Kingfisher Airlines rethinking international operations

Mallya rethinks overseas plans
AVIATION CRISIS DEEPENS
Manisha Singhal / Mumbai June 28, 2008

San Francisco may get delayed, New York on ice.

Two months before its maiden overseas flight was to take off, billionaire Vijay Mallya's Kingfisher Airlines has decided to rethink its whole strategy of flying abroad.

"Due to the increase in crude oil prices and no signs of stability in the market, we are re-evaluating all our plans for international operations, keeping in mind costs and route network," Kingfisher Airlines Executive Vice-president Hitesh Patel said in reply to a questionnaire.

The airline was scheduled to launch its international operations with a Bangalore-San Francisco service on August 27. Now, informed sources said, the airline is re-evaluating whether it should launch the service or defer it for a few months. A final decision will be taken in a day or two.

The inaugural flight to San Francisco was to be followed with flights to other destinations like New York, London and cities in South-East Asia. It is now learnt that Kingfisher Airlines has decided to put on hold its plan to fly directly to New York later this year.

The sources said that the sharp rise in aviation turbine fuel prices, the slowdown in international travel and the uncertainty in the aviation market (many US carriers have gone bankrupt) have impacted Kingfisher Airlines' overseas plans.

What makes it ironical is that Mallya had lobbied hard in New Delhi to get the norms for flying abroad relaxed so that his brand new airline could launch international flights.

While the government rules stipulated that an airline needs to have five years of domestic experience before it can mount overseas flights, Mallya wanted it to be cut to three.

He had even toyed with the idea of starting an airline called Kingfisher in the US and start services to India to circumvent the regulation. But the issue got resolved when he acquired Air Deccan last year, which has the required experience.

The airline has already taken delivery of its first Airbus A330 wide-body aircraft for international flights and is to get another ten aircraft (which also includes A340s) by the end of this year.

Some analysts said the Kingfisher Airlines decision could have been prompted by the experience of its arch rival Jet Airways. Earlier in the week, the Naresh Goyal-controlled airline had declared a loss of Rs 221 crore for 2007-08, two-thirds of which came from international operations.

Source : The Business Standard