Kingfisher Airlines

March 2010

Table of Contents
Section 1: Kingfisher Airlines Overview Section 2: India Aviation Market Section 3: Recent Performance and Continued Initiatives

Section 1

Kingfisher Airlines Overview

Kingfisher offers premium service with an efficient cost structure in the worlds most attractive aviation market
Indian aviation market is on a recovery path and is poised for long-term accelerated growth Recovery in the market is underway (14% load factor growth, 11% yield growth, 30% pax traffic growth) 15 20% 8 9%, 2x Aviation is poised for secular growth of 15-20% (GDP growth at 8-9% Aviation growth 2x, 4 trips/100 people) Irrational exuberance of capacity addition witnessed in the past is unlikely to recur (Air India likely to rationalize capacity by 30%, All other airlines expected to add only 10-15 planes in next year on base of 260) Enabling conditions are improving; Significant upgradation in infrastructure of airports Indian market is unique; Transplanting global models in India has rarely worked Indian geography makes airline travel indispensable; Emerging demographic profile requires equal focus on metro and Tier-2 cities; Higher growth likely inTier-2 cities which are typically located in 500-600km from key metros After years of deprivation, Indian consumers are moving towards conspicuous consumption; deep-rooted class conscious mindset Large proportion of consumers continue to be indirect purchasers; leisure traffic is limited No cost advantage for LCC operators (No separate airports, same personnel costs, low ancillary revenue, limited online booking) Indian markets is more suited for short and medium-haul international routes at current fuel prices Slot constraints in metro airports create entry barriers for new players
4

Kingfisher offers premium service with an efficient cost structure in the worlds most attractive aviation market
Kingfisher offers a unique model which serves all Indian consumer segments & positions KFA to capture all growth opportunities in India Airbus and ATR fleet provides unique advantage to capture growth in metro, Tier-2 cities and international market Premium offering covering all consumer segments (Only Indian airline with 5-star rating) KF First for high end business & premium consumers (valet service, gourmet cuisine, stand-up bar & lounge) Kingfisher Class for business consumers (IFE, superior service) Kingfisher Red for value-conscious (Food on Board, Lounge access, FFP)

Cost - competitiveness to ensure premium services are offered at value price points Cost difference with LCC would be limited to Food-on Board ($1.5) and GDS costs ($5)

Kingfisher has developed unique advantage over its competitors Best lifestyle brand in the country supported by multiple UB group properties (e.g. Beer, Force India, IPL); 50 years of serving the Indian market provides unique consumer insights Largest Indian domestic carrier by market share; widest domestic network connectivity (~ 400 daily flights) to leverage growth across all segments (Highest frequencies in key metros; Maximum day-return products; 29 exclusive city pairs; 400+ connections) l i it i ti ) (contd.)
5

Kingfisher offers premium service with an efficient cost structure in the worlds most attractive aviation market
(contd.) First carrier to enter Big-3 alliances One World; In addition, Kingfisher and Jet are the only private carriers currently to have approval for international operations y pp p Medium-haul routes connect to hubs of major participants in the alliance (HKG, LHR, SIN); These routes also serve large Indian diaspora All short-haul routes to neighboring countries served through cost-effective A320 which increase aircraft g g g utilization Innovative FFP program has attracted over 1.1 million members in 4 years (68% cabin penetration in First) Kingfisher is Indias most efficient and flexible Airline Consistently rated best on consumer satisfaction across surveys (rated higher than SQ in Asia) Best on-time performance amongst scheduled carriers (82%+ in Jan 10) Highest operational reliability of A321 fleet in world and one of the best technical despatch reliability in A320 fleet High aircraft utilization (~12 hrs on Airbus in a non red-eye market) Low employee/aircraft ratio at 115; Non-unionized workforce; Outsourced model ensures low fixed costs 25% of Airbus fleet is flexible; can be branded as Kingfisher Class OR Kingfisher Red based on market needs
6

