Kingfisher Airlines, struggling to stay afloat, may spin off its ATR fleet and loyalty programme (frequent flier programme) into separate units.
The fund-starved carrier has a fleet of 66 planes, including 27 ATR-72s which are primarily used to fly to tier-II cities. According to the airline, ATRs form 15 per cent of its domestic capacity and the fleet’s operating margins are eight per cent higher than the airbus A320 planes. The airline said its frequent flier programme had 1.8 million members and was growing at 25 per cent each year. “Kingfisher has monopoly on some of the routes it operates ATR planes. As a result, it’s able to command higher fares than the other routes,’’ said a source in the aviation sector.
“Till recently, it was the only airline flying on certain routes in south India and even now, it is the only airline connecting Hubli, Kullu and Shimla. The yields on ATRs are higher.’’
Kingfisher has grounded few of its ATR planes because of maintenance problems and want of spares. ATR’s media manager, David Vargas, said his company was trying to give Kingfisher the best customer support and declined to answer queries related to grounding of planes.
The airline did not respond to an email query on the issue. “The ATR planes got inducted into Kingfisher after it took over Deccan. It now appears the management is demerging the business. Salaries and facilities for the staff can be different. You can run two separate units with different cost structures and try to earn a profit,’’ said Vishwas Udgirkar, Deloitte’s senior director.
Other analysts are, however, skeptical about the airline’s plans to hive off business segments into separate units. “It will give Kingfisher a temporary reprieve and it will have more money to pay debt,’’ said aviation expert Hormuz Mama.
The carrier may also hive off its engineering department into a separate unit. “The MRO (maintenance, repair, and operations) plans won’t cut much ice with investors. Kingfisher has only one hangar in Chennai, which it got after taking over Air Deccan. Kingfisher engineers carry out routine maintenance jobs, but for regular and specialised checks, they send the planes abroad,’’ another expert said.