1. INTRODUCTION 1.

1 Background of Research: The Indian aviation industry caters to the second largest population in the world and has shown a rapid growth in the last decade. Ever since its privatization and transition into the public sector, many domestic airline companies have set up shop resulting in cutthroat competition and reduced airfare a boon to the public. It was a good sign at first, but the current global economic downturn and dramatic hike in fuel prices have created a multitude of problems and grief for the Indian Aviation Industry. Rising labour costs, lack of skilled labour, excess capacity, the burden of huge debts and intense competition on prices have only added to the woes. Aviation industry is very sensitive industry triggered hard by the recession across the world and the research seeks at a better understanding of the challenges faced by Indian aviation industry. The Kingfisher Crisis Kingfisher Airlines is one of only seven airlines awarded the honored 5-star rating by Skytrax joining Cathay Pacific, Qatar Airways, Asiana Airlines, Malaysia Airlines, Singapore Airlines and Hainan Airlines. Operating 250 daily flights, it also has the highest market share among Indian airlines. Kingfisher also owns the Skytrax award for India's best airline of the year in 2011. Over the past few days, a lot has been said, and even more speculated by the media and the common man about the Kingfisher Airlines working schedule and their losses. There was a phase when we even heard news like "Poor days for the Good Times", "Kingfisher to shut down", and even "Kingfisher asks for a bailout plan". It seems it was the most hard-hit by the economic crisis and is the current face of the struggling Indian Aviation industry. Benefits or Outcomes of this research will help to know the reason of declination in 2nd largest share in Indias domestic air travel market of kingfisher airlines to lowest market share.

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1.2 Details of Industry: Indian Aviation Industry Aviation Industry in India is one of the fastest growing aviation industries in the world. With the liberalization of the Indian aviation sector, aviation industry in India has undergone a rapid transformation. From being primarily a government-owned industry, the Indian aviation industry is now dominated by privately owned full service airlines and low cost carriers. Private airlines account for around 75% share of the domestic aviation market. Earlier air travel was a privilege only a few could afford, but today air travel has become much cheaper and can be afforded by a large number of people.

The origin of Indian civil aviation industry can be traced back to 1912, when the first air flight between Karachi and Delhi was started by the Indian State Air Services in collaboration with the UK based Imperial Airways. It was an extension of London-Karachi flight of the Imperial Airways. In 1932, JRD Tata founded Tata Airline, the first Indian airline. At the time of independence, nine air transport companies were carrying both air cargo and passengers. These were Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways. After partition Orient Airways shifted to Pakistan.

In early 1948, Government of India established a joint sector company, Air India International Ltd in collaboration with Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft. The inaugural flight of Air India International Ltd took off on June 8, 1948 on the Mumbai-London air route. The Government nationalized nine airline companies vide the Air Corporations Act, 1953. Accordingly it established the Indian Airlines Corporation (IAC) to cater to domestic air travel passengers and Air India International (AI) for international air travel passengers. The assets of the existing airline companies were transferred to these two corporations. This Act ensured that IAC and AI had a monopoly over the Indian skies. A third government-owned airline, Vayudoot, which provided feeder services between smaller cities, was merged with IAC in 1994. These government-owned airlines dominated Indian aviation industry till themid-1990s.

In April 1990, the Government adopted open-sky policy and allowed air taxi- operators to operate flights from any airport, both on a charter and a non charter basis and to decide their own
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flight schedules, cargo and passenger fares. In 1994, the Indian Government, as part of its open sky policy, ended the monopoly of IA and AI in the air transport services by repealing the Air Corporations Act of 1953 and replacing it with the Air Corporations (Transfer of Undertaking and Repeal) Act, 1994. Private operators were allowed to provide air transport services. Foreign direct investment (FDI) of up to 49 percent equity stake and NRI (Non Resident Indian) investment of up to 100 percent equity stake were permitted through the automatic FDI route in the domestic air transport services sector. However, no foreign airline could directly or indirectly hold equity in a domestic airline company.

