Kingfisher Airlines

March 2010

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

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Section 1

Kingfisher Airlines Overview

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Kingfisher offers premium service with an efficient cost structure in the world’s 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) − 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
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gourmet cuisine. Maximum day-return products. superior service) Kingfisher Red for value-conscious (Food on Board. Force India.competitiveness to ensure premium services are offered at value price points − Cost difference with LCC would be limited to Food-on Board ($1. 29 exclusive city pairs. widest domestic network connectivity (~ 400 daily flights) to leverage growth across all segments (Highest frequencies in key metros. 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. IPL). stand-up bar & lounge) Kingfisher Class for business consumers (IFE.) 5 . Beer. 50 years of serving the Indian market provides unique consumer insights − Largest Indian domestic carrier by market share.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.Kingfisher offers premium service with an efficient cost structure in the world’s 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. FFP) − Cost . Lounge access. 400+ connections) (contd.

Non-unionized workforce. Kingfisher and Jet are the only private carriers currently to have approval for international operations − Medium-haul routes connect to hubs of major participants in the alliance (HKG.) − First carrier to enter Big-3 alliances – One World. These routes also serve large Indian diaspora − All short-haul routes to neighboring countries served through cost-effective A320 which increase aircraft utilization − Innovative FFP program has attracted over 1.1 million members in 4 years (68% cabin penetration in First) Kingfisher is India’s 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. Outsourced model ensures low fixed costs − 25% of Airbus fleet is flexible.Kingfisher offers premium service with an efficient cost structure in the world’s most attractive aviation market (contd. LHR. In addition. SIN). can be branded as Kingfisher Class OR Kingfisher Red based on market needs 6 .

renewal of operating leases at 20% discount. 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 .Kingfisher offers premium service with an efficient cost structure in the world’s 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. code share agreements with key global carriers. additional operational efficiencies (fuel consumption. 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. Several revenue enhancement initiatives identified and initiated.86 over past 6 quarters).19 to Rs 3. One Stop Connect campaign. which would further enhance RASK − Kingfisher Xpress cargo service. renegotiating E&M vendor agreements. Reduction in expat pilots. Revenue Management initiatives. updated FFP program. One World Alliance − Aggressive cost reduction plan targeted to reduce costs −Rationalizing distribution costs. Internet Booking Engine.

65% 24. Total Group Holding Real Estate (UB City) Investments Pegasus License USL UBL KFA 29.2% United Spirits Ltd United Breweries Ltd Kingfisher Airlines Ltd Aventis Pharma Ltd 100% 50% 24.8% Promoter Group UBHL Held by UBHL Held by Promoters and Other Group Cos.18% 24.58% 37.45% 10.74% 30.6% Other Inv UB Engg MCF Aventis 35.22% Spirits Beer 12.2% UB Engineering Ltd 8 .56% 5.87% 5.69% 3.94% - 35.11% 12.6% Aviation 60.27% 40.62% 60.8% 10.51% 10.76% 37.49% 66.22% 6.5% Mangalore Chemicals & Fertilizers Ltd Whyte & Mackay Millennium Alcobev 37.UB Group – Transparent Holding Structure (as on date) 51.

gave it unique strengths – Sharp understanding of the evolving tastes and behavior of the Indian consumer – Ability to create premium products with true value – Nuanced understanding of operating in a 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 Launches plans for international operations and Kingfisher First Jul-08 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 9 .UB Group’s 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 India’s largest carrier with ~ 28% market share 21-Jul-08 Jan-08 • UB Group’s dominance of its core beverage business.

Strong and Highly Experienced Management Team Chairman & CEO Dr. Alliances and Loyalty functions. he worked with Jet Airways for over 10 years. Rajesh has also worked with the ITC-Welcome Group • Mr. Revenue Management. Prior to joining Kingfisher. Hitesh managed the line and base maintenance operations at JetBlue Airways in United States as a Director for over 6 years. 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. Before taking over as the CFO of Kingfisher Airlines. Mr. Prior to joining KFA. Hitesh has over 27 years of work experience in the Airline industry. Accounts. Hitesh enjoys the record of having maintained the best fleet with the highest dispatch reliability of Airbus A320s world-wide • Rajesh heads Guest Services. Legal. Secretarial. Prior to joining Kingfisher. he spent 10 years with TCS and was the head of IT department at Qatar Airways 10 . Airports and Security functions at Kingfisher Airlines and has rich experience in the Airline and Hospitality industries. Prior to KFA. He is responsible for Finance. He currently heads the Commercial function at Kingfisher airlines and is responsible for the Sales. Network Planning. A Raghunathan worked in senior finance positions in the liquor business of UB group for 26 years. Purchase & Administration • Manoj has over 18 years of experience in Indian and international airlines and travel services. In Flight Services. A Raghunathan is a qualified Chartered Accountant with over three decades of work experience in finance and accounts. 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.

