Sept 28, 2011
The announcement made by Vijay Mallya, Chairman Kingfisher Airlines to pull out of budget operations following the AGM (today) hardly comes as a surprise. Suffice to say competitors must be smiling as they wait to fill the space vacated by the carrier.
There is speculation that the decision to slash the present fleet of 66 to 35, might be the first phase of a face-saving exit. Presently, Kingfisher has over 14 aircraft on ground including ATRs. How they will be returned to lessors without putting them back in faultless condition they were delivered in, is another question. This is a given- as the buzz in the market says- that the carrier has no cash to pay for spares.
Today the blood bath in fares covers so called full service carriers and budget alike as they both battle to get a share of the same pie. So, Mallya might just end up facing the same warriors –this time with a blunt sword (of higher overheads)!.
Kingfisher (KFA) has also made the fatal mistake of not running its ATRs point to point. By running a hub and spoke operation with the ATRs, full operational efficiencies were not attained as it ended up with just 6-7 routes a day instead of the 9-10 it could have operated on says an analyst.
At a time when yields are at their lowest, being the market honcho - that Mallya proudly announced to his shareholders- does not make any sense. This is something that Capt Gopinath of Deccan Air had learnt and acknowledged publicly.
As the airline continues to bleed, incurring further expenditure in reconfiguring seats, might just be another hit on the wallet, says an official.
Mallya has clearly indicated that he has no interest in expanding internationally. Quite rightly so as five A-330s can’t take the carrier too far- given that one A-330 recently was on ground.
There might be some method to the madness, Aerospace Diary feels. Cutting domestic fleet will also mean a reduction in KFAs already diminutive international operations. DGCA stipulates the percentage of international flights needs to have a certain balance with domestic flights. However, with KFA joining the OneWorld Alliance, it may not be long before the carrier uses its international partners like AA, FinnAir and BA on international routes and connects their passengers to domestic and South Asian routes like Male and Dacca.
“High value passengers do not want to fly on a budget carrier especially when their full fare on the sector is for the front end. By KFA turning full service, this will fill the void,” says an official.
KFA can cry hoarse about “sensational media headlines” but the fact remains a buyer for the airline might still be a distant dream. For the moment, ones heart goes out to all those in line who might soon be given pink slips.