Kingfisher offers premium service with an efficient cost structure in the worlds most attractive aviation market
Kingfisher is now focused on ensuring sustainable and profitable growth Experienced management team is in place with deep aviation experience Rationalized capacity by > 20% during past 2 years; At the same time order book position will ensure lucrative growth to capitalize on demand uptick Steadily increasing Passenger RASK (21% increase from Rs 3.19 to Rs 3.86 over past 6 quarters); Several revenue enhancement initiatives identified and initiated, which would further enhance RASK Kingfisher Xpress cargo service, One Stop Connect campaign, code share agreements with key global carriers, updated FFP program, Internet Booking Engine, Revenue Management initiatives, One World Alliance Aggressive cost reduction plan targeted to reduce costs Rationalizing distribution costs, Reduction in expat pilots, renegotiating E&M vendor agreements, renewal of operating leases at 20% discount, additional operational efficiencies (fuel consumption, overheads) Balance sheet being restructured to re-phase and reduce debt Appointment of Seabury as advisors to identify further opportunities for efficiency enhancement Additional upside possible through policy initiatives like tax rationalization on fuel
7

UB Group Transparent Holding Structure (as on date)

51.8%

Promoter Group

UBHL

Held by UBHL

Held by Promoters and Other Group Cos.

Total Group Holding

Real Estate (UB City)

Investments

Pegasus License

USL UBL KFA

29.11% 12.62% 60.58% 37.18% 24.51% 10.22%

6.65% 24.87% 5.69% 3.56% 5.94% -

35.76% 37.49% 66.27% 40.74% 30.45% 10.22%

Spirits
35.8%

Beer
12.6%

Aviation
60.6%

Other Inv

UB Engg gg MCF Aventis

10.2%

United Spirits Ltd

United Breweries Ltd

Kingfisher Airlines Ltd

Aventis Pharma Ltd

100% 50%

24.5% Mangalore Chemicals & Fertilizers Ltd

Whyte & Mackay

Millennium Alcobev

37.2% UB Engineering Ltd

UB Groups Entry into Aviation

May-05 KFA first flight

Jan-05

31-May-07 KFA buys 26% stake in Air Deccan @ INR150/share

Apr-05

Jul-05

Oct-05

Oct-08 Indias largest carrier with ~ 28% market share

21-Jul-08
Jan-08

UB Groups dominance of its core beverage business, business gave it unique strengths Sharp understanding of the evolving tastes and behavior of the Indian consumer Ability to create premium products with true value N Nuanced understanding of operating i a d d t di f ti in highly regulated environment Aviation offered extra ordinary growth potential in an emerging economy like India UB group launched Kingfisher Airlines to leverage on its unique strengths Aviation business has been built on three core competencies of the group Ability to deliver a unique experience while remaining competitive Ability to manage scale up Ability to tightly manage costs

Apr-08 Jul-08

Launches plans for international operations and Kingfisher First

Oct-08

Jan-10 Kingfisher dominates with widest network coverage of about 63 cities operating over 375 flights a day within India

Apr-09

1-Sep-08 Deccan to be renamed as Kingfisher Red

Jul-09

Oct-09

Jan-10

Strong and Highly Experienced Management Team

Chairman & CEO Dr. Vijay Mallya
Operations & Engineering Hitesh Patel EVP In-Flight & Services Rajesh Verma EVP Finance A Raghunathan CFO Commercial Manoj Chacko EVP IT Sourav Sinha CIO

Currently leading operations and engineering at Kingfisher Airlines, Hitesh has over 27 years of work experience in the Airline industry. Prior to joining KFA, Hitesh managed the line and base maintenance operations at JetBlue y Airways in United States as a Director for over 6 years. Hitesh enjoys the record of having maintained the best fleet with the highest dispatch reliability of Airbus A320s world-wide

Rajesh heads Guest Services, In Flight Services, Airports and Security functions at Kingfisher Airlines and has rich experience in the Airline and Hospitality industries. Prior to KFA, he worked with Jet Airways for over 10 years. Rajesh has also worked with the ITC-Welcome Group

