher Airlines

With his eye for luxury and style, Mallya turned Kingfisher Airlines into an icon. The airline, a part of his business empire, took flight in 2005 with four brand-new Airbus A320-200s. Their aim? To redefine air travel by offering top-notch service and facilities. From hot meals to personalized entertainment, they treated passengers like royalty.

(B.2) Soaring Success

Kingfisher Airlines quickly soared to success. Within a year, they expanded from four flights a day to a whopping 104 flights, connecting 16 cities across India. Their focus on quality made them a favorite among business travelers. They even introduced personalized live in-flight entertainment, setting a new standard in the industry. They were like the darlings of the business class, earning themselves a fancy five-star status!

(B.3) Reaching for the Skies

But wait, it gets even better. In 2008, they went international, flying from Bengaluru to London. And you know what? They were the only five-star airline in India for three years straight. Impressive, right? Well, that’s what they wanted you to think.

(B.4) The Decline

Behind all that glitz and glamour was a different story. Turns out, Kingfisher Airlines wasn’t exactly swimming in cash. The irony is in 2011, Kingfisher Airline was named the Best Indian Airline. In fact, they reported losses of Rs. 1,000 crore for three years running. And guess who was at the root cause? Yep, Vijay Mallya, a famous white-collar criminal! 

This downturn marked the beginning of the end for the once-soaring airline…

(C) The Onset of Troubles for Kingfisher

You know, there was a time when Kingfisher Airlines was flying high, rated as one of the best in India. Customers were happy, and everything seemed great. But guess what? That success didn’t last long. With the economy tanking in 2008 and fuel prices shooting up, things got tough. And to top it off, Kingfisher had to keep flying on routes that weren’t making them any money.

(C.1) Caught in a Financial Web

Yeah, Kingfisher Airlines found itself in a tight spot. They were low on cash and drowning in debt. They owed money left and right – to airports, for fuel, and worst of all, to their own employees. In 2010, they brought in Sanjay Agarwal, a former CEO of SpiceJet, to try and fix things. But even with Vijay Mallya taking charge as MD and Chairman, the problems just kept piling up.

(C.2) Desperate Measures

In 2011, Kingfisher Airlines tried to cut costs by ditching their low-cost segment, Kingfisher Red. But it was too little, too late. Their financial woes were so bad that doubts arose about whether they could even survive. And you know what? They hadn’t even been paying the government money they owed. They literally messed up their finances!

(C.3) Beginning of Downfall

As time went on, things only got worse for Kingfisher. They had to cancel international flights, then domestic ones too. And in 2012, their shares hit rock bottom. They were bleeding money, with over Rs. 7,000 crores in losses and half their planes grounded. Strikes by staff only made things worse.

(C.4) End of the road with a legacy of failure

With no other options left, Vijay Mallya begged the government for help. But they turned him down. And when the DGCA suspended their flying license in December 2012, that was it. Kingfisher Airlines was done for.

So, what went wrong? Well, a lot of things. Financial problems, operational issues, a decrease in the frequency of flights, and so on. From cutting corners on safety to not paying their bills on time, Kingfisher Airlines was a total mess. And in the end, it cost them everything!

Note: Kingfisher Airlines wasn’t the only one to go bankrupt in India. Go First joined the list too in the last year (2023). For more details visit the article- Go First Bankruptcy Case and possible solutions .

(D) Reasons for the Downfall of Kingfisher Airlines

Indeed Kingfisher Airlines was a big name in India, ranking among the top five passenger airlines till December 2011. But then, guess what? It all went south. High losses, mountains of debt, and eventually, they had to close shop in 2012.

Let’s look at the reasons for the downfall of Kingfisher one by one-

(D.1) Operational Mishaps

So, why did it all go wrong? Well, it wasn’t just about marketing. Turns out, there were some serious operational issues too. The cost of running the airline was way too high. Maintenance, employee salaries, and all those fancy value-added services – they were bleeding money. And to make matters worse, they weren’t paying enough attention to things like cleanliness and scheduling.

(D.2) Rising Fuel Prices

Fuel prices were skyrocketing, and Kingfisher just couldn’t keep up. In 2012, a whopping 50.58% of their revenue went straight to fuel expenses. And because they weren’t paying their fuel bills on time, they ended up in court with vendors like Bharat Petroleum Corporation. 