By 1995, several private airlines had ventured into the aviation business and accounted for more than 10 percent of the domestic air traffic. These included Jet Airways Sahara, NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, Continental Aviation, and Damania Airways. But only Jet Airways and Sahara managed to survive the competition. Meanwhile, Indian Airlines, which had dominated the Indian air travel industry, began to lose market share to Jet Airways and Sahara. Today, Indian aviation industry is dominated by private airlines and these include low cost carriers such as Deccan Airlines, Go Air, Spice Jet, kingfisher airlines ltd. etc, who have made air travel affordable. Kingfisher airlines Limited Kingfisher Airlines Ltd. (KAL) was incorporated on 15 June 1995 as Deccan Aviation Pvt. Ltd. in Bangalore, Karnataka. Subsequently it was converted into a public limited company and the name was changed to Deccan Aviation Ltd. on 14 March 2005. It was renamed as Kingfisher Airlines Ltd. after the commercial airline division of Kingfisher Airlines (erstwhile) merged with the company. The name change was effective from 1 April 2008.It is an airline group based in India. Its head office is in Andheri (East), Mumbai and Registered Office in UB City, Bangalore. Kingfisher Airlines, through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher Red. 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. Kingfisher Airlines is one of the only seven airlines awarded 5-star rating by Skytrax along with Cathay Pacific, Qatar Airways, Asiana Airlines, Malaysia Airlines, Singapore Airlines, and
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Hainan Airlines Kingfisher operates 250 daily flights with regional and long-haul international services. In May 2009, Kingfisher Airlines carried more than 1 million passengers, giving it the highest market share among airlines in India. Kingfisher also owns the Skytrax award for India's best airline of the year 2011. Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which Vijay Mallya also owns. Kingfisher Airlines proved to be a stiff competition for other domestic airlines of India, with its brand new aircraft, stylish red interiors, stylishly dressed cabin crew and ground staff. The airline introduced in-flight entertainment (IFE) systems, for the first time to Indian consumers. The IFE systems were provided on every seat, even on the domestic flights. The airline offers attractive services to its on board passengers. Years following its inception proved to be beneficial for the airline, in terms of its booming business, with a good track record of customer satisfaction. However, it faced a worsening economic scenario in 2008. In 2008, due to the prevalent economic downturn, the civil aviation industry faced the worst period in its history. It was the time, when air passenger traffic started dripping, and the aircraft fuel prices went sky rocketing. As a result, Kingfisher Chairman Vijay Mallya and his Jet Airways counterpart Naresh Goyal announced an alliance, after a meeting. According to the alliance, both the airline companies decided to implement code-sharing on both domestic and international flights. It was a step to reduce the expenses. Subsequently, frequent flier programs were announced by both the airlines, namely King Club and Jet Privelege.

Kingfisher Airlines offers several unique services to its customers. These include personal valet at the airport to assist in baggage handling and boarding, exclusive lounges with private space, accompanied with refreshments and music at the airport, audio and video on-demand, with extra-wide personalized screens in the aircraft, sleeperette seats with extendable footrests, and three-course gourmet cuisine. Kingfisher Airlines was the first airline in India to operate with all new aircrafts. It was also the first airline in the country to order the Airbus A380. Kingfisher Airlines currently operates ATR 42, ATR 72 and Airbus A320 aircraft for domestic and Airbus A330s for international services. In the present time, the airline operates with a fleet of 74 aircrafts, which include 25 Airbus A320-200 aircraft, 6 ATR 42-500, 27 ATR 72-500, 3 Airbus A319-100, 8 Airbus A321-200 and 5 Airbus A330-200. Delivery of A380s is due in 2010 and A350s in 2012.

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2. RATIONALE Aviation industry is very sensitive industry triggered hard by the recession across the world and this research seeks at a better understanding of the challenges faced by Indian aviation industry. Benefits or Outcomes of this research will help to know the reasons behind the mismanagement in financials matter of any reputed company like Kingfisher airlines limited which is consistently losing its market share. So this study will help us to understand the pre post status of aviation industries and its key players with respect to kingfisher airlines limited.

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3. OBJECTIVES

To understand the overview and challenges faced by the Indian Airline industry in the current economic slowdown..

To find out the reason of Kingfisher airlines financial crises.

To analyze the debt recast and net worth of kingfisher airlines in a current crises.

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4. RESEARCH METHODOLOGY 4.1 Design Research design provides the glue that holds the research project together. A design is used to structure the research to show how all of the major parts of the research project the sample or groups, measures, treatment or programs and methods of assignment work together to address the central research questions. Exploratory research is conduct to clarify ambiguous problems, management may have discover general problems but research is needed to gain better understanding of the dimension of the problem. 4.2 Tools for data collection Data are collected from secondary sources like financial statements, Journals, Magazines, Research reports, abstract, database of research organizations, Internet etc . 4.3 Tools for data analysis Since the study is of secondary kind, various financial tools and ratios will be used to analyze the collected data. Few of them are Comparative financial statement, Working capital analysis Fund flow analysis, Cash flow analysis, Ratio analysis, CVP analysis will be performed.

And various other tools may be used as per the requirement of the research.

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5. REFERENCES

CMIE/ Ebsco database William G. Zikmund, (2003), Business research methods 7th edition, Cengage learning Ind. Pvt. Ltd. Pandey I.M., (2005), Financial Management 9th edition, Vikas publishing house Pvt. Ltd. http://www.researchandmarkets.com/reports/1862253/aviation_sector_in_india_trend
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http://ezinearticles.com/?Challenges-Faced-by-Indian-Airline-Industry&id=2716915 http://hiandri.blogspot.in/2008/09/recession-in-indian-aviation-what.html http://en.wikipedia.org/wiki/Kingfisher_Airlines_financial_crisis http://www.moneycontrol.com/financials/kingfisherairlines/ratios/KA02 http://www.slideshare.net/abhishek.2105/kingfishercrashing-the-ground-presentation824531

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