Mr. A Raghunathan is a qualified Chartered Accountant with over three decades of work experience in finance and accounts. Before taking over as the CFO of Kingfisher Airlines, Mr. A Raghunathan worked in senior finance positions in q the liquor business of UB group for 26 years. He is responsible for Finance, Accounts, Legal, Secretarial, Purchase & Administration

Manoj has over 18 years of experience in Indian and international airlines and travel services. He currently heads the Commercial function at Kingfisher airlines and is responsible for the Sales, Revenue Management, Network Planning, y y Alliances and Loyalty functions. Prior to joining Kingfisher, he has worked with American Express (Travel services division) and Emirates

Sourav currently heads Information technology at KFA and has over 17 years of work experience with airline systems and technology. Prior to joining Kingfisher, he spent 10 years with TCS and was the head of IT department at Qatar Airways

10

Strong and Highly Experienced Management Team (contd.)

Chairman & CEO Dr. Vijay Mallya
Corporate Development & Planning Amit Agarwal A it A l Sr. VP
Amit has recently joined Kingfisher as Sr. VP Corporate Development and Planning. He comes with a strong airline background spanning over 17 years with leading airlines such as American Airlines, Continental Airlines and Delta Airlines. His last role with Delta was Managing Director for RM, Pricing & the Network Group. Rubi heads the Human Resources function at Kingfisher Airlines. She has over 13 years of experience spanning various industries and consulting. An MBA in Human Resources from Indias premier institute XLRI, she was previously associated with the UB group. Prior to that, she worked with PricewaterhouseCoopers in their Human Capital Solutions group . Ravikant currently heads the Marketing function at Kingfisher Airlines and overall has an experience of 18 years in Marketing. He joined the UB group in 2007 and was Divisional Vice President-Marketing prior to joining Kingfisher Airlines in September 2009.

Human Resources Rubi Arya VP

Marketing Ravikant Sabnavis VP

Quality & Guest Commitment Gaurav Rathore AVP

Security Maj. Leslie Missal AVP

Gaurav is responsible for the Quality, Guest Commitment & Call Centre functions in Kingfisher Airlines. Gaurav has over 15 years experience in the aviation industry. Prior to joining Kingfisher, Gaurav worked with Jet Airways where he was heading the Service Quality Group. y p

Major Leslie is the head of the Security function at Kingfisher Airlines. Prior to Kingfisher Airlines, he was associated with the UB group since 2003, in the role of Security Advisor. Prior to his stint with the UB Group, Major Leslie served the Indian Army for 10 years in countery insurgency areas, and as a Black Cat Commando for 3 years.

11

A Premier Product for the Indian Flyer with a Low Cost Focus
Strong Kingfisher Brand High brand salience & preference in the minds of Indian consumer Costs more aligned towards low cost model C Allow high level of operational flexibility Well spread on business and leisure routes Highest exclusive stations amongst private carriers Premium business class product, well trained young staff Well positioned to capitalize on the demand uptick Balanced & Flexible Aircraft Configuration Segmented customer base targeted effectively through three sub brands Kingfisher First, Kingfisher Class and Kingfisher Red Flexibility to deploy same aircrafts across Kingfisher Class and Kingfisher Red based on need Protection against policy change More than 1 million members; superior features like faster tier upgrade, non-air reward shop, family club program encouraging customer stickiness
12

No Legacy Issues (Unions etc)

Diversified Network Monopoly Destinations High Service Quality Levels

Outsourced Ground Handling

Unique Frequent Flyer Program

Widely Recognized for Brand Strength and World Class Service

Asia Pacifics Top Airline Brand in a survey conducted by TNS on 'Asia Pacific's Top 1,000 Brands' for 2008 (2007 SQ) Voted Indias No. 1 airline in customer responsiveness in an independent survey Voted Indias No 1 airline in customer satisfaction in an independent survey conducted by Indias largest India s No. India s business magazine Rated the Best Airline in Central Asia at the SKYTRAX World Airline Awards in 2009 Economic Travel award for India's top rated Domestic Airline- Full Service for Kingfisher Airlines and India's top rated Domestic Airline- Low Cost for Kingfisher Red (2009) Indias favorite airline as per recent HT-MaRS consumer survey (2009) Kingfisher Airlines frequent flyer program, King Club received 2 Freddie Awards for Best Bonus Promotion and Best Customer Service in 2009

13

What Makes Kingfisher Indias Favorite Airline?