(D.3) Unthoughtful Merger

Back in 2007, they made a big mistake by merging with Air Deccan. See, Air Deccan was all about low-cost carriers, while Kingfisher was known for luxury. The merger confused customers, and Kingfisher lost its premium status. Even when they realized their mistake, it was too late. They shut down Kingfisher Red in 2012, but the damage was done.

(D.4) Strategic Blunders

Vijay Mallya, the man behind it all, made some serious errors in judgment. He thought luxury sells, but in reality, most people just wanted affordable travel. That’s the reality in India. If you wanna survive, give what the majority wants and the majority of the population in India is middle class. Plus, running multiple businesses at once meant he couldn’t give Kingfisher Airlines the attention it needed.

To top it all off, there was a lack of proper management. CEOs were coming and going, and even Vijay Mallya’s son couldn’t handle the business when it was passed on to him.

(D.5) Piling Debts

And let’s not forget about the debts. Kingfisher Airlines owed a whopping Rs. 7,057.08 crores, with loans from 17 different banks. State Bank of India alone was owed Rs. 1,600 crore.

So yeah, Kingfisher Airlines went from being a soaring success to a crashing failure, all because of a series of bad decisions, mismanagement, and debts they couldn’t pay.

(E) Key Takeaways from Kingfisher Airlines Case Study

Here is what you can learn-

• Operational Challenges: Running an airline isn’t just about flying planes. High operational costs and neglecting basics like cleanliness and punctuality can really hurt a company’s finances and reputation.
• Impact of Mergers: Merging with another company might seem like a good idea, but if it’s not done right, it can confuse customers and damage your brand just like the merging of Kingfisher and Air Deccan. It’s essential to understand what your customers want before making big moves.
• Strategic Decision-Making: Making decisions based on what customers need and what the market demands is crucial. Sometimes, what seems luxurious might not actually make money. It’s all about finding the right balance between luxury and affordability.
• Effective Management: Having strong leadership and management is key. Constantly changing CEOs and not having a clear direction can lead to disaster. Paying attention to the details and staying focused on the bigger picture is vital for success.
• Debt Management: Letting debts pile up can quickly spiral out of control. Not paying back loans and mishandling debts can land a company in serious trouble, even leading to bankruptcy.

So, from the Kingfisher Airlines case study, it’s clear that running an airline isn’t just about flying planes – it’s about managing costs, making smart decisions, having good leadership, and keeping an eye on the money.

(F) Future of Kingfisher Airlines

When it comes to the future of Kingfisher Airlines, things are pretty uncertain. You see, this airline had its fair share of highs and lows – it went from being super successful to crashing pretty hard. Now, there’s been talk about bringing it back to life, but nothing solid has happened yet. The thing is, it’s facing a lot of problems, like money troubles, rules and regulations getting in the way, and a not-so-great reputation. 

So, honestly, it’s kinda hard to imagine it making a big comeback. But who knows? Maybe someday, someone will figure out how to turn things around and give this airline a fresh start. 

Only time will tell!

Related Posts:

Have used this airline in the past, but now it’s hard to imagine that this airline will make good comeback!

With these insights got to know about various reasons that led to the downfall of this airline!

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The Case of Vijay Mallya and Kingfisher Airlines

Part of SPI’s India Series

By: Vilasini Pollisetty

Vijay Vital Mallya (VM) was born to industrialist and business tycoon Vital Mallya in 1955. He went on to take over his father’s business (UB Group) in 1983 at the young age of 28. VM had soaring ambition. He always looked for opportunities to expand his father’s existing business. He has been in the limelight recently as a result of financial crimes he committed before fleeing to the UK. The Indian government is working on the process of extraditing him from the UK.

Here is a timeline [1] of key events that show how VM went from being the most sought-after business man to a criminal:

2005:     Vijay Mallya chairman of United Breweries (Holding) Limited, started the luxury airline: Kingfisher Airlines.

2007:     Vijay Mallya acquires Air Deccan, which was a low-cost airline, from owner Capt. Gopinath. 

2008:     The Air Deccan takeover was formalized and UB group paid up Rs.550 crores (US$79 million) for its stake of 26% in the company.

Later that same year Kingfisher Airlines faced a loss of Rs934 crore (US$133 million) due to various reasons like oil price increases, acquisition of a financially unsound airline and other reasons.

2009:     The consolidated debt of the airline accumulates to a massive Rs5,665 crore (US$810 million) that increases to Rs7,000 crores (US$1 billion). IDBI bank issues a loan of Rs900 crores (US$128 million) to the airline.

