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8/8/2019 Merger - Kingfisher Decccn - MAIN

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Kingfisher AirlinesKingfisher Airlines

VsVs

Jet AirwaysJet Airways


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A Comparative CaseA Comparative Case

StudyStudy


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JETAIRWAYSJETAIRWAYS


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HistoryHistory Jet Airways was incorporated as an "air taxi" operator on

1 April 1992. It started commercial airline operations on5 May 1993 with a fleet of 4 Boeing 737-300 aircraft.

Naresh Goyal, who already owned Jetair (Private)Limited (which provided sales and marketing for foreign

airlines in India) set up Jet Airways as a full-servicescheduled airline that would give competition to state-owned Indian Airlines

Jet Airways was the first private airline of India to fly to

international destinations.

It began international operations to Sri Lanka in March2004.


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In January 2006, Jet Airways announced that it wouldbuy Air Sahara making it the biggest takeover in Indianaviation history. The resulting airline would have beenthe country's largest but the deal fell through in June

2006. However, a modified deal did go througheventually in January 2007.

The company has been able to lower its costs by"sweating its assets", i.e. getting the maximumutilisation out of its aircraft fleet by minimising turnaround times between flights, similar to the leadingEuropean/North American low-cost, "no frills" carriers.


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MISSION STATEMENTMISSION STATEMENT

Jet Airways will be the most preferred domestic airline inIndia. It will be the automatic first choice carrier for thetravelling public and set standards, which othercompeting airlines will seek to match.

. Jet Airways will be an airline which is going to upgrade

the concept of domestic airline travel - be a world classdomestic airline.

Jet Airways will achieve these objectives whilstsimultaneously ensuring consistent profitability,achieving healthy, long-term returns for the investorsand providing its employees with an environment for

excellence and growth.


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AWARDSAWARDS

The Freddie Award - Highest Honour For JetAirways in May 2007

'Best Full Service Carrier' category from GalileoExpress Travel World Awards in Nov 2006

Jet Airways wins three Avian global Awards for

In-flight Entertainment Sep 2006


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Star Of The Industry Awards for the BestDomestic Airline For The Year 2005 in Feb 2006

Superbrand inAug 2003

Boeing Company Award for maintaining BestTechnical Despatch Reliability for 2002 in May

2003


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Did You Know?Did You Know?

Jet Airways does not own its brand. The brand isowned by Jetair Enterprises Ltd., a separatecompany substantially owned by Naresh Goyal,which licenses the brand to the airline in returnfor an annual payment. This arrangement is verysimilar to the terms governing the use of the"easy" brand by the easyJet Airline CompanyLimited (the name under which easyJet hasbeen incorporated).


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ControversiesControversies

Jet was expected to begin service to Newark via Brusselsin June 2005 but a problem arose in March 2005, whenthe airline submitted an application to the U.S.

Department of Transportation. Nancy Heckerman, CEOof US company Jet Airways Inc. based in Bethesda,Maryland, opposed the application in letters to theTransportation Department alleging trademarkinfringement. Though the litigation is still unresolved, theDepartment of Transportation concluded it was not a

reason to prevent Jet from flying to the U.S.


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A second and moreserious allegationthat

delayed Jet Airways being permittedto fly

tothe USA focusedonitsopaque

ownership structure aswell asits alleged

linkstoorganisedcrimein India and

abroad


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Anotherissuethatwas "problematic" intheeyesoftheUS aviation authoritiesconcernedthecontroversysurrounding Naresh Goyal'scitizenship. Therehavebeenreportsinthe Indian media thatheis an Indian-born,naturalised Germancitizenwhois permanentlyresidentinthe UK. India'scitizenship laws barringdualcitizenship for Indian passportholdershaverecentlybeen amended permitting Indiancitizenstotakeupanothercountry'scitizenship - barPakistan andBangladesh- without forfeitingtheir Indiancitizenship as

long asthatcountry permitsdual citizenship. Thisdoesnot applyto Germany asitdoesnot allowdualcitizenship,unlikethe UK, US, Canada, Australia andtheNetherlands forinstance,whichdo allowdualcitizenship.


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Merger with Air SaharaMerger with Air Sahara

On January 2006 Jet Airways announced that it was to buy AirSahara for $500 million in an all-cash deal. Everything, includingSahara's assets and infrastructure, would belong to Jet Airways.This deal would have been the biggest in India's aviation historyand the resulting airline the country's largest, had it gone through.

