Jet Vs Kingfisher

BACKGROUND JET AIRWAYS • SET UP IN 1993. • OPERATES 83 AIRCRAFTS TO 64 DESTINATIONS IN INDIA AND ABROAD. • LISTED IN BSE IN 2005. • MARKET SHARE IN 2004 – 46%. • IN EARLY 2000 ONLY JET AIRWAYS & SAHARA WERE TO COMPETE WITH INDIAN AIRLINES

• • • •

BACKGROUND KINGFISHER

SET UP IN 2005. STARTED WITH 04 AIRBUS A320 ON LEASE. INITIALLY PLANNED AS LOW FARE CARRIER. AFTER LAUNCH, CONVERTED TO PREMIER SERVICE. • OPERATES 11 NEW A320, 218 FLIGHTS A DAY TO 37 DESTINATIONS. • ONE AMONGST 6 AIRLINES IN WORLD TO GET 5 STAR RATING. • MAIN LUXURY COMPONENT – IN FLIGHT ENTERTAINMENT.

GENERAL FACTS • AVERAGE AIR TRAVEL IN INDIA IS 0.014 TRIPS/ PERSON AS AGAINST 2.02 TRIP/PERSON IN USA. • INTENSE COMPETITION AND LOW YIELD HAS RESULTED IN AIRLINES RUNNING AT LOSS. • GLOBAL ECONOMIC ENVIRONMENT, COUPLED WITH ECONOMIC REALITIES OF THE AIRLINE INDUSTRY IN INDIA REQUIRES "EXCEPTIONAL EFFORTS TO RETURN TO BREAKEVEN AND PROFITABILITY".

MARKET SHARE

JET’S STRENGTHS • A PHENOMENAL AND WELL-DEVELOPED NETWORK BOTH OF THE AIRLINE AND THE CHAIRMAN. • GOYAL'S KNOWLEDGE OF THE SECTOR. • A MASSIVE POOL OF LOYAL CUSTOMERS. • EXCELLENT LOBBYING SKILLS AND ABILITY TO LEVERAGE CONNECTIONS WITHIN GOVERNMENT. • ABILITY TO SURVIVE DOWNTURNS EARLIER. • FINANCING RAISED ON STRENGTH OF OWN BALANCE SHEET. • HAS BUILT A PROFESSIONAL ORGANISATION.

• A PERCEIVED DROP IN SERVICE JET’SWHEN WEAKNESS STANDARDS PITTED AGAINST KINGFISHER. • STRUGGLING WITH THE CARCASS OF AIR SAHARA.

• POOR PEOPLE MANAGEMENT SKILLS OF CHAIRMAN. • INABILITY TO RAISE MONEY FOR THE LAST TWO YEARS.

KINGFISHER'S STRENGTHS • SUPERIOR PRODUCT ON GROUND; IN THE AIR JET BUSINESS CLASS IS BEING EQUATED WITH KINGFISHER'S 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 MALLYA'S 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.

KINGFISHER'S 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. • MALLYA'S KNOWLEDGE OF THE SECTOR DOES NOT PARALLEL GOYAL'S. • CHAIRMAN'S PEOPLE SKILLS ARE BETTER BUT EMPLOYEES HAVE TO WORK VERY ERRATIC HOURS. • UNABLE TO LEVERAGE CONNECTIONS TO THE SAME EXTENT WHILE LOBBYING. • KINGFISHER'S LOADS ARE LOWER THAN JET'S, WHICH COULD BE A REFLECTION OF ITS MARKETING AND SALES ABILITY.

Kingfisher Vs Jet Airways • Kingfisher is one of the newer Airlines in INDIA. • Overall growth in year 2008-09 is 37%. • Kingfisher acquired 46% share in Air Deccan. • Domestic airlines poised to go international.

• Jet Airways is the experienced airline in INDIA. • Overall growth in year 2008-09 is 16%. • Jet airways acquired Air Sahara in 2006. • Jet Airways already has domestic as well as international flights.

Kingfisher Vs Jet Airways • In a short span of 2 years its market share has become 28% including Air Deccan. • Personal in-flight entertainment in every seat. • It was awarded the ‘Best New Airline Of the Year’ award. • Already have training academy

• Jet Airways has its market share 31% including Air Sahara. • Average entertainment services. • Jet Airways won Double Honour Travel Trade Gazette Travel award. • They are plan to start training academy.