• Kingfisher’s board approves a resolution to raise $100 million by various instruments including Global Depository Receipts. This was in addition to raise capital for an amount not exceeding Rs500 crore (US$71 million)by a rights issue of equity shares.
• Kingfisher reports a net loss of Rs418.77 crores (US$59 million) during the second quarter of the fiscal year. Its income from operations also declines by 13.6 per cent during the quarter compared to the same period the previous year. In view of the huge losses and capacity reduction, Kingfisher decides to lay off nearly 100 pilots.

2010:     Banks give the airline an ultimatum of nine months to pay back the entire loan amount that stands at $1.3 billion.

• Kingfisher Airlines Board approves debt recast package. The airline’s debt now stands at Rs6,000 crore (US$858 million).
• 2011-Mumbai International Airport Pvt. Ltd. sends a notice to the cash-strapped airline to pay Rs90 crore (US$12million ) outstanding dues. 
• The Income Tax Department freezes 11 accounts of Kingfisher Airlines for non-payment of tax.

2012:     Kingfisher Airlines cancels several of its flights after the Income Tax Department froze some of its accounts.

• The carrier operates on a trimmed schedule and faces the prospect of losing a number of prime flying slots.
• International Air Transport Association asks travel agents to immediately stop booking tickets on Kingfisher’s behalf for failure to settle dues since February.
• Further trouble, as employees protest delays in salary payment.
• Kingfisher announces reduction of its international operations.
• Revenue department of India threatens to take Kingfisher Airlines to court over alleged tax evasion, claiming the company has not deposited taxes it collected from travelers.
• Lenders give two weeks to come up with a plan to improve operations. The airline had a total outstanding debt of around Rs.7,500 crore (US$1 billion)to a consortium of 17 banks led by  State Bank of India (SBI).
• Unpaid staff protest in Delhi, Mumbai and other airports and almost all of Kingfisher’s flights from all stations were cancelled as engineers did not certify the planes to fly.
• A non-bailable arrest warrant issued against Vijay Mallya, and four other directors for non-appearance in cases relating to bouncing of cheques issued in favour of GMR Hyderabad International Airport Limited (GHIAL) towards user charges.
• The carrier loses its flying license as the DGCA refused to renew its Air Operator Permit (AOP).

2013:     DGCA asks the carrier to clear all dues, including pending salaries of employees, before seeking license renewal.

2014:     Kingfisher Airlines reported a net loss of Rs822.42 crore (US$117 million)for the third quarter ended December 31, 2013.

• United Bank of India declares Mallya and three directors of Kingfisher Airlines as willful defaulters.

2016:     Banks move Supreme Court to ban Mallya’s overseas travel.

• Mallya leaves India on March 2, government tells court.

Money Laundering 

Allegations of money laundering were first made when it was speculated that Mallya had used loan money received from the banks and diverted them overseas to various tax havens. Mallya laundered the money with the help of shell companies with dummy directors that were controlled by him. The shell companies were located in seven countries, including the United Kingdom , USA, Ireland and France [2] . These companies did not have any activity and independent source of income. Mallya was controlling the companies through his office personnel. The directors in said companies acted on directions of UB Group at the command of Mallya [3] . 

Classified As a “Proclaimed Offender” 

In order to understand why Vijay Mallya was labelled a “proclaimed offender”, it is important to know the exact meaning of this term:

According to section 82(1) of the Criminal Procedure Code,1973(CrPc) if any Court in India has any reason to believe a person against whom a warrant has been issued has absconded or is concealing himself in such a manner that the warrant cannot be executed, then such court can publish a written proclamation requiring him to appear at a specified place and specified time. The person is required to appear in not less than thirty days of the publishing of the written proclamation by the court. Section 82(2) provides the various ways in which the court can publish the written proclamation. 

Section 82(4) mentions that any person who does not comply with provisions mentioned in Section 82(1), the Court may after making inquiry as it thinks fit, pronounce him a “proclaimed offender” and issue a declaration to that effect.

In the case of VM, he fled the country on March 2, 2016 after a consortium of banks moved the Supreme Court to recover Rs.9,000 crores (US$1.3 billion) they claimed he owed them. On April 18, 2016, the Enforcement Directorate (ED) issued a non-bailable warrant against VM to appear in court after rejecting his plea that all allegations against his company were ‘false and incorrect’ [4] .

The ED summoned VM thrice to appear in the court and testify, but he failed to do so. This behavior caused him to be termed as a “proclaimed offender”. 