The Hindustan Times- MaRS Consumer Satisfaction Survey rated Kingfisher as Indias Favorite Airline

Overall Rating of Airlines Operators (1)

Aggregating Their Flying Experiences on All Airlines, Indian Flyers Gave a Satisfaction Rating of 794 out of 1,000

Kingfisher

794

Jet Ai J t Airways

786

Kingfishers valets (porters and loaders) make a great difference for guests. Kingfisher does a little extra, which passengers like. It is also seen as a glamorous airline and people do like that, too. Then, of course, it serves excellent onboard cuisine - Ajay Prakash, CEO of Mumbai-based Nomad j y , Travels

Spice Jet

773

Indigo

761

The inquisitiveness about Mallya and his lifestyle draws a sizeable number of flyers to Kingfisher. Given an option, I prefer Kingfisher. It is much better value for money Ankur Bhatia, MD, Amadeus India, the countrys largest online reservation system

Go Air

752

Jet Lite

745

Kingfisher is the best due to its competitive fares and hygienic washrooms. Their service attitude makes all the difference. I will prefer Kingfisher even if the fare is 5 per cent more. Rajesh Verma, Mumbai-based exporter
760 780 800

Air India

736

700

720

740

Notes (1) Higher scores indicate greater satisfaction levels

14

Differentiated Strategy Offers Best-in-Class Value

Gourmet Cuisine

Only domestic airline to provide Gourmet menus created by a team of renowned Chefs

Complimentary Hot & Filling OnFlight Meals

Only low cost airline to provide complimentary meals including breakfast, lunch, snacks and dinner depending on flight timings

In-Flight Reading Material

Our on-board reading material is a mix of International and Domestic, Business, Fashion and Leisure Magazines The newspaper selection ranges from The International Herald Tribune and The UK Times to ethnic language publications

In-Flight Reading Material

Selection of Indian publications such as Cine Blitz, Times of India, Economic Times and local newspapers as on board reading material

Kingfisher Lounge in the g Air

Kingfisher First lounge on board is staffed by professionally trained Bartenders offering Signature Cocktails in a luxurious setting

Frequent Flier Privileges

Only low cost airline in India to offer Frequent Flier Privileges Reward system linked to King Club

In Flight In-Flight Guest Amenities

Kingfisher First Amenities (Perfumes, Eau de Toilettes, Moisturisers, Lip Balms and t il d Sl B l d tailored Sleeper S it ) Suits) exclusively designed by Salvatore Ferragamo

Efficient Service at Low Cost

A judicious mix of customer service and basic comforts provided at low cost t Delivers a delightful experience to the cost conscious yet discerning traveler

15

Partnerships & Frequent Flyer Program

More than 88 bilateral and unilateral interline partners across the world

Partnerships

Focused on attaining code shares Only Indian private carrier slated to join a global Alliance- One World, which is expected to further enhance revenue and streamline costs

Huge member base in just 4 years of launch (~1.16 million members growing at 46% YoY) Awarded Two top honors at Freddie Awards 2008 (Best Bonus promotions , Best Customer Service)

Frequent Flyer Program

One-of-its kind benefits like family club and non-air rewards Very high cabin penetration levels indicating affinity to the product (Kingfisher First penetration ~68%) 68%) Significant ancillary revenue generation through 57 partners across 10 verticals ( Banking, Hotel, Retail)

Launch of an auto-sweep co brand credit card (current and new partner) expected by Q2 FY11

New Developments and way forward

Launch of debit co-brand card expected by Q4FY11 Extension of King Miles as a preferred loyalty currency by increasing width of partners Increased CRM based analytics and campaigns

16

One World Alliance

About One World One World serves 800 airports in 150 countries. It operates 9,000 daily flights, carrying 340 mn passengers annually, on a combined fleet of 2,500 aircraft

Worlds most profitable global alliance, bringing together the leading airline carriers American Airlines carriersAirlines, British Airways, Cathay Pacific, Qantas, Finnair