S.W.O.T. Analysis - Strengths • Market driver • Experience exceeding 14 year • Only private airline with international operation • Market leader • Largest fleet size

- Opportunities • Untapped air cargo market • Scope in international service and tourism

- Weakness • • • •

Losing domestic market share Old fleet with average age around 4.79 years Scope for improvement in in-flight service Weak brand promotion

- Threats

• Strong competitors • Fuel price hike • Overseas market competition

S.W.O.T. Analysis - Strengths • First airline with full new fleet of aircraft • Brand image with Flamboyant Personality of Vijay Mallya • Unmatched in flight service • Exclusive Terminal Share Deal • Route rationalization

- Opportunities • • • • •

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

- Weakness • Service delivery to metros and other big cities • Yet not in profit • High ticket pricing • High attrition in top brass

- Threats • Existing Operators • Infrastructure issue • Fuel price hike

P.E.S.T. Analysis - Political Issue • License issue for international operation • Infrastructural constraint • ATF price policy

- Social Effect • Sound Pollution • Plane hijacking • 9/11 Incident

- Economic Effects • Rising income level • Reduced fare but yet not enough

- Technology Effect • Modernization of aircrafts • modern tehnology like CAT3 and ILS

JET AIRLINES KINGFISHER MERGER

JET AIRLINES KINGFISHER MERGER

• JET AIRWAYS AND KINGFISHER AIRLINES, WITH A COLLECTIVE MARKET SHARE OF OVER 58 PER CENT, ANNOUNCED A STRATEGIC ALLIANCE TO HELP THEM REDUCE COST AND ENHANCE EFFICIENCY. • THE ALLIANCE WILL INVOLVE CODE-SHARING ON DOMESTIC AND INTERNATIONAL FLIGHTS, AN INTERLINE AGREEMENT, JOINT FUEL MANAGEMENT, COMMON GROUND-HANDLING SERVICES AND CROSS-SELLING FLIGHTS THROUGH THE GLOBAL TICKETING SYSTEM. • THE TWO HAVE ALSO AGREED TO CROSS-UTILISE CREW ON SIMILAR AIRCRAFT TYPES AND USE COMMON TRAINING FACILITIES. PASSENGERS CAN ALSO USE FREQUENT FLYER PROGRAMMES BY FLYING IN EITHER OF THE AIRLINES.

JET AIRLINES KINGFISHER MERGER

• A FORMAL MERGER OF THE TWO AIRLINES IS NOT POSSIBLE BECAUSE THE

COUNTRY’S COMPETITION LAWS MANDATE THAT AIRLINE COMPANIES CANNOT HAVE A MARKET SHARE OF OVER 40 PER CENT AFTER THEY MERGE. • THIS ALLIANCE WILL RESULT IN MAJOR COST SAVING, IMPROVE EFFICIENCIES THROUGH NETWORK SYNERGIES AND CROSS-SELLING. • BOTH AIRLINES ARE IN THE RED. KINGFISHER AIRLINES MADE A LOSS OF OVER RS 1,000 CRORE AND JET AIRWAYS RS 806 CRORE IN 2008-9. • BOTH AIRLINES, WHICH HAVE A COMBINED WORKFORCE OF AROUND 19,000 (OF WHICH JET HAS 12,000), HAVE TRIMMED STAFF BY OVER 2,000 IN THE LAST FEW MONTHS. • JET AIRWAYS, WHICH BOUGHT AIR SAHARA (RENAMED JETLITE) IN 2007, REDUCED STAFF STRENGTH BY 1,200 AND FOLLOWED IT UP WITH A VOLUNTARY SEPARATION SCHEME FOR ANOTHER 750 EMPLOYEES.

• KINGFISHER, WHICH BOUGHT AIR DECCAN IN DECEMBER 2007, REDUCED ITS STAFF BY 350 RECENTLY. • THE TWO AIRLINES HAVE A COMBINED FLEET OF OVER 189 AIRCRAFT, MAKING IT MUCH BIGGER THAN STATE-OWNED AIR INDIA (THE ENTITY FORMED AFTER THE MERGER OF AIRINDIA AND INDIAN AIRLINES) WITH 149 PLANES. • THE COMBINE WILL FLY 927 DOMESTIC FLIGHTS AND 82 INTERNATIONAL FLIGHTS A DAY

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