Kingfisher departing low-cost airline biz

Hotel News - 29/09/2011

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Kingfisher Airlines, the second-largest privately-controlled carrier in India, has announced its intention to stop operating its low-cost business. The company said it would instead introduce an airline catering to the needs of travellers who prefer service over savings.

Vijay Mallya, the drinks baron who runs Kingfisher, said the change of direction would be implemented over the next four months. Kingfisher Red, the company's budget aviation brand, launched operations in 2008.

Mr Mallya said the company would shut down Kingfisher Red because the company was not planning to compete in the industry's low-cost segment. He went on to say that Kingfisher is confident there is an ample supply of passengers who prefer to travel in the airline's full-service class.

Mr Mallya said the company's load factors underscore this idea, with Kingfisher enjoying superior load factors to its cheaper sibling. Kingfisher has been a full-service carrier since 2005.

Three years after Kingfisher commenced operations, it took over Deccan, the first budget carrier in India. The merger saw Deccan become the company's budget arm, Kingfisher Red.

Mr Mallya also explained that Kingfisher's premium business enjoyed better performance, thanks to healthier margins driven by yields that are better than those seen with Kingfisher Red. Kingfisher's plans are unusual for India, where 50 per cent of the country's major airlines are budget operators.

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