Major Leslie served the Indian Army for 10 years in counterinsurgency areas. VP – Corporate Development and Planning. • Major Leslie is the head of the Security function at Kingfisher Airlines. She has over 13 years of experience spanning various industries and consulting. • Rubi heads the Human Resources function at Kingfisher Airlines. Vijay Mallya Corporate Development & Planning Amit Agarwal Sr. in the role of Security Advisor.Strong and Highly Experienced Management Team (contd. Gaurav has over 15 years experience in the aviation industry. VP • Amit has recently joined Kingfisher as Sr. and as a Black Cat Commando for 3 years.) Chairman & CEO Dr. Prior to his stint with the UB Group. He comes with a strong airline background spanning over 17 years with leading airlines such as American Airlines. Human Resources Rubi Arya VP Marketing Ravikant Sabnavis VP Quality & Guest Commitment Gaurav Rathore AVP Security Maj. he was associated with the UB group since 2003. she worked with PricewaterhouseCoopers in their Human Capital Solutions group . Pricing & the Network Group. His last role with Delta was Managing Director for RM. Prior to that. 11 . • Ravikant currently heads the Marketing function at Kingfisher Airlines and overall has an experience of 18 years in Marketing. Prior to Kingfisher Airlines. An MBA in Human Resources from India’s premier institute XLRI. she was previously associated with the UB group. Gaurav worked with Jet Airways where he was heading the Service Quality Group. Leslie Missal AVP • Gaurav is responsible for the Quality. Continental Airlines and Delta Airlines. He joined the UB group in 2007 and was Divisional Vice President-Marketing prior to joining Kingfisher Airlines in September 2009. Guest Commitment & Call Centre functions in Kingfisher Airlines. Prior to joining Kingfisher.

non-air reward shop. superior features like faster tier upgrade. 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. family club program encouraging customer stickiness 12 Outsourced Ground Handling Unique Frequent Flyer Program .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 Allow high level of operational flexibility Well spread on business and leisure routes No Legacy Issues (Unions etc) Diversified Network Monopoly Destinations Highest exclusive stations amongst private carriers High Service Quality Levels Premium business class product.

1 airline in customer satisfaction in an independent survey conducted by India’s largest 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.000 Brands' for 2008 (2007 – SQ) Voted India’s No.Low Cost’ for Kingfisher Red (2009) ‘India’s 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 .Widely Recognized for Brand Strength and World Class Service Asia Pacific’s “Top Airline Brand” in a survey conducted by TNS on 'Asia Pacific's Top 1. 1 airline in customer responsiveness in an independent survey Voted India’s No.

“What Makes Kingfisher India’s Favorite Airline?” The Hindustan Times. too. MD. It is also seen as a glamorous airline and people do like that. the country’s largest online reservation system Go Air 752 Jet Lite 745 “Kingfisher is the best due to its competitive fares and hygienic washrooms. Kingfisher does a little extra. which passengers like. Given an option. I will prefer Kingfisher even if the fare is 5 per cent more. I prefer Kingfisher. Mumbai-based exporter 760 780 800 Air India 736 700 720 740 Notes (1) Higher scores indicate greater satisfaction levels 14 .” Rajesh Verma.MaRS Consumer Satisfaction Survey” rated Kingfisher as India’s Favorite Airline Overall Rating of Airlines Operators (1) Aggregating Their Flying Experiences on All Airlines.Ajay Prakash. it serves excellent onboard cuisine” . CEO of Mumbai-based Nomad Travels Spice Jet 773 Indigo 761 “The inquisitiveness about Mallya and his lifestyle draws a sizeable number of flyers to Kingfisher. Then. It is much better value for money” Ankur Bhatia. Amadeus India. Indian Flyers Gave a Satisfaction Rating of 794 out of 1.000 Kingfisher 794 Jet Airways 786 “ Kingfisher’s valets (porters and loaders) make a great difference for guests. of course. Their service attitude makes all the difference.

Moisturisers. Times of India. Economic Times and local newspapers as on board reading material Kingfisher Lounge in the 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 Guest Amenities • Kingfisher First Amenities (Perfumes. Lip Balms and tailored Sleeper Suits) exclusively designed by Salvatore Ferragamo Efficient Service at Low Cost • A judicious mix of customer service and basic comforts provided at low cost • Delivers a delightful experience to the cost conscious yet discerning traveler 15 . 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. Eau de Toilettes.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.

