Tuesday, May 5, 2020
Kingfisher Airlines Growth of Low Cost Airlines
Question: Describe about the Report of Kingfisher Airlines for Growth of Low Cost Airlines. Answer: Literature review: Kingfisher Airlines was launched in the year 2005. Vijay Mallya, the owner also owned a beer brand with the same name. At the time of the launch of the airline, there was huge competition in the airline industry; Air India, Jet Airways and the low cost airline Air Deccan were the major competitors (Economictimes.indiatimes.com, 2016). Initial years of the Airlines attracted many passengers with the type of service that the Airline provided. At its peak, the Airline was the second largest airline in India in terms of carrying most number of passengers. With the increase in the price of fuel, the Company started to struggle in maintaining their lower pricing strategy. Soon its burden increased and the Company was found to struggle in its business. Net loss widened up to Rs. 1,608 crore INR. As commented by Zaman, (2012), that the acquisition of the Deccan Airlines happen to be the worst part of their business. There are other major reasons as well that has dragged the Airline towards i ts demise. As identified, some of the major issues of Kingfisher Airlines include lack of proper delegation, failure towards a good administration and inability to frame a good budget and pricing policy (Economictimes.indiatimes.com, 2016). As pointed out by Kaur (2013) that a big or a small firm does not matter when it comes to delegation. Assigning proper responsibility to right people holds key importance in the success of a business. Mallya, failed to understand the importance of this factor that lead to the decline of the Company. In this respect, Sarker, Hossan and Zaman, (2012) mentioned that keeping an eye on the market and the activities of the competitors in the industry are equally important. Kingfisher Airlines has completely failed in analyzing the market situation of the airline industry and the country of operation as well. There was sufficient lack in framing the budget of the Airline that failed to compete with the existing airlines and attract customers. According to Subha and Archana, (2013), analysis of the market situation gives an overall projection of the complete industry within a specific region of operation. When market analysis is done, it provides the company specific idea about the economic and the social status of the organization. It is based on the analysis, the Company might think about any kind of changes that are necessary for the improvement of the business of the company. In 2012, Vijay Mallyas Kingfisher Airlines shut the operation as a result of problems related to credit and cash flow. It was revealed that the Company was in a debt of $2 billion and more than 1000 employees of the Company were jobless. There was an arrear of over $100 million. The employees were unpaid salary. Very soon the share of the Company dropped dramatically by over 19.1% that lead to the situation when the government declined to provide financial help to the Company. These are overall the major reasons behind the downfall of a well established airline of India. Reference list: Economictimes.indiatimes.com (2016) Angry Kingfisher Airlines employees say Vijay Mallya has blood on his hands - The Economic Times. Retrieved 21 October 2016, from https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/angry-kingfisher-airlines-employees-say-vijay-mallya-has-blood-on-his-hands/articleshow/51268757.cms Kaur, N. (2013). Managing grievances with special reference to Kingfisher Airlines.EXCEL International Journal of Multidisciplinary Management Studies,3(5), 108-115. Sarker, M. A. R., Hossan, C. G., Zaman, L. (2012). Sustainability and Growth of Low Cost Airlines: An Industry Analysis in Global Perspective.American Journal of Business and Management,1(3), 162-171. Subha, M. V., Archana, R. (2013).Identifying the dimensions of service quality as antecedents to passenger satisfaction of Rajiv Gandhi International Airport.Journal of Contemporary Research in Management,8(2), 25.