Voted the Worlds Leading Airline Alliance for the seventh year running in the 2009 World Travel Awards

Only alliance with member airlines based in every continent and with members based in South America, Australia and Asias Middle East

Key Benefits for Kingfisher Access to market share and network without significant addition of financial investments Access to landing/parking slots and gates that are typically leased to the larger airlines Significantly enhance customer proposition Top-tier qualifying miles Top-tier recognition Global lounge access

Provide further opportunities for cost savings and access to management best practices 17

Powerful Marketing Efforts Drive the Kingfisher Brand Strength

Movie Associations and in - Film Branding

Events Cabin Crew with Delhi CM at Delhi Marathon Events: Womens Conference with Cherie Blair Kingfisher Cabin Crew at the TiE Summit

Outdoor Branding

18

Significant Marketing Synergies from Parent Group Branding

Leveraging Group Marketing Assets
Formula 1 Car Racing Team Kingfisher East Bengal Football Club

Royal Challengers IPL Cricket Team

Kingfisher Frequent Flyer Program

19

Extensive Network Providing the Widest Domestic Reach

66 aircraft 70 destinations 394 flights a day

Market Share Evolution

%
100 4 4 2 1 15 12 5 11 50 7 36 25 12 0 KFA Jet Lite Go Air Paramount 5 FY 2005-06 Air Deccan Air India Spice Jet January 2010 Jet Airways Alliance Air Indigo 22 18 18

75

27

AI

JA

KFA

Source: DGCA

20

Performing well on operating parameters

Key Operational Analysis
Current Fleet (Dec09) Average Fleet Age (yrs) Employees per Aircraft Market Share (Jan10) Average Seat Factor (Apr-Dec09) RASK (Apr-Dec09) CASK (Apr-Dec09) Unionized Legacy Govt. Ownership Customer Satisfaction

KFA
61 3.0 115* 22.2% 70.2% 3.58 3.88
No No

Skytrax-5 star

Notes (1) All metrics are for domestic operations only (2) Market Share is basis DGCA report for Jan 2010 2010 (3) RASK is Passenger Revenue per ASK; CASK is EBITDA cost per ASK (4) ASKMs are basis the DCGA monthly reports (5) * Employees/AC numbers are for Domestic + International ops, based on Q3 FY10 declared numbers Source: DGCA and Published financials

21

Uniquely Flexible Fleet to Aid Market Based Deployment

Current Fleet Description Fleet Type Airbus 319 Airbus 320 Airbus 321 Airbus 330 ATR 72 ATR 42 Total Fleet Strategy # Aircraft 3 23 8 5 25 2 66

Projected Delivery Schedule Fleet Type 2011 2012 2013 2014 2015 2016 Total # A320 6 9 7 8 12 42 # A330 4 3 4 4 0 15 # A350/380 2 6 2 10 Total 0 10 12 13 18 14 67

Airbus A 320 fleet in multiple configurations ( Single & Dual ) to aid a map to market capability ATR fleet to leverage growing underserved & underdeveloped markets Competitive A 330 aircraft designed with unique KF specs to create the best product in the sky for international best sky medium & long haul operations
22

Leverage Strengths in Engineering & Maintenance

Key Industry Standard Certifications

ISO certification- twice a year audit done by BSI Management system, India, a subsidiary of British Standards Institute IOSA certification- 3 Audits (KF standalone, DN standalone, KF & DN combined)

Fleet Management Capabilities for Specialized Purposes

Self management of entire NSOP fleet B727 / HS125 / Helicopter EC 155 Total care support to Reliance ACJ (VVIP Aircraft) First organization to receive approval under CAR 145 Highest operational reliability of A321 fleet in world fleet & one of the best technical g p y dispatch reliability in A320 family fleet Safety management system is built into E & M policies through MOE & QMS Approvals obtained from Civil Aviation Authority of Singapore (CAAS), Qatar Civil Aviation Authority (QCAA) Civil Aviation Authority of Srilanka (CAASL) (QCAA), Approvals in process: General Civil Aviation Authority (GCAA-UAE), EASA

High Operational Reliability and Safety Management

Foreign Regulatory g g y Approvals

Third Party Handling Support at Indian Airports

23

Section 2

India Aviation Market

24

Most Attractive Aviation Market in the World

Aviation traffic in India amongst lowest in BRIC countries
Aviation Traffic Penetration in BRIC Countries
25 45.1 39.4 35.8

Historical domestic passenger CAGR of 20%...

