Kingfisher Airlines Management Control Systems

SUBMITTED TO: PROF. NARENDER SUBMITTED BY: SWAGATA GIRI (10BSPHH010818) VIKRANT SHINDE (10BSPHH010732) PRATIKSHA (10BSPHH010 NIKHILESH JINDAL (10BSPHH010 AMIT kumar (10BSPHH010942)

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Contents

Introduction: ................................................................................................................................................3

Objective and Scope: ...................................................................................................................................3

Organization Structure: ................................................................................................................................3

Management Style: ......................................................................................................................................4

Culture: ........................................................................................................................................................4

Control Processes: .......................................................................................................................................5

Rewards: ......................................................................................................................................................6

Rewards to Employees: ............................................................................................................................. 6

Rewards to the Company: ......................................................................................................................... 6

Rewards to Loyal Customers: .................................................................................................................... 7

Communication: ..........................................................................................................................................7

Internal Communication ........................................................................................................................... 7

External Communication........................................................................................................................ 8

Co‐ordination: ............................................................................................................................................9

Recommendations: ....................................................................................................................................9

Conclusion: ................................................................................................................................................9

Exhibit I ......................................................................................................................................................10

Management Team ....................................................................................................................................10

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Introduction:

Kingfisher Airlines is one of the leading private players in the Indian aviation industry. Incorporated in

1995 as Deccan Aviation, the company is engaged in the business of providing passenger services and

helicopter charter services. The name was changed to Kingfisher Airlines in the year 2008. The airline is

part of UB Group owned by Dr. Vijay Mallya. This airline offers three unique classes of services

Kingfisher First (Business class), Kingfisher Class (Premium economy) and Kingfisher Red (Low fare).

The company owns two subsidiaries namely Northway Aviation and Vitae India Spirits. Northway

Aviation is engaged in the business of financing pre-delivery payments and aircraft acquisition.

Kingfisher Airlines is only five star airlines in the Indian skies and is known for providing world class in

flight services to its passengers.

Objective and Scope:

The objective of the study is to understand the following about Kingfisher Airlines:

Organization Structure of the company

Management Style and Culture adopted by the managing authorities

Control Processes implemented for improved efficiency and smooth functioning

Rewards systems used for the internal employees

Co-ordination and Communication within and outside the organization

All the above mentioned elements of the organization have been described in detail in order to have a

complete understanding of the systems and processes in place for attaining improved efficiency,

maintaining better relationships with all the stakeholders for achieving long term sustainability.

Organization Structure:

The structure that is followed at Kingfisher Airlines is a balanced functional matrix structure where teams

of employees are frequently used to accomplish work, in order to take advantage of the strengths, as well

as make up for the weaknesses, of functional and decentralized forms. A project manager is assigned to

oversee the project. Power is shared equally between the project manager and the functional managers. It

brings the best aspects of functional and projective organizations.

Management Style:

The management style adopted by Kingfisher Airlines is democratic in nature as employees are given

immense freedom to express their opinions and are encouraged to participate in decision making. The

standards for business conduct provide that, Kingfisher Airlines upholds ethical and legal standards

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vigorously, as they pursue their financial objectives and the Company, the Board and senior management

personnel do not compromise honesty and integrity. The members of the Board and Senior Management

Personnel of the Company acknowledge and accept:

The responsibility to carry out their duties in an honest and business like manner and within the

scope of their authority, as set forth in the general laws of the land where they operate and in the

Memorandum of Association and Articles of Association of the Company, Corporate Governance

Guidelines.

They are entrusted with and responsible for the oversight of the assets and business affairs of the

Company in an honest, fair, diligent and ethical manner, and with the duty to make and enact

informed decisions and policies in the best interests of the Company and its stakeholders.

Accordingly, the Board has adopted this Code and the Directors and Senior Management

Personnel are expected to adhere to the standards of loyalty, good faith, and the avoidance of

conflict of interest.

Suspected violation of the code is reported to the Chairman of the Board or the Chairman of the

Audit Committee. All reported violations are appropriately investigated. Directors who violate

the Code may be subject to sanctions, up to and including a request to resign as Director or the

Board’s seeking removal of the Director, where permitted by applicable law.

Culture:

The organization has an informal culture and an open door policy to make the place more employee

friendly. The intense focus on quality of relationships, and Kingfisher’s willingness to invest long term in

the maintenance of relationships among the managers, employees, and business partners forms its most

distinctive organizational competency. Kingfisher’s commitment and passion for the shared goals, shared

knowledge, and mutual respect, joins with frequent, timely, problem-solving communication to form a

powerful force called Relational Coordination which forms an integral part of coordination and

communication within the organization and is imbibed well within the organizational culture. Also,

Employees are encouraged to be themselves at work and to openly recognize major events in the lives of

employees and their families. Fun is taken seriously. This kind of culture helps bridge the work and

family divide. Additionally, Kingfisher uses Cross-functional, not functional performance measures to

encourage participants to focus on learning rather than blaming when things go wrong. This avoids finger

pointing and is useful in measuring performance.

