Kingfisher Airlines: Soaring ambition

Conventional wisdom can question some of the things that Vijay Mallya, whose liquor company UB controls Kingfisher Airlines, does. For instance, why is a two-year old domestic carrier, still three years away from international operations if it played by the book, buying A380, the world largest civilian aircraft?

So far, the double-decker aircraft, which can seat 853 in an all-economy configuration, has found buyers only among large international carriers like Singapore Airlines, and none among the busy US carriers.

Mallya does not bother to explain. "I do not want to keep my aeroplanes on the ground. Wait and you will see a unique product in the international sky," said Mallya, waving a Kingfisher beer bottle on board the aircraft's high-decibel flight from New Delhi to Mumbai, whose ambience resembled a Page 3 party. The trouble is that even the most conventional thinker cannot dismiss what Mallya says as hyperbole. He has earned the right to be taken seriously. 
 

MARKET SHARES
	Kingfisher	Jet Airways
May 2005	0.07	41.3
Jan 2006	7.6	34.8
May 2006	7.7	33.2
Dec 2006	9.8	25.4
April 2007	10.6	22.9
Source: DGCA and industry

Launched 24 months ago, Kingfisher packed a surprise right at the beginning. Everyone thought it would join the crowd of low-cost carriers. But once out of its shell, the airline offered full service and no price concessions. Its swank new aircraft and a very efficient front office added to the appeal.Starting with a minuscule 0.07 per cent share of the market, Kingfisher soared to 7.7 per cent after 12 months and 10.6 per cent in April this year. At the same points in time, the market share of Jet Airways, the market leader and Mallya's rival of choice, was 41.3 per cent, 33.2 per cent and 22.9 per cent.

Of course, it cannot be established that Jet's loss is Kingfisher's gain. Says a Jet executive: "The market has grown as more airlines have entered the scene. By dropping fares, Air Deccan (the pioneer in domestic low-far flying) has eaten into the market shares of all airlines. We have not lost any passenger to Kingfisher."

From here on, Kingfisher's flies into the most critical phase of its fledgling existence as it gears up to go beyond India's borders. It has been waiting for a licence to fly to the US from the government, which says that a domestic carrier must fly for five years before being eligible to start international flights. To circumvent the clause, Mallya has set up a subsidiary in the US, Kingfisher International. However, it has yet to obtain all clearances.

Hopes arose last week when civil aviation minister Praful Patel said his ministry would grant permission to domestic airlines to fly international on a case-by-case basis.

One interpretation of it is that the five-year clause gets junked. Kingfisher plans to deploy A380s on non-stop India-US flights. Estimates say that will reduce the cost by 30 per cent.Adds Kingfisher executive vice-president Hitesh Patel, "We are very much on track with our Plan A "� starting service from India to the US under the Indian flag."

Things will not be easy in the dog-eat-dog world of international flying. "Mallya will have to secure various approvals, source engineering talent and pilots, and invest heavily in overseas stations," say industry analysts.

Jet Airways has just revamped its international operations and set up a hub in Brussels for flying in Europe. Mallya though remains undaunted. "Kingfisher will be the biggest airline in India by 2010 not only in terms of market share, as others claim. In all the aspects, it will be the biggest. Wait and you will see," he said, dismissing all related questions. Hyperbole? Like the man says, we will wait and see.