Enabling conditions would ensure continued growth Economy expected to continue to grow at 7% 9% Ministry of Civil Aviation envisages creating infrastructure to handle 280 MM passengers by 2020

Growth of Indian Aviation Industry

50.0 50 0

CAGR of 20% since FY 2004

44.4 40.0

23

20

30.0 25.2 19.4 15.7

15

13

20.0

10

Indian Middle Class to reach 50% of Indias population at 600 MM by 2025

4

10.0

0.0
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10E Annual domestic pax traffic (Mn)

0 Brazil China India

No. of domestic passengers per 100 people

KPMG expects Indias air traffic to grow 2 3 times by 2012

Source: KPMG, MOCA, CAPA, McKinsey Global Institute

25

Highest Growth Aviation Market in the World

North America 10.5%

Europe 7.9% 7 9%

CIS 8.7%

Middle East 7.2% Africa 8.3%

India 2007 2016 2017 2026 2007-2016 2017-2026 9.7%
Source : Airbus Estimates

11.5% 11 5% Asia-Pacific 7.4%

World 20-year growth 8.0% 2007 2016 2017 2026 2007-2016 2017-2026 5.4% 4.4% 20-year growth 4.9%
26

6.4%

Massive Infrastructure Investments Supports Growth

Massive Airport Investments Over next 5 years, Airports Authority of India has planned an investment of US$3.1 Bn Government policy support for Infrastructure 100% FDI under automatic route is permissible for green field airports Private developers allowed setting up of captive airstrips and general airports 150 km. away from an existing airport 100% tax exemption for airport projects for a period of 10 years The Government is also planning to develop around 300 unused airstrips

Non-Metro Airports Identified for Upgrade and Modernisation

Jammu Amritsar Chandigarh Dehradun Dimapur Patna Guwahati Imphal

Jaipur Udaipur Ahmadabad Rajkot

Agra

Lucknow

Varanasi Bhopal Khajuraho Ranchi Raipur Bhubaneswar Vizag

Agartala

Indore Vadodara Nagpur

Aurangabad Pune

Goa Mangalore Agatti Coimbatore Trivandrum Trichy Madurai Port Blair

Land Constrained Airports

Unconstrained Airports

Source : CAPA

27

Move Towards a Rational Supply Environment

Avg. Monthly Seats Offered

Industry (MM)
6.5 6.1 5.9 5.6 5.5 5.4 54 5.2 5.0 5.0 4.8 4.5 45 4.6 5.2 5.1 4.9

Seats Offered Industry (MM) 2H 2008 1H 2009

H-o-H HoH 4% (16%) 3%

6.0 6.0 60 5.8 5.5 5.5 3 5.3 5.0

2H 2009

5.3

5.4 5.2 5.3 4.9

5.3

5.1

4.0 Jan CY08 Feb Mar CY09 Apr May Jun Jul Aug Sep Oct Nov Dec

Source : MOCA Website, PIB press releases

28

Government Policies Present Upside

Expected change in Government policies & in macro-economic environment would result in lower operating costs for the industry Declared Goods status for ATF would result in lower uniform taxation of 4% on fuel p private airports expected to be charged as UDF from consumers. No p p g Escalation of airport costs at p escalation foreseen for AAI airports, given the recent hikes in 2009 Removal of expat pilots by July 2011 as per Government guidelines across Industry

29

And There Is Reason to be Optimistic

The big three players Kingfisher Airlines (23%), Jet Airways + JetLite (25%) and Air India (18%) are critical to the Indian economy (4)