Control Processes:

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The control process involves carefully collecting information about a system, process, person, or group of

people in order to make necessary decisions about each. Managers set up control systems that consist of

four key steps – establish standards to measure performance, measure actual performance, compare

performance with standards and take corrective actions. This is done in order to achieve efficiency and

desired organizational goals. In regards to Kingfisher airlines:

Kingfisher Airlines has proper and adequate system of internal controls commensurate with its

size and nature of operations to provide reasonable assurance that all assets are safeguarded,

transactions are authorized, recorded and reported properly and applicable statutes, codes of

conduct and corporate policies are duly complied with.

The Internal audit department reviews the adequacy and efficacy of the key internal controls,

guided by the Audit Committee of the Board. One of the objectives of the Audit Committee is to

review the reports submitted by the Internal Audit Department and to monitor follow-up and

corrective action by Management.

The company has a compliance procedure to ensure that all laws, rules and regulations applicable

to it are complied with.

The Company Secretary is the designated as the Compliance Officer to ensure compliance with

SEBI regulations and with the Listing Agreement with National Stock Exchange of India Limited

and Bombay Stock Exchange Limited.

It has a process of both external and internal safety audits for each area of operation. It is in full

compliance with all laws, rules and regulations relating to airworthiness, air safety and other

statutory operational requirements.

As part of its Risk Management strategy, its strategies, processes, procedures and guidelines are

reviewed on a continuous basis to effectively identify and mitigate risks. Further, the

Management has developed a procedure to ensure adequate disclosures of key risks and

mitigation initiatives which are also reported to the Audit Committee of the Board.

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Kingfisher Airlines has also reengineered Guest Processing Functions by entering into a strategic

partnership with Sabre Airline Solutions. With the implementation of Sabre Airline Solutions`

passenger reservations and departure control systems, the Sabre Sonic Passenger Solutions,

Kingfisher Airlines manages its reservations, pricing, ticketing and reporting efficiently. By

doing so, Kingfisher Airlines can now benefit from the integration, consistency of service and

cross- department best practices. It is a single vendor engagement for more than 20 enterprise

applications.

Kingfisher Airlines is also among the first in India to offer the latest range of check-inoptions for

its guests, including "Web check-in" facilities and "Roving agents" that use mobile devices to

check in guests to help alleviate check-in queues at airports.

Rewards:

Rewards to Employees:

Employee Stock Option Plan (ESOP):

During the period from July 1, 2009 to March 31, 2010, the Company allotted 328385 Equity Shares of

Rs. 10/- each against the exercise of equivalent vested options for its employees. During the year 731,400

options have been granted afresh under ESOP 2009 which will vest from September, 2009 and February,

2010 over a period of four anniversaries thereof.

Rewards to the Company:

'5-STAR AIRLINE' award by Skytrax for 3rd consecutive year, 2010

Best Airline in India and Central Asia’, ‘Best Economy Class Seats’ and ‘Staff Service

Excellence Award for airlines in India and Central Asia’ in World Airline Awards,2010.

'India’s Favourite Airline' in HT MARS Consumer Satisfaction Survey , 2009

'Best Airline in India and Central Asia', 'Best Cabin Crew-Central Asia' for Kingfisher Airlines

and 'Best Low-Cost Airlines in India and Central Asia' for Kingfisher Red services in SKYTRAX

World Airline Awards, 2009.

Rewards to Loyal Customers:

King Club is the membership card offered to the clients who frequently fly with Kingfisher

airlines. It involves benefits such as Bonus King Miles, Complimentary Business Travel

Insurance, Traveler Services, Emergency Services and other membership rewards. Along with

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basic membership there are four Membership Tiers within King Club; King Red, King Silver,

King Gold and King Platinum. Each tier offers a unique and expanding suite of valuable benefits

and exclusive privileges.

Kingfisher Airlines Inked Strategic Alliance with American Express. The partners announced the

launch of India’s first airline corporate charge card program specifically targeted at the small to

medium sized enterprise (SME) market. It involves benefits such as 8% corporate rebate,

business savings plus program, reduces administrative cost for companies, optional spending

limits, MIS to track expenses and savings on travel, online program management.

Communication:

In today's global business environment, effective organizational communication--internal and external--

has a significant impact on an organization's success. Effective communication is a prerequisite for

implementing organizational strategies as well as for managing day to day activities through people. So

communication is not an issue to be taken lightly.

Internal Communication (communication with employees)

Kingfisher Airlines build and sustain relationships with employees through:

Shared goal

Shared knowledge

Mutual respect

Kingfishers commitment and passion for shared goals, shared knowledge and mutual respect joins with

frequently, timely and problem solving communication forms a powerful force. This habit of sharing

ideas and knowledge brings benefit across the business.

Practices used for building high performance relationships with employees:

Lead with credibility and care: The top management team has built trust over time by being

upfront and consistent in their message. The employees are made to think and act like owners.

Kingfisher has been known for saturating its people with information that will help them better

understand the company and its mission, customers and competition. It is known for leaders

leading leaders.

Invest in frontline leadership: Supervisors are there to advice the frontline employees which

makes problem solving an easy task.

