Indigo V/S Kingfisher
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Indigo V/s Kingfisher Indigo Airlines company profile IndiGo was set up in early 2006 by Rakesh Gangwal(is a former CEO and Chairman of US Airways Group) and Rahul Bhatia(director,interglobe) of InterGlobe Enterprises. InterGlobe holds 51.12% stake in IndiGo and 48% is held by Caelum Investments, a Virginia, US based firm, run by Rakesh Gangwal. IndiGo placed a firm order of 100 Airbus A320-200 aircraft during June 2005 in plans to commence operations in mid 2006.Former US Airways. Executive vice-President and Marketing and Planning Bruce Ashby joined IndiGo as its Chief Executive Officer. The airline already acquired parking lots for its brand new aircraft at both Mumbai and Delhi airports. By the time they announced the first flight, they had already scheduled their first 20 aircraft. IndiGo operates to 32 destinations in India and abroad with 355 flights each day. Following Indian regulations, in January 2011 IndiGo received its license to operate international flights upon completing five years of operations. IndiGo's first international service was launched between New Delhi and Dubai on 1 September 2011.Over the following weeks, the international services were expanded to serve Bangkok, Singapore, Muscat and Kathmandu from New Delhi and Mumbai. On February 15, 2012, the civil aviation ministry of India has lifted the barriers on the carrier when was set over a year ago to defend the sinking national flag carrier Air India from competition on the International routes. The ministry announced that IndiGo's proposals to fly to Dammam and Doha would get cleared immediately. IndiGo is known to have applied for permission to fly to these two cities several months ago and wasn't approved because of the barrier. Rapid expansion By early 2012, IndiGo had taken the delivery of its 50th aircraft in less than 6 years. IndiGo is known to have placed the largest order in commercial aviation history during 2011, when Airbus won the US$ 15 billion deal for 180 aircraft. This deal pushed up the percentage of Airbus aircraft in India to 73%. As of February 2012, IndiGo was expanding rapidly and was making solid profits, the only airline in India to do so. It had replaced Kingfisher as the second largest airline in India in terms of market share. IndiGo's strong adherence to the low cost model, buying only one type of aircraft and keeping operational costs as low as possible along with heavy emphasis on punctuality are said to be some of the reasons for its success even when the airline industry in India is currently going through a bad patch. IndiGo focuses on adding a new plane every six weeks and sometimes even faster. IndiGo offers a simple fare scheme, such as charging one-way tickets half that of round-trips. Typically fares increase as the plane fills up, which rewards early reservations. Kingfisher airlines company profile Kingfisher Airlines was established in 2003. It is owned by the Bengaluru based United Breweries Group. The airline started commercial operations in 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight from Mumbai to Delhi. It started its international operations on 3 September 2008 by connecting Bengaluru with London. Ever since the airline commenced operations in 2005, it has been reporting losses. After acquiring Air Deccan, Kingfisher suffered a loss of over 1,000 crore (US$181 million) for three consecutive years. By early 2012, the airline accumulated losses of over 7,000 crore (US$1.27 billion) with half of its fleet grounded and several members of its staff going on strike. Kingfisher's position in top Indian airlines on the basis of market share had slipped to 5 from 2 because of the crisis. As response, Dr. Vijay Mallya called on the Chairman of Central Board of Direct Taxes and offered to pay up the dues by 13 December 2011 as the Income Tax Department had frozen all its bank accounts. The Kingfisher bank accounts were unfrozen on 14 December 2011.Due non-payment, several Kingfisher's vendors had filed winding up petition with the High Court. As on November 2011, winding up petition of seven creditors was pending before the Bangalore High Court. In the past Lufthansa Technik & Bharat Petroleum Corporation Limited (BPCL) had also filed winding up petition against Kingfisher Airlines During late February 2012, Kingfisher Airlines started to sink into a fresh crisis. Several flights were cancelled and aircraft were grounded. The cash-strapped airline claimed that the disruptions will continue for four days due to unexpected events including bird strikes which rendered aircraft out of service. The airline shut down most international short-haul operations and also temporarily closed bookings. Out of the 64 aircraft, only 22 were known to be operational by 20 February. With this, Kingfisher's market share clearly dropped to 11.3%.The cancellation of the flights was accompanied by a 13.5% drop in the stocks of the company on 20 February 2012. The CEO of the airlines, Sanjay Agarwal was summoned by the Directorate General of Civil Aviation and the Chairman CBDT to explain the disruptions of the operations. In March 2012, the airline was suspended by the International Air Transport Association from using its inter-airline fund clearing system, the suspension means the airline will have to deal directly with other airlines when sharing revenue on services. The Income Tax authorities in India have frozen accounts due to Income Tax deducted from Employees Salaries and not deposited with the Government since March 2009, apart from nonpayment of Service Tax. Due to the ongoing financial crisis, an Airbus A330-200 aircraft was impounded at London Heathrow Airport in the United Kingdom under Court Orders due to unpaid fees to aircraft leasing companies and RBS. The case One wintry day in 2007, Vijay Mallya, arguably the Indian billionaire with the most panache, decided to leave behind his personal Airbus Corporate Jet to fly an up-and- coming low-cost airline from New Delhi. It was only after the chairman of Kingfisher Airlines, billed India's only five-star airline, had settled into seat 12D, in the emergency row, and the Mumbai-bound plane was in the air that the low-cost airline's CEO was informed that a rival was on the flight. Mallya, who sussed out the airline's service - he sat in the first row for part of the flight to get a feel of the 'premium' row, for instance - was prescient. The airline he was getting a feel of was IndiGo. IndiGo today has a market share - a shade under 20 per cent - that jostles every month with Kingfisher for the No. 1 spot among Indian aviation firms. Not only has it achieved that with 43 planes, versus Kingfisher's 66, just five years into operations, it is the most profitable in the Indian airline business. It is an unlisted airline and not required to make its revenues and profits public, but company insiders say its 2010/11 revenues were around Rs 3,200 crore and net profits Rs 700 crore. Kingfisher reported a loss of Rs 1,027 crore on Rs 6,396-crore sales the same year. In a market that today flies around five million people a month and is projected to grow 7.5 times by 2020, IndiGo has a clear headstart - one earned by careful planning, patient capital and attention to detail and execution, run by a 4,000-strong team that lives by its "on time, hassle-free" service motto. According to analysis’s, Indigo maybe the only Indian airline in the year ending March to post profits despite the double whammy of rising jet fuel price and a sharply depreciated rupee. Kingfisher has dug its own hole through bad strategy and poor understanding of the aviation business and the business environment, Also Kingfisher should receive no bailout with taxpayer money. It should, of course, be allowed to dig itself out of that hole or simply die. Questions What explains Kingfisher’s plight? What were the strategies the two companies used? What were the strategies of indo airlines that helped overcome its main competitor? What should kingfisher do now? Tickets fair in indigo nd kingfisher highest and lowest for national and international. Number of destinations international compared to kingfisher. Graph to show the 2005 profit. For both indigo and kingfisher Unlisted and listed airline? Y 2 years gap in kingfisher? Whn and y did they buy air Deccan? 5 min activity for class. Y did the the banks freeze his accounts? Banks unfrozen the accounts ? Creditors 2011 ? What loan for what use and how much? 9 companies in total. No of air busses… Birth strike? .