Jet Airways claimed that a final sticking point was the government'sdelay in approving Jet chairman Naresh Goyal's appointment to the

Air Sahara board. Air Sahara countered that Jet Airways hadengineered this impasse by delaying the request for such approval,as a way of extricating themselves from a deal they now regretted.Jet was said to be willing to go ahead with the deal only if the

originally agreed price was lowered by 20-25% on the basis of AirSahara's mounting debts, an option which was firmly rejected by AirSahara. Finally both sides confirmed that the deal was off


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Buyout of Air SaharaBuyout of Air Sahara

On April 12, 2007 Jet Airways agreed to buy out itssmaller rival Air Sahara for 14.5 billion rupees ($340m).

Air Sahara is renamed as Jetlite and it has been placed

between a lowcost carrier and full fledged airliner.It maybe noted that Jet Airways with the acquisition of AirSahara is all set to refurbish the fleet and crew with newlivery and uniform and plans are in pipeline to start afreighter by the year end.

The deal has given the airline a combined domesticmarket share of about 32% with Jet having a share of25% and Air Sahara of 7%.

Both airlines also fly to international destinations andtheir operations and re-structuring will be merged.


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JETAIRWAYS-DESTINATIONS

Jet Airways is an airline based in Mumbai,India,operating domestic and international services. Itoperates over 330 daily flights to 50 destinations acrossthe country and 6 overseas. Its main base is Chhatrapati

Shivaji International Airport, Mumbai, with hubs at IndiraGandhi International Airport, Delhi, Anna InternationalAirport, Chennai, Netaji Subhash Chandra BoseInternational Airport, Kolkata and BangaloreInternational Airport.


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SERVICESSERVICES

In-Flight services

To take the flying experience to great new heights,they

have changed the cabin design, in-flightentertainment,menus and the livery now sports a boldnew attitude and a fresh new look.

Come dinnertime, select from a tantalising menuspecially created to suit every palate. Personalised five-course meal and one can choose what he/she wants and

when one wants from the wide selection of world-classcuisine. Be spoilt for choice with two of the worlds finestchampagne, or appreciate the extensive selection of fineaward-winning wines.


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When its time to unwind, slip on your Bose noise cancellingheadphones and enjoy the latest in-flight entertainment on your 23-inch flat screen TV. Of course, its all on demand so you controlwhat you watch and when you watch it.

The above services are currently offered only on the Mumbai-London-Mumbai and Delhi-London-Delhi routes, on our all-new

Airbus 330-200 and Boeing 777-300ER routes. These services willbe progressively introduced on other routes very soon.

As a Premire passenger, you have the privilege of selecting your seat atthe time of reservation, relaxing and enjoying complimentary snacks andbeverages at our plush airport lounges at Delhi, Mumbai (Bombay), Chennai

(Madras), Kolkata, Bangalore, Hyderabad and Jaipur.


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Special Services

Special servicesinclude Infant andchild

care,Wheel chairAssistance,Expectantmothers,Unaccompanied minors and

Medical Emergencies.


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KINGFISHER AIRLINESKINGFISHER AIRLINES


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VisionVision

The KingfisherAirlines familywill

consistentlydelivera safe, value-basedandenjoyabletravel experienceto all our

guests


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INTRODUCTIONINTRODUCTION

Kingfisher Airlines is an airline based in Bangalore,India. It is a major Indian luxury airline operating anextensive network to 34 destinations, with plans forregional and long-haul international services. Its main

bases are Bangalore International Airport, BangaloreChhatrapati Shivaji International Airport, Mumbai andIndira Gandhi International Airport, Delhi, with a hub atSardar Vallabhbhai Patel International Airport,Ahmedabad. Kingfisher Airlines, through one of its

holding companies UB holdings Ltd, has acquired 26%stake in the budget airline Air Deccan and has option tobuy further of 20% stake from the secondary market.


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HistoryHistory

The airline started operations on 9 May 2005, followingthe lease of 4 Airbus A320 aircraft. As of July 2007,Kingfisher operates only on domestic routes, however ithas announced plans to start flights to the USA withAirbus A380 aircraft. The airline is owned by the UnitedBeverages Group under the leadership of Vijay Mallya(which also owns the popular Indian beer of the samename). The airline promises to suit the needs of airtravellers and to provide reasonable air fares. KingfisherAirlines' main "luxury" component is its In-Flight

Entertainment System, a first among Indian airlines.


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Facts about KingfisherFacts about Kingfisher

The airline was the first in India to initially, and tocontinue, to operate with all new aircraft.

On 18 February 2005 Kingfisher Airlines signed acontract with Airbus for three Airbus A319 aircraft,

adding to the 10 Airbus A320 aircraft (plus twentyoptions) ordered in January 2005. The first of the A319swill be delivered in December 2005, complementing theA320s on routes to smaller cities in India.