Ethics Analysis 

As per Section 166 of the Companies Act, 2013 [5] , the director of any company incorporated under the Act has certain duties. 

Firstly, the director has the duty to act in good faith to achieve the overall objectives of the company and to act in the best interest of all its members, employees, shareholders, community and environment. 

Next, he is required to exercise his duties with due and reasonable care, skill and diligence and exercise his own independent judgements. 

He must not be involved in situations that may directly or indirectly be in conflict with the interests of the company. Lastly, he must never achieve or try to achieve any kind of unjustified gains for himself or for a person of his choice and if he does so can be liable for fine equal to the amount of the undue gain.

1. Failing in his fiduciary duty to shareholders, employees, and investors: 

• A director of a company is expected to always put the interests of the corporation and all the people involved with it above his own personal interests. He is expected to remain loyal and ensure to maintain the trust of shareholders, employees and investors. Any kind of conflict of interest , such as earning a secret profit, unknown/undisclosed business dealings show disloyalty on the part of the director.
• The director of Kingfisher Airlines, Vijay Mallya resorted to such practices for his own gains.
• Kingfisher airlines, the second largest airlines in India, did not generate profits for 8 years. [6]
• Mallya did not stop operations in spite of making only losses and allowed shareholders and customers to be under the illusion the airline was functioning properly.
• In 2012, the losses of the airline were publicly discussed when Mallya failed to pay the salaries of his employees. When asked about this, Mallya made statements about not having enough money to pay the salaries due to reported losses.
• Soon in 2013, Diageo acquired a 27% stake in United Spirits Limited for Rs.6,500 crores (US$902 million). However, not a single lender or employee was paid.
• There was speculation that Mallya had his own agenda and invested the money in his IPL (Indian Premier League) cricket team. A few years later he spent a lot of the funds for his elaborate birthday bash which featured renowned singer Enrique Iglesias [7] .
• Such instances are clear examples of Mallya violating his fiduciary duties as a director of a company.

2. Non-Disclosure of Non-Compete Clause 

• A probe by the Serious Fraud Investigation Office (SFIO) in India found that corporate ethics were compromised in the merger between Kingfisher Airlines and Deccan Aviation Limited [8] .
• Kingfisher Airlines had created three new departments in the airline to avoid paying capital gains tax.
• In addition, a non-compete fee of Rs.30 Crores (US$4 million )  was paid to the owner of Deccan Aviation, Captain Gopinath, which was not disclosed to shareholders.
• Transparency is vital in a listed business. Full disclosure of information must be provided to the shareholders, so they can make informed decisions.
• Any kind of non-disclosure of important details points to the dishonesty of the company director and shows how little he cares about his shareholders.

3. Misuse of Power [9]

• There is a celebrated quote, “With great power comes great responsibility [10] ”.
• The primary responsibility that arises with power is the responsibility not to misuse such power.
• In 2010 Mallya was selected to be an MP of the Rajya Sabha (Upper House), in the Indian Parliament and used his position for his personal use.
• He misused his position as a Member of Parliament to ensure he was put in the civil aviation committee. He did so to speed up the approval of Foreign Direct Investment (FDI) into the aviation sector. This expedited approval assured that foreign investors could invest in Kingfisher Airlines when the airlines was hitting its lowest point [11] .
• VM took advantage of access to Parliament. He discussed informally with Union Finance Minister Arun Jaitley, within the corridors of Parliament, the possibility of convincing banks to settle with Kingfisher Airlines. The Finance Minister claims to have denied his request as it was not made according to formal protocols. Immediately after this, Mallya fled the country. The following statement was made by the Finance Minister in response to the allegations:

Statement from Mr. Jaitley [12] :

“My attention has been drawn to a statement made to the media by Vijay Mallya on having met me with an offer of settlement. 

The statement is factually false in as much as it does not reflect the truth. Since 2014, I have never given him any appointment to meet me and the question of his having met me does not arise. However, since he was a Member of Rajya Sabha and he occasionally attended the House, he misused that privilege on one occasion while I was walking out of the House to go to my room. He paced up to catch up with me and while walking uttered a sentence that “I am making an offer of settlement”. Having been fully briefed about his earlier “bluff offers”, without allowing him to proceed with the conversation, I curtly told him “there was no point talking to me and he must make offers to his bankers.” I did not even receive the papers that he was holding in his hand. Besides this one sentence exchange where he misused his privilege as a Rajya Sabha Member, in order to further his commercial interest as a bank debtor, there is no question of my having ever given him an appointment to meet me.”