$14bn + aviation industry is similar in size to Indian railways ($18bn) Creates substantial impact on other allied industries Tourism, Hospitality, Banking 4.5% of global GDP is attributed to the air transport component of civil aviation (1) Impact on indirect industry is estimated at 1 1 5 times size of aviation industry (2) 1-1.5 Improved connectivity results in higher GDP growth $100 spent on air transport produces benefits worth $325 for the economy (1) Improves economic productivity of passengers (estimated at 50% of ticket prices) (3) Creates significant employment potential Direct ~ 100,000 Indirect ~ 6 times (1)

Notes 1) Naresh Chandra Committee Report 2) Port Authority report on New York aviation market 3) IATA report 4) YTD FY10 market share

30

Indian Aviation The Way Forward

Favourable Economic Outlook

The economy continues to show signs of recovery with GDP g y g y growth estimates climbing back g over 7% Passenger traffic has firmed up in Q4 and is expected to grow by > 15% in the coming year as per CAPA estimates Premium traffic has also seen a comeback and growth is expected to continue

Better DemandSupply Match pp y Should Improve Yields

Industry capacity is more aligned to demand after a series of sharp cuts in the early 2009, and capacity induction in the current year is expected to be <10 % as per CAPA estimates Yi ld i Yield improvements witnessed i Q3 are expected to continue given the narrowing of the i d in d i i h i f h demand supply gap. CAPA expects domestic yields to improve by 5-7% in 2010-11 and as high as 10% in Q3 of next year

Pricing and Policy Matters

Rational pricing is expected from industry, going forward Government is re-evaluating policies which might benefit industry ATF taxation, FDI norms, RDB guidelines , g

31

Section 3

Recent Performance and Continued Initiatives

32

Kingfisher Has Actively Rationalized and Restructured Capacity

KFA Capacity Trend
Second round of capacity rationalization to balance demand supply

First mover to rationalize industry capacity

Shift of capacity towards KFR to address the tough market requirements

KFA decreased capacity by 25% in the domestic market in Summer 2008 to rationalize industry capacity Capacity was further rationalized by 13% in June 2009 to balance demand and supply in a tough economic environment KFR contribution to total capacity increased from 40% to 65% to address the market requirements 33

And Has a Well Calibrated Plan for its International Operations

KFA adopted a cautious approach to international operations due to the prevailing economic conditions:
Did not initiate Ultra-long haul A340 operations - sold out the Aircrafts C ti Cautiously d l l deployed th A330 t LHR SIN and HKG markets to build operations i t k d the A330s to LHR, d k t t b ild ti into key markets from India, along with potential alliances with other global carriers - a step towards joining a global alliance Have identified lucrative short-haul markets - BKK DXB, CMB, KTM & DAC - and deployed short haul BKK, DXB CMB narrow body capacity of existing aircraft to enhance utilization Future capacity deployment plans include increase of frequency to these destinations by further exploiting narrow body fleet Currently KFA has an option to purchase 4 A 330s every year from 2012, the decision for which would be taken closer to date, given the operating environment

34

Which is Improving Operating Performance

Improvement in Overall Seat Factors of KFA

%
85

Uptick in KFAs Domestic Revenue (RASK-Fuel CASK) ( )

RASK (in Rs.)
3.5

Rising Yields as Seen in KFAs Domestic ATV

KFA ATV Trend ATV (INR)
7,000

80

3.0

2.5

6,000

75
2.0

70
1.5

5,000 5 000

65

1.0

4,000

60

0.5 0.0
Ap M r ay Ju n Ju Au l g Se p O ct No v De c Ja n Fe b M ar

55
Ja n Fe -0 9 b M - 09 ar Ap - 09 M r- 0 ay 9 Ju -09 nJu 0 9 Au l-09 g Se - 09 p O - 09 ct No - 09 De v-0 c- 9 09

3,000
Ja n Fe -0 9 bM 09 a Apr- 09 M r- 0 ay 9 Ju -09 n Ju -0 9 Au l-09 g Se - 09 p O - 09 ct No - 09 De v-0 c- 9 09

