Strategic Alliances, Collaboration and Joint Ventures Case Study

Kingfisher Airlines–Jet Airways Alliance: Competitors Turned Collaborators

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Abstract:
This case study attempts to analyse the possible synergies and outcome of the alliance between Kingfisher Airlines and Jet Airways, two dominant airline companies in the Indian Aviation Industry. This case explores into the factors that led to troubled times in the airline industry; reasons behind the alliance between the archrivals – Kingfisher Airlines–Jet Airways – and the expected synergies; and the feasibility of the alliance in the short term as well as the long term.

Since the takeoff of its first flight in 1932, the Indian Aviation Industry has been shaped by a series of events. While the deregulation in 1991 ended the monopoly of the state players, the repeal of the Air Corporation Act (ACA) in 1994 saw the rise of private players’ dominance. However, with the introduction of Low-Cost Carriers (LCCs), airfares dropped to as low as train fares and passenger traffic shot up recording 25% yearly growth. To attract more passengers, fares were decreased and capacity was increased. Added to this, the cost of Aviation Tribune Fuel (ATF) was increased exorbitantly. With the fall in the revenues and increase in the costs, players were unable to break even. As a solution, players further increased fares, indulged in consolidation and pleaded the government for a bailout. However, with the failure of all the measures and the losses mounting by the day, on October 13th 2008, archrivals Jet Airways and Kingfisher Airlines announced to form an alliance in eight major areas. With the two having different aircrafts and a large-scale route overlap, can major synergies be derived out of this alliance. The case delves into the feasibility of this collaboration between competitors.

Pedagogical Objectives:

• To understand Indian Civil Aviation Industry’s life cycle and analyse the relative importance of critical success factors over the life cycle
• To explore and debate on the possible synergies between Kingfisher Airlines–Jet Airways proposed alliance
• To contextualise the factors governing competitors becoming collaborators and evaluate the nature of the relationship.

Keywords : Low Cost Carriers, Competition , Collaboration, Joint Venture, Strategic Alliance, Competitive Strategy, kingfisher, Jet-Airways, Air Deccan, Synergies, Aviation Industry, Consolidation

Contents : 
Indian Civil Aviation Industry
Air Deccan Fare Comparison with Rail Fares
Competitive Landscape in the Aviation Industry
LCC Cost Benefit over FCC in India
Viable Fares and Load Factors
Decrease in Air Passengers
Operating Cost of Private Indian Carriers
Events in a Chronological Order