The above instances reflect Mallya’s leadership qualities. He appears to be disconnected from the situation facing his employees, shareholders and other persons dependant on the company and its reputation. Though he is not legally liable to pay salaries to employees from his personal wealth, he could have taken moral responsibility for his actions that caused suffering in the lives of people whose livelihoods were dependent on Kingfisher Airlines. Mallya was an inspiration to many. His wealthy way of living fascinated them but some personal austerity wassurely required. 

Yet in an interview, Vijay Mallya made the following statement and refused to take responsibility for the financial mess:

“In a Public Limited Company where is one man, who might be the chairman, responsible for the finances of the entire Company? And what has it got to do with all my other businesses? I have built up and run the largest spirits company in the world in this country.”

Recently Forbes Magazine dropped Mallya from their Billionaire list and stated his current net worth is only USD 800 million . He made a satirical comment on twitter:

Vijay Mallya  ‏@TheVijayMallya :

“Thanks to the Almighty that Forbes has removed me from the so called Billionaires list. Less jealousy, less frenzy and wrongful attacks.”

Present Standing of the Case [13]

Understandably, India wants Mallya to face criminal action relating to loans taken out by his defunct Kingfisher Airlines and Indian authorities want to recover about $1.3 billion they say Kingfisher owes.

On December 5, 2018, five days before the decision of Mallya’s extradition case, he further appeals to the banks to accept his settlement offer and also agrees to pay 100% of the principal loan amount he owes to them. He further justifies his actions in a series of tweets:

December 10, 2018 [14] : The Westminster Magistrates’ Court in London on Monday orders United Breweries chairman Vijay Mallya’s extradition to India. Indian finance minister Arun Jaitley welcoms the court’s decision on Mallya.

Mallya Redux

It is not easy to manage so many different companies at once and ensure they are all successful. Mallya had taken lot of risks and made new investments that his father had never made. An in depth study of the case shows that a majority of Mallya’s dealings were done for his own personal gains and not for the overall benefit of his employees, shareholders and investors. Mallya committed financial fraud and most importantly ethical violations by breaking the trust of the people who were not only dependant on his company but who even looked up to him as a role model. Mallya explains himself through his tweets, sitting in a far off country and communicating through social and other media. Instead of acting in this pathetically unethical way, he should return India and agree to trial in court as a virtuous person would do. Another aspect of this case most people tend to overlook is the mistake committed by the Indian Banks. It is their duty to conduct proper credit checks before sanctioning loans of such a large amounts to one company. Apparently, certain procedures and processes were omitted in order to grant loans to Kingfisher Airlines. The government of re-elected Narendra Modi should take note of this high profile case and put efforts into preventing similar behaviour in the future. A change in existing laws or introduction of a new law seems appropriate. Then again, the Indian government seems to be failing to keep a check on unethical and illegal behavior by tycoons, as the recent scam of renowned businessman and jeweller Nirav Modi [15] has once again shaken the nation. 

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[1] https://www.indiainfoline.com/article/news-top-story/vijay-mallya-s-timeline-curse-of-good-times-116031000523_1.html

https://www.zawya.com/mena/en/busines s/story/Timeline_The_rise_and_fall_of_Vijay_Mallya-GN_18042017_190453/

https://www.dnaindia.com/business/report-vijay-mallya-arrested-timeline-of-money-laundering-case-that-led-to-king-of-good-times-downfall-2550100

https://www.livemint.com/Object/G1YWR33VqEAfHN9Bh1gBuL/vijay-mallya-timeline.html

[2] https://timesofindia.indiatimes.com/india/mallya-diverted-most-of-rs-6000-crore-loan-to-shell-companies/articleshow/60820678.cms

[3] https://www.businesstoday.in/current/economy-politics/vijay-mallya-used-f1-and-ipl-team-rcb-for-money-laundering-ed-chargesheet/story/279328.html

[4] https://economictimes.indiatimes.com/news/politics-and-nation/vijay-mallya-declared-proclaimed-offender-by-pmla-court/articleshow/52748005.cms

[5] http://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf

[6] https://www.entrepreneur.com/article/272322

[7] https://timesofindia.indiatimes.com/city/goa/Enrique-to-be-Mallyas-Hero-on-60th-birthday/articleshow/50193822.cms