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%) • Significant ancillary revenue generation through 57 partners across 10 verticals ( Banking.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. 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 . 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 . Hotel.One World.

Cathay Pacific. British Airways. It operates 9. Australia and Asia’s 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 . Finnair Voted the World’s 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.American Airlines.500 aircraft World’s most profitable global alliance. bringing together the leading airline carriers.One World Alliance About One World One World serves 800 airports in 150 countries. Qantas. carrying 340 mn passengers annually.000 daily flights. on a combined fleet of 2.

Powerful Marketing Efforts Drive the Kingfisher Brand Strength Movie Associations and in .Film Branding Events Cabin Crew with Delhi CM at Delhi Marathon Events: Women’s 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 75 27 12 5 11 50 18 7 AI 36 25 18 JA 12 0 KFA Jet Lite Go Air Paramount 5 FY 2005-06 Air Deccan Air India Spice Jet 22 KFA January 2010 Jet Airways Alliance Air Indigo Source: DGCA 20 .

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 (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.0 115* 22.Performing well on operating parameters Key Operational Analysis Current Fleet (Dec’09) Average Fleet Age (yrs) Employees per Aircraft Market Share (Jan’10) Average Seat Factor (Apr-Dec’09) RASK (Apr-Dec’09) CASK (Apr-Dec’09) Unionized Legacy Govt.2% 3.58 3. Ownership Customer Satisfaction KFA 61 3.2% 70. 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 medium & long haul operations 22 .

a subsidiary of British Standards Institute • IOSA certification.twice a year audit done by BSI Management system. Qatar Civil Aviation Authority (QCAA). 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) High Operational Reliability and Safety Management • First organization to receive approval under CAR 145 • Highest operational reliability of A321 fleet in world fleet & one of the best technical 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). EASA Foreign Regulatory Approvals Third Party Handling Support at Indian Airports 23 . India. DN standalone. Civil Aviation Authority of Srilanka (CAASL) • Approvals in process: General Civil Aviation Authority (GCAA-UAE).3 Audits (KF standalone.Leverage Strengths in Engineering & Maintenance Key Industry Standard Certifications • ISO certification.

Section 2 India Aviation Market 24 .

4 39.0 CAGR of 20% since FY 2004 44.4 35.0 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10E Annual domestic pax traffic (Mn) 0 Brazil China India No. CAPA. McKinsey Global Institute 25 ..Most Attractive Aviation Market in the World …Aviation traffic in India amongst lowest in BRIC countries… Aviation Traffic Penetration in BRIC Countries 25 Historical domestic passenger CAGR of 20%. MOCA.0 25.2 19.0 20 30.4 15.1 23 40. …Enabling conditions would ensure continued growth Growth of Indian Aviation Industry • Economy expected to continue to grow at 7% – 9% • Ministry of Civil Aviation envisages creating infrastructure to handle 280 MM passengers by 2020 50.0 5 0.8 45. of domestic passengers per 100 people KPMG expects India’s air traffic to grow 2 – 3 times by 2012 Source: KPMG.0 10 • Indian Middle Class to reach 50% of India’s population at 600 MM by 2025 4 10.7 15 13 20..

0% 2007-2016 2017-2026 5.4% .5% Asia-Pacific 7.4% 4.2% Africa 8.Highest Growth Aviation Market in the World Europe 7.4% World 20-year growth 8.9% 26 6.7% Source : Airbus Estimates CIS 8.5% Middle East 7.9% North America 10.3% India 2007-2016 2017-2026 9.4% 20-year growth 4.7% 11.

Airports Authority of India has planned an investment of US$3.1 Bn Government policy support for Infrastructure Non-Metro Airports Identified for Upgrade and Modernisation Jammu • 100% FDI under automatic route is permissible for green field airports • Private developers allowed setting up of captive airstrips and general airports 150 km.Massive Infrastructure Investments Supports Growth Massive Airport Investments • Over next 5 years. 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 Amritsar Chandigarh Dehradun Jaipur Udaipur Ahmadabad Rajkot Agra Lucknow Guwahati Patna Agartala Ranchi Dimapur Varanasi Bhopal Khajuraho Imphal Indore Vadodara Nagpur Aurangabad Pune Raipur Bhubaneswar Vizag Goa Mangalore Coimbatore Agatti Trivandrum Trichy Madurai Port Blair Land Constrained Airports Unconstrained Airports Source : CAPA 27 .

