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Pinky Walia
Author:Pinky Walia
Financial Advisor
Despite downturn Kingfisher plans international flights

Kingfisher Airlines, with its funky stand-up bars, massage chairs personally designed by Vijay Mallya and its ubiquitous hordes of red-clad girls, is going ahead with its slew of international flight plans despite the downturn in the aviation industry—London first, followed by San Francisco, maybe New York, Singapore, Hong Kong and the Middle-East. However, it is planning to go slow on its hectic aircraft acquisition plan for domestic sector. “After comprehensive review of our domestic network, we may not want as many narrow-bodied aircraft as we had initially estimated,” said company chairman Vijay Mallya. Kingfisher has about $7 billion worth of new aircraft on the way.

Showing off his brand new wide-bodied Airbus A330-200 at the Farnborough air show in England, Mr Mallya is confident that despite the downturn, Kingfisher can make an impact with its trademark five-star positioning on key routes—with a focus on more direct and non-stop flights from its Bangalore hub to overseas destinations. Bangalore is still not as well served as Mumbai or Delhi with direct flights to London or the west Coast of the US.

One key route that Kingfisher wants to focus on is Bangalore-San Francisco non-stop, which Mr Mallya said “is a no brainer, it will link the Silicon Valley and the Silicon plateau”. However, he is looking very closely at the economics of a New York-Bangalore non-stop, as it is already a crowded route; and indications are it may be dropped. US services will start latest by September-October this year, “as one can’t keep the planes sitting on the ground”, Mr Mallya said. While it is still in the planning stages, his strategy is to use the narrow-bodied medium haul A320 series aircraft for “all nearby destinations, starting with Bangalore-Singapore, and moving on as many destinations in the Middle-East and the Far East as is feasible”.

Despite ‘burning’ oil prices ‘burning’ cash at Kingfisher—though he won’t give any financials—Mr Mallya insisted that India is a unique aviation market, and the airline industry could still break even without the sales tax on aviation fuel. About expanding at a time when most airlines are cutting down, Mr Mallya said: “I’ve done plenty of crazy things in my life, and we’ll let our product speak for itself,” he said.

Kingfisher launches its Bangalore-Heathrow direct and Mumbai-Heathrow direct services any day between August 31 and September 3. While for Bangalore-Heathrow non-stop British Airways is the only competitor, Mr Mallya believes that the traffic on the Mumbai-London route is enough to enter that crowded route as well. “London is a must destination for all Indians,” he said. Besides, thanks to a last minute cancellation, Kingfisher has been lucky enough to acquire good slots at Heathrow; meaning convenient landing and take-off timings for passengers.

He isn’t yet revealing his pricing strategy, “as many of my competitors are lurking around Farnborough, it won’t be the cheapest, but you’ll get what you pay for”. The market expectation is that Kingfisher will be competitively priced in the economy class, but be slightly higher than the average business and first-class fares of competitors like Jet and BA. One of the key innovations that Kingfisher is introducing is a stand-up bar lounge in its ‘super’ business class. Mr Mallya, getting nostalgic about the swish bar lounges that old 747s had on their upper deck, said the ‘romance’ of air travel has been replaced by economics.

A similar stand-up area and lounge for economy passengers on ultra-long haul flights is on the cards when Kingfisher acquires its mammoth Airbus A380s, but that’s only after 2010. Unfortunately, none of this will be available to domestic passengers since these aircraft cannot be landed or parked at domestic airports.

 
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