[8] https://indianexpress.com/article/business/companies/all-corporate-ethics-compromised-in-kingfisher-airlines-deccan-aviation-deal-serious-fraud-investigation-office-4945586/

[9] https://www.theweek.in/news/india/2018/09/14/Guilty-of-conflict-of-interest-Mallya-and-the-curious-case-of-businessmen-MPs.html

[10] http://www.inspirational-motivational-success-quotes.com/winstonchurchillquotes.html

[11] https://www.firstpost.com/business/mallya-meets-sharma-on-aviation-fdi-273000.html

[12] https://www.thehindu.com/news/national/vijay-mallya-extradition-case-live-updates/article24933895.ece

[13] https://www.livemint.com/Companies/nLyNim2xqg5lgGLeYkB4PO/Vijay-Mallya-in-UK-court-for-extradition-case-hearing.html?utm_source=scroll&utm_medium=referral&utm_campaign=scroll

[14] https://www.livemint.com/Companies/4XSaTzCOY1zQbbzKhpSl2K/London-court-orders-Vijay-Mallya-extradition.html    

https://edition.cnn.com/2018/12/10/business/vijay-mallya-extradition-india-uk/index.html

[15] https://www.businesstoday.in/sectors/banks/nirav-modi-case-pnb-fraud-11400-crore-scam-ed-cbi-raid/story/270708.html

Photo: Courtesy of Business Insider

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A case study on the downfall of kingfisher airlines

2019, IP innovative publication pvt. ltd

Kingfisher Airlines Ltd. was owned by biggest liquor tycoon of India with an ambition to become an industry leader. Growing share in aviation market, wide number of destinations and numerous awards, depicted a very attractive and innovative picture for the company. Kingfisher airlines achieved success in gaining customer satisfaction by offering great and comfortable flying experience to its passengers. However, in the Indian aviation sector, Kingfisher Airlines had a short but lasting impression. By the end of 2011, Kingfisher Airlines suffered a huge financial crisis. Kingfisher Airlines, UB Holdings Ltd. was provided loan by many private and public sector banks in India, considering the reputation of its CMD. He was unable to repay loans to many public sector banks, however private banks recovered all loans. This paper describes the downfall of Kingfisher Airlines and the study of financial condition of United Breweries Holdings. Here, we have tried to understand the business of Kingfisher Airlines and studied the role of banks in extending loans and recovery attempts. Moreover, we have attempted to emphasize the reasons behind the financial failure of the company from the point of view of mistakes in strategic decision making.

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• DOI: 10.18231/J.JMRA.2019.014
• Corpus ID: 199344905

A Case Study on the Downfall of Kingfisher Airlines

• CMA(Dr.) Ashok Panigrahi , Antra Sinha , +1 author Astha Mehta
• Published in Journal of Management… 30 June 2019

4 Citations

Dropped out of grace: a case of kingfisher airlines, financial crisis at jet airways limited: turnaround or bankruptcy, two biggest bank frauds in india in the last decade that have impacted the economy. an in-depth analysis., examining the determinants of indian airlines’ revenues, 4 references, related papers.

Showing 1 through 3 of 0 Related Papers

Detailed Case Study on Kingfisher’s Marketing strategy

By Aditya Shastri

Kingfisher is an airline group based in India. It is a parent company under United Breweries. It started its operation on 9th May 2005.

In the Kingfisher Airlines case study, we will talk about the marketing strategies of Kingfisher including its campaign, marketing mix, competitors, and swot analysis.

About Kingfisher

Kingfisher is a private airline that started its operation in 2005, its headquarters are based in Bangalore, Karnataka India. The airline is owned by Vijay Mallaya and is known as the second-largest share in India’s domestic market share. It is also associated with the beverage industry. They were known as one of the most admired airlines in the Asian-Pacific region. However, the airline went into a huge loss with high debts and finally closed its operations in the year 2012. 

Let us further learn more about kingfisher in this case study.

Marketing Mix of Kingfisher

The term marketing mix is a foundation model for businesses. It consists of the 4P’s, which are product, price, place, promotion. Let’s take a further look by diving into kingfisher’s marketing mix.

The product explains the range of goods which has been offered by the firm. It has provided quality service and delivered value to the passengers by creating a luxurious experience.

It has three airlines named as:

• Kingfisher first which has international and domestic routes 
• Kingfisher class International and domestic routes.
• Kingfisher red which is also known as Air Deccan which was only available on domestic routes.

