Kingfisher ! IT ! KFR !

India's Kingfisher Airlines plans to exit the country's low-cost market within the next four months and focus more on the premium market.

The company was started up as a full service operator, with its Airbus aircraft offering first class and economy class options on international and domestic routes.

However, for the last three years, it has also been operating ATR aircraft under the Kingfisher Red no-frills brand after buying low-cost carrier Deccan. High operating costs and low yields, however, meant that the unprofitable Kingfisher Red has been a drain on the full-service airline.

That has led to Kingfisher deciding to simplify its business model by phasing out Kingfisher Red and reconfiguring its ATR aircraft with economy class seats, its chairman Vijay Mallya said in a statement.

Some of the Airbus A320s that are all economy-class will have first class seats, but the number of first class seats in existing Airbus aircraft will be reduced and more economy class seats will be added.

This reconfiguration will be completed in four months, said Mallya. The move will add a significant number of seats and hence generate additional revenue at minimal cost, he added

"Over the past six months, Kingfisher Class (full service economy class of service) has generated higher yields and seat factors than the no frills Kingfisher Red class of service. Following re-configuration of all Airbus aircraft, the number of economy seats across the Airbus fleet will increase by approximately 10% and this capacity will be offered across the board as a Kingfisher Class full service product," the airline said in a statement.

"All ATR aircraft will continue to operate in a single configuration as a Kingfisher Class full service product. Judging from actual past performance, higher yields and load factors and increase in overall revenue are expected."

Ailing Indian carrier Kingfisher Airlines will be suspending all international flights and reducing domestic operations in its latest move to stay afloat.

"We have decided to suspend our international operations as we are not on IATA platforms. So, there is no sense flying abroad," its chairman Vijay Mallya told reporters after a meeting with India's director general of civil aviation, Bharat Bhusan, on 20 March.

Mallya had been summoned to brief the Directorate General of Civil Aviation (DGCA) on the airline's situation and to provide a recovery plan.

International flights will likely be suspended in late March.


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Earlier, Bhusan had told reporters that the carrier's financial situation and unscheduled cancellation of flights are a cause for concern.

"I do not think this situation can go on," he adds.

The country's civil aviation minister Ajit Singh has also said that Kingfisher has to submit a recovery plan to the DGCA and keep to the plan in order to continue operations.

"They have been giving DGCA plans, but have not adhered to them. Mr Mallya has been called to see what plans he has. If the DGCA gives a report that safety cannot be assured with all the problems they have, we will certainly take action. [In addition to] suspending them, we can cancel their licence also," says Ajit.

"Everyone feels that it's the final chance that Kingfisher has to give a credible plan which they can adhere to, to save themselves. It just cannot continue like this," Ajit adds.

The carrier, which was operating over 400 flights with its fleet of 64 aircraft last year, now operates about 100 flights daily with 20 aircraft.

Last week, the beleaguered carrier said it was curtailing overseas widebody flights which are "bleeding heavily", and has returned one Airbus A330-200 to a lessor. Before the curtailment, Kingfisher had an extensive overseas route network serving destinations in Europe, the Middle East and Asia-Pacific.

It was suspended from IATA's Billing and Settlement Plan (BSP) and Cargo Accounts Settlement System (CASS) on 8 March when it failed to provide a cash deposit. This suspension means Kingfisher can no longer sell and settle its accounts with travel and cargo agents through the two IATA systems.

On 7 March, it was suspended from IATA's Clearing House payment system because it did not settle its accounts before the deadline.

Airline staff, including pilots, have not been paid in months.

Struggling Kingfisher Airlines (IT) said it has moved into a “holding plan” in which it will operate only about 120 flights daily (around a quarter of its full schedule) while it awaits a much-needed recapitalization.

Meanwhile, chairman Vijay Mallya assured employees over the weekend that salaries will begin to be paid again shortly following a suspension in worker pay that extends back to December (ATW Daily News, March 15).

Mallya said that Indian tax authorities have unfrozen IT’s bank accounts, allowing some payments to employees to begin this week. While there have been calls for the wealthy liquor baron to shut down the seven-year-old airline, which has never earned an annual profit, Mallya doubled down in a letter to workers quoted Monday by The Times of India.

“We have managed to keep the lights on in our days of darkness with adversity from every conceivable direction,” he told IT employees, according to the newspaper. “I am personally passionate about and committed to your airline. Please stand by me. Let’s not become fodder for the media and competition to feed off.”

In a statement issued last week, IT said, “Our keen intent is to get recapitalized and to bounce back as a major player in civil aviation.”