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Hire and train for relational competence: Training is geared towards building functional

expertise as well as relational competency. Most positions are filled through internal promotions

and through lateral moves across departments creating a great deal of internal job mobility and

therefore opportunities for learning about other parts of the operation.

Use conflicts to build relationships: Informational gathering meetings suggesting that

conflicting parties have to bare their souls to achieve reconciliation.

Create boundary spanners: The operation agent is at the centre of the communication among

the various functional groups to get the plane uploaded, serviced and reloaded. They manage the

flow of information across boundaries. Also engage in relationship building, developing and

mutual respect among fellow employees.

Make union your partners not adversaries: Respectful relationship between company

management and unions chosen by frontline employees appear to set the tone for respectful

relationships throughout the company.

External Communication (communication with customers & suppliers)

External communication covers how a provider interacts with those outside their own organization like

suppliers, customers, local authorities and other organizations. Many services require customers to

participate in creating the service product. In the airline industry, it is very important for the company to

consider the customers as a part of the company in order to serve them better. The inseparability of

services leads to customer being the co-producer.

The customer base of Kingfisher Airlines includes Business Class travelers, Corporate, Leisure

travelers, Students, King Club members.

Communication with customers by Kingfisher Airlines is carried out through:

Advertisements in television, newspapers, business magazines, etc

Very famous Kingfisher Yearly Calendar

Sponsorship to various events

Loyalty programs like King Club

Most people think of clear communications in terms of their customers. But contacts with those who

supply services and products is also crucial. Kingfisher Airlines always emphasizes to build the

relationships with the airport it services, air traffic controllers and aircraft manufacturers. Suppliers for

Kingfisher Airlines includes HPCL which is Kingfisher Airline's largest aviation turbine fuel (ATF)

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supplier & Lufthansa Technik who are the leading provider for maintenance, repair and overhaul (MRO)

of airplanes, components and engines.

Coordination:

Kingfisher Airlines believes in the development of building long term relationships with its employees,

suppliers and customers. Hence, Relational Coordination is a powerful tool adopted by Kingfisher

Airlines.

Impact of coordination on efficiency and quality of services provided:

Reduction in turnaround time.

Decrease in consumer complaints.

Decrease in flight delays.

Also, Flexible job boundaries help to build stronger relationships between functions, improving

coordination between them to form Relational Coordination.

Recommendations:

Certain recommendations to Kingfisher Airlines would be:

In the culture of Kingfisher Airlines, too much of importance is given to the informal approach

and the fun aspect. So in this regard, more professional attitude needs to be brought in, otherwise

some taken for granted assumptions may creep in amongst the employees.

Secondly, though the decentralized process of decision making has been successful so far, in the

near future more layering is required to keep a control over the entire system.

Conclusion:

The importance of control in management cannot be underestimated. It involves control protocol,

employee behavior, and other ethics along with the kind of organization structure and culture,

management style and communication systems. It is important to have proper systems in place in order to

continue to have balanced growth for an organization.

Exhibit I

Management Team

Kingfisher Airlines is led by a dynamic, extremely talented and experienced team:

Board of Directors

Dr. Vijay Mallya, Chairman & CEO

Mr. Subhash Gupte, Vice–Chairman, The UB Group

Mr. Piyush Mankad

Mr. A.K. Ravi Nedungadi

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Mr. Diwan Arun Nanda

Mr. V.K. Rekhi

Dr. Naresh Trehan

Mr. Rup Pillai

Operating Team

Mr. A. Raghunathan, Executive Vice President and CFO

Mr. Hitesh Patel, Executive Vice President

Mr. Rajesh Verma, Executive Vice President

Mr. Amit Agarwal, Senior Vice President- Corporate Development & Planning

Captain D D Gandhi, Vice President – Operations

Chandrashekhar Nene, Vice President – IT

Mr. C.S. Tomar, VP- Engineering & Maintenance

Bharat Raghavan, Assistant Vice President - Legal and Secretarial

Ms. Rubi Arya, Assistant Vice President HR

Mr. Ajit Bhagchandani, General Manager - In-Flight-Services

Mr. Ashwani Khanna, General Manager - Airport Services

Mr. Bhupesh Joshi, General Manager – Airports

Capt Jesudasan, Chief Examiner

Captain K. Ravindran, General Manager - Flight Safety

Major Leslie Ojjit Missal, General Manager – Security

Mr. Ratan Ratnakar, General Manager - Revenue Optimization

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Mr. Sanjay Bahadur, General Manager - Corporate Affairs

Mr. Shailesh Borkar, General Manager – Finance

Mr. Umesh Rindani, General Manager - Revenue Accounts

Mr. S.K. Ghorai, General Manager - Quality Control

Captain Sanjeev Marwah, GM-Flight Ops (A320)

Capt PA Bhushan, GM-Flight Operations (ATR)

Mr. Gaurav Rathore, General Manager - Quality & Guest Commitment

Mr. Vijay Nair, General Manager – Cargo

Mr. V. Seetharaman, General Manager - Engineering

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