Kingfisher to head for budget airline business exit

by William ASTON on September 29, 2011

India’s Kingfisher Airlines intends to pilot its new premium business model, which means its existing low-budget outfit will be stopped.

The airline, which is the second biggest private carrier in India, is run by drinks tycoon Vijay Mallya, who said that changes will come early next year. The budget branch of the airline, created in 2008, has been marketed as Kingfisher Red.

Mr Mallya confirmed that he will dispose of Kingfisher Red as his company does not intend to continue competing in the industry’s low-cost segment. He then told of his belief that more than enough passengers prefer to travel with the normal Kingfisher class, which is shown through the airline’s own performance where its load factors across the Kingfisher class exceed those of Kingfisher Red.

Kingfisher began business as in 2005 as one of India’s most prominent full service carriers. Three years later, Deccan, India’s first-ever budget airline, was purchased and the merger saw the birth of the budget arm. Mr Mallya, Kingfisher’s chairman and also its chief executive, confirmed that Kingfisher class’ margins are always higher than those of Kingfisher Red because the yields continuously prove to be better than those of the budget arm.

Mallya’s move bucks current trends in Indian aviation industry, which sees half of the country’s six major airlines as budget carriers.

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