Kingfisher was also the first Indian airline to bring thelatest super jumbo Airbus 380 to India. A 380 arrived on6 may 2007 in New Delhi and in Mumbai on 8th May aspart of Kingfisher's second anniversary celebrations


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GROUND SERVICESGROUND SERVICES

Your Personal Valet at the airport to assist youat every step of the way, from baggage handling

to boarding

Exclusive lounges with your private space,accompanied with refreshments and music


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SERVICESSERVICES

In-flight entertainment to take-off withPersonalized video screens and headphonesbroadcasting 5 video channels of the trendy FUN TV andthe exclusive Kingfisher Radio - 10 channels ofchartbusting music from across the globe.

Let's talk about your safetyThey have done everything possible to ensure it. Withthe most sophisticated communication, navigation andsecurity systems - both in the air and on the ground. As

well as with a highly trained and skilled team of pilotsand cabin crew who operate in completely state-of-the-art paperless environments.


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Feeling comfortable, now?You will, with the seats we've got in store for you.Indulgently wide, plenty of legroom and adjustableheadrests. Our superbly groomed flight attendants will

ensure that you're well taken care of.

Bon appetitA special selection of food and beverages is available onboard with an individual Menu Card for every guest toenable you to choose from the finest on offer.


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Are you there yet?Your individual moving map on the personalized videoscreen will let you know. It will continually keep track of

your aircraft's altitude and speed, as well as flight timeremaining to keep you on top of things at all times.

The little detailsThe Kingfisher Class experience begins even before you

step on board. When you book your ticket online in thecomfort of your home or office. At spacious terminalswith the personalized attention of our dedicated valets.At the convenient check-in counters. And the attentionto detail continues when you step on-board. Withswanky designer interiors, spacious overhead storage

bins, a professional crew decked in designer uniformsand a host of other comforts and delights.


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One of the mostEXCLUSIVEOne of the mostEXCLUSIVE

BOUTIQUES in the land ISBOUTIQUES in the land IS

NOTON LANDNOTON LAND

Personal Care

Home Care

Travel Accessories

KingfisherAirlines Memorabilia


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AWARDS AND ACHIEVEMENTSAWARDS AND ACHIEVEMENTS

"India's No. 1 Airline in customer

satisfaction"- BusinessWorld

"Rated amongst Indias 25 Innovative

Companies"- Surveyconducted by Planman

Media

Economic Times Avaya Award 2006 for

Excellence in CustomerResponsiveness-


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The GoodTimesThe GoodTimes


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UBGroup makes significantUBGroup makes significant

investment in Air Deccaninvestment in Air Deccan

An initial investment of Rs.150 crores into

Deccan Aviation Ltd. had been made againstwhich shares were allotted and furtherinvestments of Rs.396 crores were made beforethe end of June.

Captain G.R. Gopinath will continue as ExecutiveChairman, a new CEO will be appointedreporting directly to the Board of Directors.


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Kingfisher Airlines and Air Deccan will,henceforth, work very closely together toexploit the significant synergies that existin the areas of operations andmaintenance, ground handling, vastlyincreased connectivity, feeder services,

distribution penetration etc.


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The Kingfisher-Air Deccan group will be thelargest domestic airline with a fleet of71 aircraftincluding 41Airbus aircraft and 30ATR aircraft.

This combined airline powerhouse will cover allsegments of air travel from low fares topremium fares and offer the maximum numberof537 daily flights covering the single largestnetwork in India connecting 69 cities whilst

taking advantage of unparalled synergy benefitsarising from a common fleet of aircraft.


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Dr. Vijay Mallya, Chairman of the UB Group stated "when

I launched Kingfisher Airlines in 2005, I made astatement that I would build India's largest domesticcarrier by 2010. With this strong financial andoperational alliance between Kingfisher and Air Deccan,and our significant management participation, I havesucceeded in creating an Airline Group with the largestdomestic fleet, network and market share co-leadershipin just over 2 years. This will be welcomed by the entireaviation industry as it's a very significant move towardsmuch needed consolidation. The back-end operationalsynergies are enormous which will have a positivefinancial impact on both Air Deccan and Kingfisher andfurther improve the competitive position of the group inthe fast growing aviation industry in India.


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Airli Pr f r

80%

20%

ki fis r

t


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Entry OF Low Cost irlines

15%

50%

30%

2.50% 2.50%

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60%

SA A N D SD

Series1


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35

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yes no maybe

Increase in Advertisement

Series1


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Mer er f b t Airlines

25%

75%

yes

no


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40% 40%

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Positive Negative Neutral

Associationof K it liq or

Series1


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RecommendationsRecommendations

Boththe airlinescanthink about loweringthe

pricesoftheirticketseventhoughtheirtarget

marketistheeliteclass.

Canspend moreon advertisements.

Canropeincelebrities forendorsement.

Can betterontheirservices by providinggames

like Xbox,Playstationetc forkids. Canintroduceschemes like freetickets.

Makethesitting morespacious.

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