SF

200809

200910

KFC

KFR

Total

35

Improvement Reflected in Y-o-Y Results

Apr 09 - Dec 09 (Rs. Cr) INCOME Operating Revenue Non Operating Revenues Total Revenues EXPENDITURE Employee Remuneration & Benefits Aircraft Fuel Expenses Other Operating Expenses EBITDAR Aircraft Lease Rentals Total Operating Expenditure EBITDA Depreciation Interest Total Expenditure Loss before exceptional items and Tax Exceptional Item Provision for taxation PROFIT / (LOSS) AFTER TAXATION 531 1,319 1,484 485 840 4,175 (355) 156 818 5,149 1,29 300 (554) (1,075) 3,776 43 3,819

Apr 08 - Dec 08 (Rs. Cr) 4,168 16 4,184 620 2,267 1,739 (442) 900 5,526 (1,342) 125 529 6,180 1,996 (459) (482) (1,055)

Variance % -9% +169% -9% -14% -42% -15% -7% -25% +25% +55% -17% -33%

+2%

36

With This Stringent Cost Focus, Kingfisher Has Emerged as the Lowest Cost FSC in the Current Year

Cost Comparison (Apr-Dec FY10)

KF Cost Details Fuel Cost Non-Fuel Cost Employee Emplo ee S&D Other EBITDAR Cost Lease Cost EBITDA Costs Depreciation/Amortization EBIT Costs ASKM (Mn) ASL Seats/Flight Rs. Cr 1,102 1,920 472 408 1,041 3,021 665 3,441 156 3,598 8,860 8 860 803 110 3.88 9,760 9 760 (1) Adjusted CASK (1) 1.24 2.08 0.48 0 48 (1) 0.46 1.14 (1) 3.32 0.68 0 68 (1) 3.72

Notes Costs include domestic operations, and include reversals undertaken in respective time periods (1) Adjusted CASK refers to estimated CASK at higher capacity for full fleet operations for Apr-Dec FY10 ( assuming no grounding of aircrafts)

37

Kingfishers Multi Pronged Cost Reduction Initiatives Are Expected to Further Reduce its Costs

Reduced Costs in 2010-11 Focus on reviewing distribution channels and costs to reduce S&D costs to 8% of revenue New IBE geared towards increasing website sales

Rationalizing Distribution Channels

Renegotiating Vendor Agreements

Overall S&D cost and achieving a cost of < $4 per RPB, by restructuring CRS/GDS contracts and increasing direct web share Additional fuel discounts E&M costs with new vendor (Air France) In-flight & Catering costs through change in menu and additional volume discounts Renewal of operating leases at 20% discount to existing lease Reduce Rentals, costs of Transportation and local Conveyance, Communication Consolidate and optimize space (warehouses, offices, call centers) Increase effectiveness of spends and increase barters to reduce Marketing costs Reductions in employee cost through sizing manpower with capacity Replacement of high cost expat pilots in narrow body fleet Reduction in excess AMEs/ ATR expat Reduce fuel consumption to less than 3,000 Ltr/BH for A320 and 750 Ltr/BH for ATR operations through targeted reviews p , p g g Target E&M spend reduction (in-house C-checks, controlled redelivery)

Control Discretionary Spend

Head Count Rationalization

Operational Efficiency

38

Summary of Seaburys Mandate and Plan

Focus areas for Seabury include

Draft 5 year business plan basis current operating dynamics

Review all areas of operations

Review fuel consumption process

Implement leading practices in revenue management

Review and help restructure Sabre contracts

Review network strategy with focus on profitability

Benchmark aircraft lease rentals and maintenance reserves to the best

Evaluate profitability of ATR fleet

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Further Market Share Opportunities

Enhancement of day return product across key primary and secondary sectors Incremental passenger connections generated through launch of One Stop Connect campaign Increased presence thro gh e pansion of inter line agreements and e al ation of global through expansion inter-line evaluation alliances Increased ancillary revenues through launch of cargo operations (Kingfisher Xpress) Strengthened loyalty through enhanced FFP program New Internet booking engine driving greater consumer traffic towards online bookings Leverage international POS to stimulate demand in key South East Asian markets

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