They have business class and economy class separately rather than combining them. These were some of the different classes of airlines that kingfisher offered.

The airline adopted a premium pricing strategy. As the pricing strategy is highly dependent upon crude oil, dollar rates, and competition. The price segment that the firm targets are the higher income group as well as upper-middle-class background. It also targeted youth with high lifestyle segments. Kingfisher Red charges low fare thereby targeting the middle-income class.

These were some of the pricing strategies adopted by the firm.

It operated its service into domestic and international. It was known as one of the largest domestic airlines with a fleet of 60+ aircraft. Flight bookings of the firm were based by the travel agent or online.

The firm has promoted its airlines in many ways to create huge brand awareness in the market. During the launch of the airlines, Yana Gupta was the brand ambassador. The firm has created various campaigns to promote its brand and it kick-started with a 1 billion campaign for the launch of its international flight in London. 

They also partnered with the IPL team royal challengers. It also sponsored many cultural events and celebrity endorsements.

Hence, this covers the entire kingfisher marketing mix.

Kingfisher’s Competitors

There are many competitors for Kingfisher both in terms of beers and airlines. There are local and international competitors. Haywards 5000, which contains 7% of alcohol is the top second after the Kingfisher beer brand in India.

At an international level, Budweiser became the number one beer brand in the world in 2020. In the airline section, Kingfisher Airlines has been rated five stars by Skytrax. However, in India itself, it had many challenges from airlines such as Indigo, Jet airways, and other local airlines. These brands are recognized as competitors because of their infrastructure usage, services, flight prices, and customer choices. 

These were some of the competition faced by the firm now lets us have a look at their swot analysis.

SWOT Analysis of Kingfisher Airlines

For your business to be successful, pleasing your consumer is the foremost thing. SWOT analysis of kingfisher airlines will further list their strength, weakness, opportunities, and threats.

Strengths of KIngfisher

• Brand value and reputation in the mind of the consumers.
• United Breweries as the parent company.
• Innovation and Quality service.
• Strong promotion activity.
• Awarded as the most premium domestic airline.
• It had flights connecting to many Indian destinations and internationally as well.

Weaknesses of Kingfisher

• High ticket pricing.
• Huge debt caused which led to shutting operations.
• Laid-off workers created a bad image.
• Tough competition from domestic as well as international players in the market.

Opportunities for Kingfisher

• Helps to expand the tourism industry.
• Financial stability may have improved the operations.
• They could have a good market share if able to survive in the market.
• More domestic and international markets.

Threats to Kingfisher

• Huge pressure from aviation companies and government policy.
• Rising fuel prices.
• They had infrastructure issues which created a huge fall in demand for the airlines.
• The economic slowdown was a great hit for the firm.

The firm has a strong presence in the past years, but due to financial debt, it lost its competition in the market. Therefore the company had to shut its operation. Now let us further look at the marketing campaigns of Kingfisher.

Kingfisher Marketing Campaigns 

Kingfisher was one of the most controversial based companies. It was famous for its airlines and does promote its brand extensively. Following is the ad campaign of kingfisher airlines.

In this ad campaign, the firm tried promoting its brand as fly the good times with kingfisher and enjoy safety flights. 

Even after the kingfisher airline was shut the firm tried promoting their brand kingfisher beer to create huge brand awareness to regain the name in the market. Here are some of the advertisements done by a kingfisher.

Source- Kingfisher Youtube

This ad campaign showcases how good times last longer with Kingfisher by their favorite cricket players with the jingle Ola la la la le o This ad campaign was a major hit during IPL season as it grabbed users attention.

Another ad campaign done by kingfisher was the Rap anthem wherein the ad portrays divided by the team but united by a kingfisher.  

The firm believed that it is important to target and reach the right audience. So, to reach their customers despite their geographical areas or age groups, Kingfisher company promoted their brand through sports, fashions, concerts, and social media. Using such modes, made their campaign successful. Therefore we come to the end of the case study.

Kingfisher was a popular and successful company once upon a time. Its marketing and on-ground promotions have made it one of the top desired and trusted companies. However, the airline firm went into losses and created a huge downfall in the market. Therefore the firm tries to regain its brand image through other industries as we saw from the above campaigns.

After reading this case study do you want to learn how to promote ads on various social media platforms? IIDE offers you Facebook and Instagram courses, digital marketing courses, and many others, so do visit our website and check them out for yourself.