9 5.3 5.2 5.3 5.4 5.0 Jan CY08 Feb Mar CY09 Apr May Jun Jul Aug Sep Oct Nov Dec Source : MOCA Website.0 5.3 5.5 4.1 4. PIB press releases 28 .0 4.8 5.5 5.8 4.6 5.5 5. Monthly Seats Offered Industry (MM) 6.Move Towards a Rational Supply Environment Avg.6 5.4 Seats Offered Industry (MM) 2H 2008 1H 2009 2H 2009 H-o-H ∆ 4% (16%) 3% 4.2 5.5 6.0 6.2 5.1 6.0 5.5 5.1 4.9 5.3 5.0 5.9 5.

No 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 .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 − Escalation of airport costs at private airports expected to be charged as UDF from consumers.

5 times size of aviation industry (2) • 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.…And There Is Reason to be Optimistic The big three players– Kingfisher Airlines (23%).5% of global GDP is attributed to the air transport component of civil aviation (1) – Impact on indirect industry is estimated at 1-1. 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.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 . Banking – 4.

RDB guidelines 31 .Indian Aviation – The Way Forward Favourable Economic Outlook • The economy continues to show signs of recovery with GDP growth estimates climbing back 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 Should Improve Yields • Industry capacity is more aligned to demand after a series of sharp cuts in the early 2009. going forward • Government is re-evaluating policies which might benefit industry – ATF taxation. and capacity induction in the current year is expected to be <10 % as per CAPA estimates • Yield improvements witnessed in Q3 are expected to continue given the narrowing of the demand supply gap. FDI norms. 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.

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 .

BKK.and deployed 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. given the operating environment 34 .…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 . along with potential alliances with other global carriers . the decision for which would be taken closer to date.sold out the Aircrafts – Cautiously deployed the A330s to LHR. SIN and HKG markets to build operations into key markets from India. CMB.a step towards joining a global alliance – Have identified lucrative short-haul markets . DXB. KTM & DAC .

09 De v-0 c.5 Rising Yields as Seen in KFA’s Domestic ATV KFA ATV Trend – ATV (INR) 7.09 M r.09 p O .09 ar Ap .000 3.0 4.9 09 SF 2008–09 2009–10 KFC KFR Total 35 .0 ay 9 Ju -09 nJu 0 9 Au l-09 g Se .09 De v-0 c.5 55 Ja n Fe -0 9 b M .) 3.0 80 2.000 60 0.…Which is Improving Operating Performance Improvement in Overall Seat Factors of KFA % 85 Uptick in KFA’s Domestic Revenue (RASK-Fuel CASK) RASK (in Rs.09 M r.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 3.000 75 2.0 ay 9 Ju -09 n Ju -0 9 Au l-09 g Se .5 5.09 ct No .5 6.000 Ja n Fe -0 9 bM 09 a Apr.9 09 0.0 70 1.09 p O .09 ct No .000 65 1.

149 1.29 300 (554) (1.075) 3.526 (1.267 1.996 (459) (482) (1.Improvement Reflected in Y-o-Y Results… Apr 09 .180 1.168 16 4.Dec 08 (Rs.776 43 3. 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 1.175 (355) 156 818 5.484 485 840 4. Cr) Variance % 4.739 (442) 900 5.319 1.184 -9% +169% -9% 620 2.055) -14% -42% -15% -7% -25% +25% +55% -17% -33% +2% 36 .Dec 09 (Rs.819 Apr 08 .342) 125 529 6.

14 (1) 3.46 1. Cr Fuel Cost Non-Fuel Cost Employee S&D Other EBITDAR Cost Lease Cost EBITDA Costs Depreciation/Amortization EBIT Costs ASKM (Mn) ASL Seats/Flight 1.88 9.860 803 110 3.021 665 3.48 (1) 0.68 (1) 3.With This Stringent Cost Focus.598 8. 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 .32 0.102 1. Kingfisher Has Emerged as the Lowest Cost FSC in the Current Year Cost Comparison (Apr-Dec FY10) KF Cost Details Rs.08 0.920 472 408 1.72 Notes Costs include domestic operations.041 3.760 (1) Adjusted CASK (1) 1.441 156 3.24 2.

000 Ltr/BH for A320 and 750 Ltr/BH for ATR operations through targeted reviews • Target E&M spend reduction (in-house C-checks. controlled redelivery) 38 . Communication − Consolidate and optimize space (warehouses. 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. offices. costs of Transportation and local Conveyance.Kingfisher’s 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. 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 Control Discretionary Spend Head Count Rationalization Operational Efficiency • Reduce fuel consumption to less than 3.

Summary of Seabury’s 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 39 .

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 through expansion of inter-line agreements and evaluation of global 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 40 .

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