Thank you for your time. If you found this blog useful do share it with your friends and help them learn as well. Also, let us know your thoughts about this blog in the comment section below.

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

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Case Study | Corporate Governance | Kingfisher Airlines

• Case Study | Co

CASE STUDY- KINGFISHER AIRLINES

BY  AATIF PILPILE​, AKSHAY R S,​ GOVIND, ​PRIYANKA NEELAM (PGDRM Batch Jan’20-21 and July’19-20)

CORPORATE GOVERNANCE

Cadbury committee ​:  .

• Corporate governance is the system by which business corporations are directed and controlled. Board of Directors is responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.​

​ ​Organization for Economic Co-operation and Development:

• Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. It provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. ​

The Institute of Company  Secretaries of India:

• Corporate Governance is the application of best management practices, compliance of law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders.​

KINGFISHER AIRLINES CASE STUDY

About the company ​:  kingfisher airlines limited ​.

• Kingfisher Airlines Limited was an airline group based in India. ​
• Its head office is in Andheri (East), Mumbai, and its registered office in UB City, Bengaluru.​
•  Kingfisher Airlines, through its parent company United Breweries Group, had a 50% stake in low-cost carrier Kingfisher Red.​
• Until December 2011, Kingfisher Airlines had the second-largest share in India’s domestic travel market.​
• The chairman of the company is Mr. Vijay Mallya, who has now cases pending against him.​

​ Initial Troubles  ​

•  KFA’s troubles started right from the start of its operations in 2005. It is also a well-known fact that the fixed costs for Airlines are very high. Fuel expenditure accounted for 50% of aviation firm’s operating costs. In 2005, the oil prices were soaring at nearly $75 per barrel.​
• For 2005, KFA had a revenue of ₹ 305.55 crore ($ 61 million),and the net loss was ₹ 19.53 crores ($ 4 million). In 2006 the revenue increased three fold to ₹ 989.12 crores ($197.8 million), and net loss has grown to an alarming ₹ 272.44 crores ($54.4 million).​
• In order to increase crew size and start foreign service, KFA went for a reverse merging with Air Deccan.​

Merging of Air Deccan ​

• Acquisition of Air Deccan  Towards the end of 2007,  KFA in order to meet this requirement decided to acquire 46% of ‘Air Deccan’ another low cost Airliner, to compete with other  low cost carriers and most importantly to be able to open international operations.​
•  Air Deccan was in existence for more than five years and this acquisition would allow KFA to fly on international routes. To facilitate this, a reverse merger was engineered, first Air Deccan acquiring KFA and few months later the merged Airline becoming KFA again. ​
• KFA also hoped that the acquisition would save ₹ 300 crore ($60 million) annually and also increase the fleet strength to 71. This acquisition was financed with ₹ 550 crore ($110 million) from the group’s holding company UB Ltd.​
• By March 2008, the debt stood at ₹ 934 crore ($186.8 million)​
•  In 2009 KFA board of directors approved a resolution to raise ₹ 500 crore (US $ 100 Million) by using Global Deposit Receipts (GDRs) and also other means. Further they approved raising another ₹ 500 Crore ($100 Million) by issuing rights shares to existing shareholders​
•  By the end of 2009 the net-worth of the company has become negative.​

Banks Came To The Rescue  ​

• In 2009, IDBI approved a loan of ₹ 950 crore ($190 million) in spite of turning down the same request in 2006.​
•  Mallya approached a number of other banks between 2008 and 2010 and managed to get huge amount of loans from a number of banks.​
•  Surprisingly these banks provided the loans to KFA by taking the company’s ‘brand value’ into consideration and seven trademarks as collateral. They included Fly Kingfisher (Label Mark and Word), Flying Models of Kingfisher, Fly the Good Times, Funliner and Kingfisher, which were valued by global consultancy firm Grant & Thornton.​

Read the full case study here:   Kingfisher Airlines Case Study

Disclaimer This report has been produced by students of Global Risk Management Institute for their own research, classroom discussions and general information purposes only. While care has been taken in gathering the data and preparing the report, the student’s or GRMI does not make any representations or warranties as to its accuracy or completeness and expressly excludes to the maximum extent permitted by law all those that might otherwise be implied. References to the information collected have been given where necessary. GRMI or its students accepts no responsibility or liability for any loss or damage of any nature occasioned to any person as a result of acting or refraining from acting as a result of, or in reliance on, any statement, fact, figure or expression of opinion or belief contained in this report. This report does not constitute advice of any kind.

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